Today’s column: Alphamin reopens, Western Australia might be the next REE capital of the world, and SMT wants to 10x profits to avoid a hostile takeover.
“Digging for Value, One Story At A Time.”
Alphamin Reopens
I’ve written a lot about how mines will become nationally strategic assets if they are not already. The implication is that there should be a premium on these assets because a) they’re vital to national security and b) they’re somewhat “priceless”. It’s the old “how do you put a price tag on safety?” argument.
I’ve also written a lot about the US’s thirst for critical minerals and the lengths it will go to secure supply. Like how the DRC asked the US for military aid in exchange for a share in its critical mineral endowment.
It was all theoretical until it wasn’t.
Yesterday, Alphamin Resources (AFM) resumed operations at its Bisie tin mine in the DRC. Mining.com reports:
“Operations at the Bisie tin mine — one of the largest in the world — were halted last month after the M23 rebel paramilitary group advanced nearby, taking the strategic town of Walikale and openly threatening the mine.
In recent months, the M23 rebels — which are allegedly backed by the Rwanda government — have taken several key areas of eastern Congo, including Goma, an important logistical hub city for mining in the region.
Hoping to put an end to the decade-long conflict with the M23, DRC President Félix Tshisekedi proposed a minerals-for-security deal with the United States. Discussions are currently advancing, with Massad Boulos, US President Donald Trump’s senior adviser for Africa, having been to Kinshasa to lead the talks.”
My friend and Twitter/X user @YellowLabLife commented on the reopening, “Cobre Panama…1 year going on 2. AlphaMoon $AFM.V in North Kivu DRC back in 1 month. What’s the Moon worth today with “the implication” made by the USA? More than before M23 took Goma.”
The “implication” is the Nationally Strategic Put. AFM is worth more today because there’s a chance that the US will help the DRC with its rebel problem.
You’re carving a Tier-1 outcrop into an otherwise “risky” jurisdiction. And we know Tier-1 jurisdictions garner higher valuations. What was a 3-5x EBITDA producer suddenly becomes a 6-10x EBITDA producer.
I love the price action of AFM’s stock over the past week. The company dropped 43% on the news of the mine closure, only to rise 100% as of this morning.
What’s the trading lesson here? Buffett always says to buy when there’s blood in the streets. So I guess you should’ve bought AFM when the mine closed? I assume there was blood in some streets – that’s what rebel groups do, right?
I don’t know. Investing is hard. You could’ve (and should’ve?) bought MetalsX Limited (MLX) on the AFM mine closure news as it was the only way to play tin. I didn’t and thought I “missed the trade.”
But even that stock gave back all its AFM-closure gains.
Mining is hard.
Western Australia Loves This China Ban
Rare earths, those 17 sci-fi-sounding elements like dysprosium and terbium, are critical for everything from electric vehicle motors to missile guidance systems. And when China, which controls 90% of the global supply, decides to tighten the spigot, the ripples are felt across industries and continents.
But here’s where it gets interesting: while most of the world scrambles to figure out how to replace these vital materials, Western Australia’s rare earth miners are quietly smiling.
Let’s step back for a second.
This isn’t the first time China has used rare earths as an economic weapon. Back in 2010, during a territorial dispute with Japan, Beijing cut off rare earth exports to its neighbor.
The result? A global panic that sent prices soaring and forced countries to rethink their supply chains. Fast forward to 2025, and we’re seeing a similar playbook. Only this time, the stakes are higher because rare earths are even more integral to modern technology.
So how does this export ban benefit Western Australia? Well, if the US can’t get their REE from China, they have to go somewhere else. And right now, that “somewhere else” is Australia.
Companies like Lynas Rare Earths (LYC) and Northern Minerals (NTU) are suddenly looking much more attractive to investors desperate for non-Chinese sources of these critical materials. Shares in Australian heavy rare earth developers have already rallied, with NTU surging 9.5% earlier this week.
This is a big deal for the Western Australia Chamber of Minerals and Energy (CME). Here’s CME chief executive officer Rebecca Tomkinson on the ramifications of China’s export ban:
“Wide-ranging exemptions were in place for commodities such as iron ore, gold, LNG, bauxite, alumina and critical minerals including lithium and rare earths produced within the state.
Ms Tomkinson said the exemptions highlighted the ongoing significance of minerals and energy produced in WA to the world’s biggest economy.
“These exemptions are recognition that commodities like those we produce cannot simply be conjured out of thin air,” she said.”
For Western Australia’s miners, this could be a golden—or dysprosium-colored—opportunity. As demand for non-Chinese rare earths grows, companies in WA stand to benefit not just from higher prices but also from increased investment in their projects.
Maybe they even get some of that Nationally Strategic Premium, too.
Sierra Metals Doesn’t Want To Sell
Alpayana, a privately held Peruvian miner, wants to buy Sierra Metals (SMT). The problem is that SMT doesn’t want to get bought. And the reasons are hilarious.
“Peruvian miner Alpayana sweetened its hostile takeover bid for Sierra Metals (TSX: SMT) by 31% after the Canadian company rejected its initial salvo. The stock surged.
Alpayana is now offering C$1.11 for each Sierra share instead of the C$0.85 offer it made in December, according to a statement issued late Wednesday. The new bid, which values Sierra at about C$235 million, is valid until 5 p.m. EST on April 25. Alpayana called the revised price “best and final.””
This is interesting because:
- Alpayana currently doesn’t own any shares in SMT.
- SMT still trades below the CAD 1.11 bid price.
Alpayana’s pitch is basically, “Look, we’re a much larger company, we do $500M in revenue, we have no debt, we’ve been mining Peru for almost 40 years … we can do this better.”
And it kind of makes sense. The company explained that:
““Sierra has high levels of expensive debt, a large working capital shortfall, an unpaid $56.1 million obligation to its publicly traded Minera Corona unit and high corporate expenses, along with being one of the highest cost per pound copper producers in the industry,” Alpayana said.
“Given Sierra’s thin margins, it is vulnerable to withstanding any potential unexpected production, labour, social, political, regulatory and/or macro challenges.””
Say you’re SMT and know you don’t want to sell, but you don’t know if your shareholders share the same view. What would you do? Probably something like, “Don’t sell! I promise we’ll 10x our profits.”
Turns out that’s precisely what SMT did:
“Sierra CEO Ernesto Balarezo told The Northern Miner earlier this week that the company is targeting a 10-fold earnings increase in earnings before interest, tax, amortization and depreciation (EBITDA) this year compared with 2022. Sierra has attracted potential “white knight” investors after rejecting Alpayana’s unsolicited bid, he added.
EBITDA could rise to $130 million this year versus $13 million three years ago and $74 million in 2024, Balarezo said in the interview.”
This is amazing. Why sell your shares at <2x NTM EBITDA when you can wait, hope the company delivers on its 10x forecast, and trade at 5-7x EBITDA?
I don’t know how you trade this if you’re Alpayana. Remember, they don’t own shares yet; they want the whole company at CAD 1.11. But I feel like you should probably buy some shares here. If the company delivers, you’ll profit. If they don’t, you’ll have a chance to buy at much lower prices.
