Shares in tantalum producer, Noventa plc (AIM: NVTA) slumped to a new all time low after the company warned it would have to raise additional cash from shareholders to see it through to positive cash flow.
The Company issued a update on operations for the three months to 31 March, 2008, which showed some encouraging progress at its operations in Marropino, Mozambique. Tantalum production increased by 40% on the previous quarter, with recoveries up to 55% in March. However, the Company was hit by plant equipment problems, and the long delay in ordering and receiving replacement parts. As a result of the equipment downtime issues, plant availability slumped to 48% in March, and averaged 56% in the quarter versus a target of 75%. The downtime for equipment forced Noventa to cut this year's production target to between 300,000 and 330,000 pounds of tantalum concentrate.
"Plant availability requires further attention. The impact of unexpected equipment failures has been exacerbated by the remoteness of the plants location resulting in longer than anticipated downtime and hence below targeted quantities of finished material being produced." the Company said.
Noventa also announced that it had entered into a "Pre shipment facility" of US$6.7 million to help alleviate its working capital constraints. However, despite the introduction of the facility, the Company warned investors that the company had yet to reach cash flow breakeven and would have to tap shareholders again for additional cash.
Chairman of Noventa, Clinton Wood commented:
"I am encouraged by the numerous and significant challenges that the team have dealt with in the last six months and I thank them for their untiring effort. They have made significant progress in overcoming the problems encountered and anticipating that this trend will continue, consistent achievement of targets can be expected. The growing demand for and limited new production of tantalum continue to add to the attractiveness of our existing operations and our planned expansion."
Shares in Noventa fell 23% to 100 pence.