By: Matthew Hill
12th April 2011
TORONTO (miningweekly.com) – Noventa, the TSX- and Aim-listed company that owns a tantalum mine in Mozambique, could double production from the 600 000 lb/y rate planned at year-end earlier than 2013, chairperson Eric Kohn said on Tuesday.
“It’s all driven by market demand,” he noted, adding that there was currently a shortage of tantalum, used to make electronic capacitors in cell phones and laptops, and also in super alloys that go into jet turbines.
The company had previously said it could start production at the Morrua deposit in 2013, adding to the output from its existing Marropino openpit mine.
Speaking in an interview, Kohn said there was a shortage in the tantalum market as electronics companies avoided buying so-called conflict minerals, which excludes supplies out of the Democratic Republic of Congo and neighbouring countries.
The US Dodd Frank Act, which came into force on April 1, and has a clause requiring companies to conduct due diligence to ensure their supplies are conflict free, also had an impact.
The shortage could be as high as two- to three-million pounds of the metal, compared to a demand forecast of seven-million pounds yearly in 2012.
“We could sell everything we could get at the moment,” Kohn said. He added that the company could double production to around 1,3-million pounds yearly through the addition of Morrua.
UK-based analysts at Canaccord Genuity, Jeremy Dibb and Damien Hackett, predicted in an April 8 research note that the supply deficit would last for the first half of this year, before the market moved into balance over the remaining six months of 2011.
The world’s biggest tantalum mine, which Global Advanced Metals (GAM) owns in Australia, restarted producing earlier this year, after having been put on care and maintenance in 2008.
The operation should start delivering product to customers mid-year, at a rate of 700 000 lb/y.
GAM CEO Bryan Ellis said in March that the “interest shown in the re-opening of our mining operations reflects the rapidly reducing global stockpiles of tantalum”.
Kohn started at Noventa in 2009 in a bid to turn around the loss-making company.
The Marropino mine is now producing at a rate of around 200 000 lb/y but this will reach slightly more than 600 000 lb/y when a new plant is commissioned in the fourth quarter.
To bring Morrua’s production forward, the company would need to increase resources at Marropino to lengthen the pit’s life, Dibb and Hackett wrote.
At the current rate, the company is producing at around break-even levels.
Noventa has contracts to sell 470 000 lb/y of tantalum to two smelters in the US and Thailand, at a price lower than spot levels, Kohn said, adding the pricing was confidential.
Spot prices leapt from $32/lb in July 2009 to $120/lb currently.
The supply contracts last until 2013, when Noventa will consider either extending them or building its own refinery in Mozambique.
Canaccord’s Dibb and Hackett gave Noventa a £3,62 price target, while the share closed in London at £2,30 on Tuesday.
Edited by: Liezel Hill
http://www.miningweekly.com/article/...-production-to-13mt-2011-04-12
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