Jersey-based tantalum mining group Noventa Ltd said it believes it will only achieve operational cash breakeven in the first quarter of 2009, despite improving production levels at the Marropino mine in Mozambique.
It also said it is receiving a US$5 million capital injection by two existing substantial shareholders to compensate for the effect of the current financial crisis on its credit and loan arrangements.
Operating performance at the Marropino mine continues to improve, with the average daily production increasing by 40 percent between August and November 2008.
However, operating costs continue to be impacted by the delay by the Mozambican national electricity utility in providing line power to the Marropino mine. Line power is now expected in Q2 of 2009. As a result of the delay, the company has had to rely on diesel generators to provide power to its operations, which has resulted in operational costs being 20 percent higher than if line power had been available.
Furthermore, in order for the company to process the unweathered transitional and hard rock ore which it anticipates to start mining in Q2 of 2010, it needs to build a hard rock circuit, construction lead time for which is 12 months. Should Noventa not be able to secure funding for the hard rock circuit by the end of the first quarter of 2009, future production will be significantly impacted should the soft weathered ore be mined out before the hard rock circuit is operational.
The current state of world equity markets has temporarily delayed the raising of the necessary capital, on acceptable terms, for the procurement and installation of a hard rock circuit at Marropino, it said.
On a more positive note Noventa sees a good opportunity arising from Talison Minerals’s decision last month to suspend operations at their 100 percent owned Wodgina tantalum operation in Western Australia. Wodgina is the world’s largest tantalum operation which supplied over 30 percent of the World’s tantalum demand in 2008.
In today’s statement, Noventa said it will be well placed to supply a significant portion of Talison’s former customers’ requirements from its mines in Mozambique once its Morrua project is completed. “As a low cost industrial scale producer the company is capable of profitably expanding production at prices currently being paid for quality, reliable and legitimate tantalum concentrate,” the group said.
Noventa has secured subscription undertakings for an additional $5 million in the form of convertible loan notes to existing substantial shareholders Highland African Ventures Ltd and Blackrock World Mining Trust PLC. The notes are convertible into 22,296,544 ordinary shares, representing 36.1 percent of the post-conversion issued share capital, at an effective 15 pence per share.