Noventa plans to accelerate assessment of new Tantalum discovery

Noventa (LON:NVTA) has decided to accelerate the assessment of its new ‘potentially significant’ tantalum discovery, which was found near the Marropino mine in Mozambique.

Separately, the company also announced that it has secured over £5 million (US$8m) in new capital, with a £3.2 million (US$5m) equity placing and a separate £1.9m (US$3m) share subscription agreement.

Should the new discovery prove to be viable for mining, Noventa said that Marropino’s “enhanced economics may reduce or eliminate further need for external financing”.

Before the discovery and today's fundraisings, Noventa had planned to raise as much as $23 million to fund the next phase of the company’s development.

The strategic plan aims to raise plant production at Marropino to more than 500,000lbs of tantalum from 300,000lbs, and upgrade the facilities so they can handle material from the company’s Mutala and Morrua projects.

Noventa’s new discovery was initially reported last week, and on the 1st September, the company told investors that independent assays on three pits have confirmed the additional deposit as high grade tantalum bearing ore, measuring about 1 square kilometre.

According to Noventa, the additional costs associated with an accelerated assessment will be minimal. The company also pointed out that the discovery could significantly enhance the economics of the ‘Strategic Plan’ for Marropino, especially in the early years.

However, the company also emphasised that “until the evaluation of the Discovery is completed there is no guarantee that it is viable or of consistently high grade”.

Earlier this week, Noventa said that initial sampling results indicate that the discovery is significant and the tantalum could be economic to mine, providing at least twelve months of feedstock for the Marropino plant, and substantially increasing the mine’s life.

“We are encouraged that the discovery will add a significant quantity of tantalum to the existing mineral resource.

“Not only do we now expect the life of Marropino to be extended, but the substantially higher grade of tantalum will mean that the economics and payback of the project will be significantly enhanced,” said Noventa Chairman Eric Kohn.

The first three samples have been analysed independently and the results show tantalum grades of 3,836 ppm (parts per million), 2,697 ppm and 7,577 ppm respectively. Additional sampling and assaying is still taking place.

Noventa said that the discovery confirmed its decision to start exploration on all of its mining concessions and exploration licenses.

The discovery also caught the attention of Collins Stewart’s chief mining analyst, John McGloin who described it as ‘pretty significant’. If proved up, it could allow the company to expand beyond the existing Marropino tantalum mine without too much cost, the analyst told Proactive Investors.

McGloin said Tantalum is “one of the best stories out there in terms of supply and demand” as he emphasised the positive economic trends for the rare metal.

Global production of tantalum, which is used to manufacture high-end electronic capacitors for mobile phones, has been limited since the closure of major mining operations in Australia. The Wodgina mine in the Pilbara region of Western Australia closed in 2008 even though it was the world’s largest tantalum mining operation, supplying 30 per cent of global demand.

Among the publicly-quoted tantalum-focused juniors, McGloin reckons “Noventa is probably the best placed” to profit from this acute lack of supply. He pointed out that the company is already in production and it seems to have successfully worked through its legacy issues following the appointment of corporate fixer Eric Kohn.

Indeed, Noventa has been gaining considerable traction in recent months, as it has continued to turn-around the previously underperforming Marropino tantalum mine.

In August, the company revealed that Marropino’s redevelopment has made rapid progress since the mine re-started operations in April 2010, after spending just under a year on care-and-maintenance.

Tantalum recovery at Marropino has increased significantly over historic levels, to more than 51% by. Prior to May 2009, the mine achieved recovery rates between 30% and 35%.

Furthermore, production output from the mine has also been higher than expected, which enabled the company to dispatch the first shipment of tantalum to one of the company’s two key customers ahead of schedule.

The shipment on the 24th August, is expected to confirm logistics pathway for future shipments as well as revise and adjust shipping routes and procedures ahead of the commencement of full production at Marropino in 2011.