ELT – Elementos Limited
Joe David: G’day, Manny. Great to be back with you.
Manny Anton: So, Joe, the company has just released an announcement with the news that you have signed an agreement to acquire up to a 50 per cent interest in an operating Spanish tin smelter. Can you tell us a little bit about the agreement itself?
Joe David: Yeah, absolutely. So, at this stage it is a term sheet agreement, although we’re deep into the final stages of due diligence and the binding documentation set. What it is is we purchase shares off the current shareholders for about 1.2 million euros, and then it includes a capital investment into the company of about 2 million euros. So, total value of about 3.2 for us to take a 50 per cent stake of the smelter. Critically, for us, this smelter is located 220km by road from our project. This is virtually unheard of in the tin sector, where basically all the smelter capacity for global miners like ourselves is based in Asia. So, for us to move towards a solution that we get not only a local smelter solution but one fully integrated within Spain and fully integrated within the European Union just ticks so many boxes that we’ve been chasing strategically.
Manny Anton: Can you tell us a little bit more from a synergies perspective? Can you tell us about the CRM synergies, the tin smelting and soldering company which owns a facility and which will be your 50 per cent partner?
Joe David: Yeah, so they are an established… They’re a Spanish company, but they have international operations in Brazil, Mexico, and they sell a lot of their product into Europe and North America, so they’ve got offices around the world. They predominantly… They do smelt tin concentrate. They also produce a lot of tin from residue material and tin scrap material. So, very established producer. I love their responsible way they’ve gone about it of basically recycling a lot of their tin. And their focus is less on producing tin ingots, although they do do that and sell it to the market. They consume a lot of their own tin and move it into downstream further than we’re even talking of going, into the soldering, into the soldering paste and all these bespoke products. They do produce responsible tin because tin tantalum and tungsten have had to be reported for many years due to the conflict mineral nature of a lot of the sites where it comes from. That reporting is firmly established, and CRM are already a certified group by most of the global auto manufacturers, electronics producers, all the big names. If you go through their responsible and due diligence reports, CRM is there. So, these guys are very good at what they do and have a fantastic reputation. So, for them to show the interest and the faith in us to come in as a strong partner… And obviously there’s a synergy there, as you said — they’re always chasing more tin. So, the fact that we will be producing tin at a combined smelter, there’ll always be the option to be selling tin to them as our customer and then consuming it further downstream for themselves. That’s not part of the deal we’ve done, but it’s certainly an opportunity that we’ll explore in the future.
Manny Anton: Is your intention to truck the material to the smelter?
Joe David: Yeah, it is, but it’s a tin concentrate, so it is in the same form as if we were sending it through to the Asian tin smelters. We get it up to about a 62 to 64 per cent grade concentrate. That’s an international seaborne grade. But instead of, as you said, trucking it to a port, sending it halfway around the world to Malaysia, Thailand or China, we’ll now be doing it 220km away. So, the cost benefits to us are substantial. The carbon reduction of producing responsible tin is substantial. And the other thing that we put in our announcement is absolutely key for us and what makes it such a fantastic deal is there’s actually a premium for tin above the London Metals and Shanghai published prices for tin delivered in Europe and tin delivered in North America. So, from Spain, those two markets are very accessible, and the average 12-month price of those premiums is somewhere in the order of $750 to $1,000 premium above the published price, which far exceeds what we’re modelling the treatment and refining costs for this product. So, economically, another fantastic outcome for us.
Manny Anton: Can you tell us a little bit more about the smelter itself from an operating capacity perspective? And also what’s the potential there, or is there any potential there, to expand the current operating capacity going forward?
Joe David: Absolutely. And part of our deal is actually to expand the facility and the quality produced and the throughput. So, historically, it was a lead smelter. There were a number of owners. It did lead shots, it did ammunition. It also, in its more recent history, you know, about 10 years ago, was doing lead acid battery recycling, all which need a big rotary furnace, which is the key to this facility. In 2021, our partners CRM took it over, and in 2022 they installed a new rotary furnace. So, the actual key asset of this is very new. It is estimated somewhere between… Depending on which products you put in, it sort of changes the overall throughput. But we’re somewhere between 8,000 to 10,000 tonnes of tin being fed into that. For us, what we produce from our Spanish project would be about 5,400 tonnes of feed. So, there’s already extra capacity there from what we require. So, the licences far exceed that current throughput. Our reading and working with our partners, it looks like it’s closer to 20,000 tonnes. So, there’s space for it, there’s a licence that allows it. Basically what’s yet to do is to finalise the engineering plans and obviously source more feed to put it into it. But certainly you’ve identified that upside and it’s certainly something which has encouraged us about this deal, that this can get bigger and more tin mines can feed into it.
