Kazera Global Regulatory News (KZG)

25 January 2017

Kennedy Ventures plc

Investee Company Operational Update

Kennedy Ventures plc ("Kennedy Ventures" or "the Company"), the AIM quoted investment company, who through its stake in African Tantalum (Pty) Limited ("Aftan") has an interest in the Tantalite Valley Mine ("TVM") in Namibia, provides an update of Aftan's progress at its TVM.

Tantalite Valley Mine progress

Following the plant upgrade during Q4 2016, Aftan has informed the Company that ramp up continued in early January post the customary and scheduled 16 day mine shutdown over the December and New Year holiday period, an event common to mines in Namibia and South Africa. In addition to reviewing Aftan's operations, Larry Johnson, who has only recently been appointed CEO of Kennedy Ventures, has provided Aftan with guidance around further plant processing optimisation, as well as reviewing existing commercial contracts to ensure Aftan receives optimal revenues from the TVM.

Since the New Year, Aftan has advised that mining has continued as planned, with stockpiles increasing in line with increased volumes of ore moved. Improved mining face availability and flexibility in ore sourcing is providing for improved access to high grade ore; a direct result of consistent blasting and the generation of new adits in line with the mine plan under the new explosive programme. However, in mid-January, water retention through the new plant was highlighted as below the level needed to meet the upgraded specifications and Aftan identified the plant water management system as requiring additional controls to minimise water loss. As part of this improvement, upgrades to pumping systems and water storage facilities will be implemented during the month of February and Aftan has advised the Company that that the thickener which is an integral part of the water management system has arrived on site and will be installed over the next 10 days.

In line with these improvements taking place, Aftan has delayed the installation of the new milling circuit which is now expected to be installed in March, at which point the fines recovery circuit will be completed and coupled to the existing circuit. This will enable the recovery of the fine tantalite and production is expected to rapidly build up to previously forecast production levels. Production of tantalite continues throughout this process.

Further improvements anticipated

As part of the ongoing review, Mr. Johnson will seek to assist Aftan to introduce further efficiencies at the mine to ensure stockpile levels are maintained and old stockpiles are incorporated into the mine plan, creating an additional economic source of tonnage.

The focus of the Company and Aftan remains to deliver strong cash margins and to extract the significant value from the mine and exploration ground. Accordingly, Mr Johnson is assisting Aftan with a review of staffing levels, procurement functions, stock control and general management in line with the ongoing plant upgrade, to ensure the mine delivers maximum productivity and profitability at the higher output levels.

Furthermore, following Larry's appointment and given his knowledge of tantalum pricing, a review of Aftan's offtake arrangements was deemed necessary. Aftan is currently in several discussions with some of the largest users of tantalum in the world and has consequently withdrawn the 1.6 tonnes of assayed and quality approved tantalite concentrate that was produced in December 2016 from the bonded warehouse where it was delivered to Aftan's offtake partner but not paid for, without penalty and as permitted by the offtake contract, until improved terms are agreed or new potential offtake agreements are finalised. This will result in a delay in Aftan receiving revenues from the sale of the tantalum it has produced. In this respect, Aftan has scheduled an onsite visit for 15 and 16 February by one of the largest tantalum consumers in the world. The end result of this process, as well as the necessary plant improvements, is expected to be continuous operations at the higher rate, generating improved sales and cash generation.

Lithium developments

Aftan's lithium programme is proceeding well, with the Lepidolite sampling programme nearing completion. A JORC/SAMREC ore resource is expected to be announced in Q2 this year. The test work programme is underway and proceeding as planned at SGS Johannesburg with first results received and an initial plant design being scoped.

Addition corporate opportunities

The addition of Mr. Johnson as CEO, brings potential new revenue generation streams and investment opportunities. The Company is currently exploring new opportunities which could include investing in new purchasing and supply chains for tantalite and other speciality minerals in Africa and globally.

Larry F. Johnson, CEO of Kennedy Ventures said: 

"Since my appointment I have spent a considerable amount of time at the TVM reviewing Aftan's procedures and the progress of its plant upgrade. I am pleased with the progress of their mining operation as we see increased movement of ore under the new explosives programme and consequently growing stockpiles. I am also particularly excited about Aftan's potential to generate strong cash margins and provide for a potential entrance into the lithium market, subject to the results of our ongoing geological and metallurgical studies. As part of the upgrade, further improvements to the plant water management system have been identified to ensure optimal recovery of fine tantalite. Consequently, Aftan has postponed the installation of the new milling circuit for the recovery of fine tantalite until the improvements have been incorporated. Importantly, this will allow for the completion of the construction of the fines plant without disruption in the coming months and ultimately ensure Aftan achieves its higher throughput target of 15,000 tonnes per month, higher production output and sells additional higher grade tantalite to its offtake partner. Aftan has informed us that it still expects to be operating at these higher levels by the end of Q2 2017.

I am highly excited about TVM and its licence prospectively, particularly the lithium potential where Aftan expects to have established a resource in Q2 2017. Further afield, we see Aftan creating additional potential value for the Company through investing in purchasing and supply chains in tantalite and other speciality minerals across Africa, and globally, and we are conducting detailed analysis into this presently."

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

For further information on the Company, visit: www.kvplc.com: