By Kishori Krishnan Exclusive to Tin Investing News

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Tin may recover quickly if Chinese demand picks up

Sydney-based Resource Capital Research has hit a gold mine, with their comments: “We think tin will be one of the first metals to recover once markets stabilise.” Don’t disregard the comment. Resource Capital Research (RCR) does have a point.

Unlike most of the other base metals, there is no growing tin surplus. Inventories held at the London Metal Exchange now sit at 8,820 tonnes, against a 52-week high of 11,430 tonnes. The RCR case is that a rebound in Chinese demand, coupled with the closing of mines in Indonesia, could trigger supply shortages.

So, there you have it. Shortages portend high prices. The future points to strong demand and short supplies. Copper, and lead have potential as well. It is time to pull down the hatch and adopt a wait-and-watch policy.

Even dealers said the tin market would keep an eye on supplies from Indonesia after China slapped a 10 per cent duty on exports of primary refined tin from January 1 — a move aimed at discouraging exports and ensuring local supplies. Tin is used in electrical solders and as a corrosion-resistant coating for other metals.

“The development in China is supporting the price. We don’t expect anything to come out of China, which means if something happens in Indonesia, it will affect prices,” said a dealer in Malaysia’s northern state of Penang. “There’s a chance tin will revisit the highs,” he said.

Incidentally, the various Australian stock exchanges that have been home to many tin companies over the years, are now gaining critical mass. There are around 15 companies that have a substantial tin interest. The biggest player is Metals X (MLX) with its Renison mine. Gippsland (GIP) has advanced to a bankable feasibility study at its Egyptian tantalum-tin project. North Queensland Metals (NQM) has gold revenue to finance its tin projects, while those classed as in the advanced exploration stage by RCR are Consolidated Tin Mines (CSD), Kasbah Resources (KAS) (with a potentially world-class deposit in Morocco), Venture Minerals (VMS) (with Australia’s third largest resource in Tasmania) and China-controlled YTC Resources (YTC).

It may be noted that that during the past 12 months, the listed companies on the ASX with tin projects have regained considerably from their share price lows, one of the best performers being Stonehenge Metals (SHE), along with Macquarie Harbour Mining (MHM) and Malachite Resources (MAR). For the record, the other tin plays are Minemakers (MAK), Wolf Minerals (WLF) and Auzex Resources (AZK).

Mincor Resources (MCR), which engages in the mining and exploration of mineral resources in Australia, owns and operates four nickel mines: Miitel, Redross, Mariners, and Wannaway in the Kambalda Nickel District of western Australia. Mincor Resources also holds a 100 per cent interest in the Gascoyne Tungsten prospect, Tottenham Copper prospect, Widgiemooltha Gold prospect, and Lake Cowan Gold prospect.

Shares in Mincor Resources have risen as the nickel miner committed to a dividend payout despite posting its first ever loss in eight years. In its interim report released on Wednesday, Mincor reported a net loss of $22.7 million for the six months to December 31, 2008. Mincor said the loss includes a provisional pricing adjustment charge of $9.3 million, a one-off impairment charge of $17.3 million and $6.7 million in exploration costs.

Revenue for the period dropped from $164.87 million, reached in the prior corresponding period, to $100.39 million on the back of a sharp fall in the nickel price. Over six months, the average nickel price dropped from $14.05 per pound to $7.99/lb. Funnily enough, Mincor was upbeat about the results, saying the net loss comes despite record production and “best cost performance” in more than two years.

Not a firm to be beaten. What also buyoed sentiment, was that despite the head of Indonesia’s second-biggest tin smelter, PT Koba Tin, being detained for alleged illegal mining, the production process and exports remain unaffected. Kamardin Md Top, the president director of Koba Tin, has been detained since February 16 for mining in a protected forest area, and is being held at Bukit Semut prison on Bangka island for further investigation.

The detention is the latest twist in a long-running series of investigations by the authorities in Indonesia’s main tin-producing islands, source of nearly a quarter of the world’s tin. While the saga disrupted output in early 2007 and continues to worry markets, it hasn’t affected output. “Shipments are not affected,” Koba Tin director Darmansyah Nawawi told Reuters. “That means all things are running as planned and approved by the government”.

The crack down on tin mining on the islands comes amid growing pressure to protect Indonesia’s environment and forests, which are being destroyed by illegal logging, mining, and the rapid expansion of plantations firms, as well as a concerted national campaign to stamp out corruption.

Exports Down

Indonesia’s refined tin exports fell nearly 38 per cent from the same period a year ago, trade ministry data showed. Indonesia exported an estimated 6,185.74 tonnes of refined tin in January, down from 9,914.40 tonnes of refined tin in the same month a year ago. But the volume was nearly double that in December, when 3,805.50 tonnes were exported. “Exports fall because of slowing demand from overseas buyers and low tin prices,’ said an official at the trade ministry. A drop in tin prices has cut margins for small smelters and prompted them to temporarily suspend operation since October. The price of tin, which is also used in food-packaging, has fallen nearly 57 per cent from an all-time high of $25,500 a tonne hit in May 2008, reflecting the impact of the global economic crisis.

Company News

Silver Standard Resources Inc. (TSX:SSO) has announced its wholly-owned Pirquitas Mine in Jujuy, Argentina, is on schedule to commence concentrate production in the current quarter. Initial production will focus on the processing of over 400,000 tonnes of run-of-mine grade jig tails from historic operations and then transition to material from the open pit. To date, approximately five million tonnes of material has been moved from the Pirquitas open pit and stockpiling of ore has commenced.

At current metal prices, the silver and tin concentrates account for over 95 per cent of the anticipated revenue from the mine. As a result, the silver circuit will be optimized first, followed by the tin circuit. A decision to complete the zinc circuit is dependent on the results of metallurgical testwork to be received on increasing silver recoveries. With production ramping up through Q2, Pirquitas is expected to produce in excess of six million ounces of silver in 2009 with full production in excess of 10 million ounces in 2010.

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