TIN has been doing it tough this calendar year, falling from $US24,450 a tonne to $US19,500 of late due to a surge in shipments from Indonesia, the world's biggest producer of the handy stuff.
But given the surge from Indonesia had much to do with that country's small-scale producers maximising exports ahead of the new export specifications for tin that took effect on July 1, the flood of material is not likely to last -- feeding expectations that the price of $US25,000 a tonne needed to induce new sources of supply to meet robust demand predictions will return.
That's the theory anyway. What is known is that consumer electronics is by far the biggest consumer of the metal by a long shot, followed by the old tin can itself. And while Japan might have its problems, consumer electronics remains very much a part of its competitive advantage, making its access to long-term supplies of tin critical.
It is for those reasons that there was no surprise that Japan Inc has followed up its early support for Kasbah Resources (KAS) and its Achmmach tin project in northern Morocco with some more love. This time, Nittetsu -- majority-owned by Nippon Steel and a miner in its own right -- has paid $7.5m for a 5 per cent stake in Achmmach, a significant global resource containing 131,000 tonnes of tin (15 million tonnes at 0.85 per cent tin), with a likely substantial resource upgrade sometime this quarter. The current resource does not sound like much until its $US2.5 billion in-situ value gets mentioned.
The entry of Nittetsu follows on from an earlier agreement under which Toyota Tsusho -- it handles 8 per cent of the global trade in tin -- agreed to acquire a 20 per cent interest in Achmmach under staged payments. It currently stands at 18.8 per cent of the project having paid $16m to Kasbah in 2012.
The quality of Kasbah's Japanese partners, with their trading and mining capabilities and consumption needs, represents a strong endorsement of Achmmach's quality as a development candidate and will no doubt ease the pathway to production should, as is expected, the project be given the all-clear in the definitive feasibility study, due to be released by the end of the year.
Financing the thing will be all that much easier too as Japan Inc will look beyond the current weakness in tin prices in recognition of the long-term strategic appeal of securing access to new supplies of the metal, vital as it is to its consumer electronics industry.
More to the point, the Nittetsu deal implies a value for Achmmach of $145m, and gives a "see-through" value for Kasbah of $116m.
This is where it gets interesting, given Kasbah was trading at 10.5c a share yesterday, giving it a market capitalisation of $41m and an enterprise value of $27m.
It is little wonder then that most of the analysts that follow the stock reckon it should be at least a 20c-plus stock, the proviso being that tin does what most suspect it will do in the back half of the year by getting back above $US20,000 a tonne.
