AIM-listed tin miner, AfriTin Mining (LSE: ATM) is having a good year at the stock market. It started rallying early in 2021 and by mid-March, its share price had gained a whole 189%, reaching all-time highs. It has slipped a bit recently, but the AfriTin Mining share price is still elevated compared to last year. A whole 41%, to be exact.
This sounds promising. But as an investor, I want to know if the price increase can be sustained. For this I took a look at its fundamentals, which are a mixed bag. First, the positives:
#1. Decent operational update
For the March–May 2021 period, AfriTin Mining produced 183 tonnes of tin concentrate, higher than the company’s 180 tonnes target. It also extracted more tin metal from the concentrate, at around 59%, than in the same quarter last year.
It is also looking to implement a project that will enable it to extract a higher 67% tin from concentrate. Tin prices are at multi-year highs, which should strengthen the company’s financials in any case. But I think it can gain even more if this project pays off.
#2. Possible lithium production
Earlier this year, it also talked of adding lithium to its products. Lithium is a component in electric vehicle (EV) batteries. As the popularity of EVs rises, lithium demand is also expected to rise. According to S&P Global research, lithium battery production capacity is expected to increase by 26% each year on average over the next five years.
However, there are downsides to the AfriTin Mining share too. These are:
#1. Weak production and financials
Its latest production numbers may be higher than expected, but they are less than those in the same quarter last year, at 195 tonnes. Also, it is a loss-making company, and I am not sure when it will start making profits. As a rule, I like to buy shares of loss making companies only if they are growing fast or it is a one-off occurence, like during the pandemic. Neither is the case here.
For this reason, I would put it in the category of a speculative investment. It is not as speculative as say a bitcoin miner but it is not as safe as an established FTSE 100 or FTSE 250 miner either.
#2. Other miners outperform
Moreover, some of the more established miners are better buys right now. For instance, the FTSE 250 iron ore miner Ferrexpo has seen a far bigger annual price increase of 144%. Even FTSE 100 multi-metal miner Anglo American has seen a bigger increase of 71%. Also, both of them pay dividends.
My takeaway for the AfriTin Mining share price
On a net basis, I think that AfriTin has some merit. With tin prices on fire, potential for increased tin production and even lithium production, it is possible that its share price can continue to rise.
However, I also have to bear in mind its recent performance and its weak financials. I think there are more robust stocks to buy today that can perform equally well if not better.
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Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.