My Top Pick In Mining

What I like about tin is the current market fundamentals are strong, the future supply outlook is weak, and there is the possibility for a landmark new technology adoption in something like lithium-ion batteries that could get the focus of investors like cobalt did a few years ago.

Tin production is relatively opaque. The majority of it is mined and produced in Burma (Myanmar), China, and Indonesia. The U.S. does not produce any tin. The main players outside of Southeast Asia are Alphamin Resources’ (AFM.V; AFMJF) Bisie mine in the DRC, Minsur’s Pitinga and San Rafael mines in Peru, and the Renison project in Tasmania (an Australian island territory) which is a 50/50 joint venture (JV) between Metals X (MLX.AX; MLXEF) and China’s Yunnan Tin, the largest producer of refined tin in the world.

The most promising tin junior is Cornish Metals (formerly Strongbow Exploration; CUSN.L; CUSN.V; SBWFF). Its South Crofty project in the historic mining region of Cornwall in Southwestern England is the highest grade undeveloped project. The only problem I see with Cornish Metals is that it is undercapitalized. The company is working on expanding the existing defined Resource which may eventually help get the stock moving.

South Crofty is a project that should have been acquired already but most mid-tier mining companies are strategically inept. It has high grade exposure to a new technology metal, has quality economics, significant Resource expansion potential, and is located in a jurisdiction where the locals are hungry to see it put into action.

There are very few tin producers that are investable. Shares of Minsur only trade in Peru. Only shares of Alphamin Resources and Metals X are available to most investors. I am not interested in investing in the DRC. That leaves Metals X in a solid mining jurisdiction positioned to benefit from the soaring tin price.

A Potentially Explosive Price Situation At Hand

I want to emphasize that the supply of tin is fragile. A major negative event at one of the main mines and/or smelters could lead to a tremendous price spike. At present, exchange inventories are at bare bones levels in London and Shanghai. Producers are just barely supplying the market and scrap production is undoubtedly running at full throttle with prices at record highs. To my knowledge, there are no new projects being developed (i.e., under construction). There are some out there with pre-feasibility or feasibility studies, but I am not aware of anything under construction outside of Burma, China, and Indonesia. The International Tin Association (ITA) is recommended for investors looking to follow the situation going forward. They also put out a nice monthly newsletter that summarizes key tin related news items.

My investment case for Metals X (MLXEF) does not require tin prices at the current level, in fact, it assumes a gradual reduction in the tin price over the next several years which is prudent. However, I expect the rise of global inflation and ongoing tightness in the tin market to lead to a higher incentive price for new mines and a higher long-term average price moving forward. A few years ago I was assuming a $20,000 to $21,000 per tonne long-term average price but I have recently raised this to $23,000.

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The information presented in the True Vine Letter is general in nature and designed for do-it-yourself and professional investors. It does not have regard to the investment objectives, financial ...

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