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Noventa looks to take tantalum projects funding to US$25m, 2009 losses halve

Noventa (LON:NVTA) has outlined its strategic future development plan - now approved by the board - , which will include an increase in the capacity of the Marropino tantalum mine in Mozambique by over 70% and development of its other tantalum projects, while also releasing its full year results, which showed  a 50% reduction in pre-tax losses.

The financial results were positive, yet the operational accomplishments made by the company during the year were of greater significance. Revenues were slightly lower at US$5.7 million compared to last year’s US$5.9 million, while pre-tax losses halved from US$22.3 million to US$10.7 million, making for basic and diluted losses per share of 7.7 US cents compared to a loss of 82.7 US cents in 2008. The cash position doubled, rising from US$2.5 million to US$5 million.

Noventa has operated from a single mine in Marropino since 2003, where the productivity and profitability have failed to meet expectations, leading to the implementation of a performance enhancement plan in 2005 and 2006. The output improved, but not on a sustainable basis and the mine was placed on care and maintenance in May 2009.

 

The mine was restarted post-period, in late April 2010. This month, Noventa said that concentration of tantalum in the mine’s tailings ore has proven to be significantly higher than expected, while the choice of liberation process and technique had proven to be successful on an industrial scale.

An independent laboratory has verified that the tantalum concentration in the tailings exceeds the previously estimated 115 ppm (parts per million) based on samples of the entire tailings dump.

Noventa said that the results exceeded expectations in both grade and recovery and bode well for the further expansion of its mining activity in Zambezia Province, Mozambique, both at Marropino and at the company's other sites.

The company has recently raised US$2 million to provide funds for working capital in the initial phase of production at the Marropino mine, and the purchase of key items of equipment in preparation of the plant upgrade in the latter half of 2010. Noventa plans another capital raising to take its total funds raised to US$25 million this year to cover both the Marropino plant upgrade and the development of the Mutala mining concession.

At Marropino, an updated 3D exercise has been incorporated into the mine planning, recalculating the geological resource at the project using the highly detailed original data. The company said that the results provided “considerable confidence” in the geological grade/tonnage estimate, most notably of the average tantalum grade.
Exploration activity at Marropino in 2010/2011 will focus on the assessment of the other known, relatively minor pegmatite occurrences and colluvial/eluvial deposits to the east of the pit, which may provide additional feed for the Marropino plant.

Preliminary work carried out at Mutala in 2002 suggested the presence of significant colluvial deposits, indicating there could be around 5 mlbs (million pounds) of contained tantalum.

A mapping exercise at the Morrua tantalum project, aimed at delineating the more readily accessible waste piles which may provide a significant resource, is planned for the second quarter of 2010. The six other exploration licenses in the vicinity of Morrua are set to be assessed.

Key exploration objectives for the Ginama project include traverse line mapping and sampling to delineate all the pegmatite occurrences with the focus on assessing the possibility of colluvial deposits being present.

Noventa said that its future development plan comprised three parts, with phase 1 focusing on the upgrade of the existing plant at Marropino to boost its capacity by 70%, the development of Mutala in phase 2, the development of Morrua in phase 3, with mining operations planned to start in 2015, and the examination of property acquisition opportunities in phase 4 after the current mining licenses will be surveyed in June-August this year.

The existing wet plant is expected to be moved to Morrua after the resources at Marropino are depleted, to take advantage of minimum travel distance and to minimize additional capital expenditure.

Noventa has also approved a new three year strategic plan, which includes the upgrade of the Marropino mine to over 0.5 mlbs of tantalum per annum during 2010/11as well as the upgrade of the infrastructure at the mine to handle material from surrounding sites including Mutala and Morrua during 2011, with Mutala planned to be brought into production by 2012.

Marropino, Mutala and Morrua are expected to have a combined mine production life of approximately 15 years. This could be extended by the ongoing development of the exploration licenses and potential acquisitions.

The plan also calls for a broadening of the customer base for Noventa’s tantalum concentrate and increase of the average price received. The company is currently in discussions with its offtake partner and other parties to purchase the additional output.

The plan will require US$23m of new capital. Noventa’s financing options under consideration currently include strategic partnerships, development bank loans, convertible debt, redeemable convertible preference shares and/or equity. The company is expected to become cash generative in 2011. Cash generation between 2011 and 2013 is expected to be around US$20 million with cash margins expected to eclipse 33% by 2013.

The plan will be incorporated into Noventa’s ongoing NI43-101 technical report, which is set to be completed during summer prior to the company’s planned listing on the Toronto Stock Exchange (TSX).

 



Disclosure: The author holds no positions in the company