Noventa soars after confident outlook for Marropino tantalum mine restart

Shares in Noventa Ltd (AIM: NVTA) soared in afternoon trade today after the Jersey-based tantalum mining group announced that its new management team can profitably restart the Marropino mine in Mozambique, its troubled flasgship operation which has been in care and maintenance since May 2009.

The stock was trading nearly 30 percent higher in midafternoon deals.

In a trading update, Noventa said that, following the recent changes to the company’s board and having conducted an initial evaluation of its assets, the new team believes in the marketplace for the company's mineral resources and intends to restore it to profitable production and maximise shareholder value. 

Noventa's objective is to become a low cost industrial scale producer of tantalum bearing concentrate. Like with most metals, the price of tantalum has been adversely affected by the economic downturn, but the board believes that the medium term outlook for the metal is encouraging, as demand is expected to outstrip supply in 2010 and 2011.

Its initial open cast mine, Marropino, has been operating intermittently since 2003, but the board believes that the approach that was historically taken to bring the mine into production was incorrect and not as effective as it should have been. As a result, much less of the resource has so far been extracted than would originally have been expected by this point. In addition, the company's other mine rights at Morrua and Mutala remain unexploited.

Marropino's poor performance can be attributed to a wide variety of equipment, operational and management failings, which resulted in output being consistently below expectations, the company said. However, the board believes that all these issues can be suitably addressed.

Each element of the process from extraction through processing and distributing to clients is being examined to identify and eliminate losses and inefficiencies. The reserves are being re-examined and assays of the open mine are being taken to verify the ore projections to compare historical assay data with fresh assays. An extensive list of remedial actions has already been identified and these are being assessed prior to incorporation into a recovery plan.

The management team is considering and comparing several options to profitably restart operations, each of which is being stress tested in order to identify the most effective and reliable approach. These options will be put before the board will also be communicated in more detail to shareholders shortly.

As previously announced, Noventa needs to secure additional working capital in order to move forward with its objective. The board is in discussion with its advisers as to the most appropriate way that this can be achieved.

Acceleration of mains power into the site has been agreed with the supplier with a completion forecast for August 25 2009. This will provide significant improvement both in terms of cost savings, estimated at more than US$1.5m annually, and reliability compared with the existing diesel generators.

A potential saving in distribution costs may be realised by changing the transport route of the concentrate to the customer, avoiding costly overland transport to the port of Walvis Bay in Namibia.
Samples will be taken and independently assayed to verify the ore body and to reconfirm the viability of resurrecting production, Noventa added.