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15 Dec 2008 07:00
NOVENTA LIMITED
("Noventa" or the "Company")
AIM: NVTA
TRADING UPDATE AND ISSUE OF CONVERTIBLE LOAN NOTES
Highlights
Operating performance at the Marropino mine continues to improve. Average daily production increasing by 40% between August and November 2008
Capital injection of $5 million into company via issue of Convertible Loan Notes to existing, substantial shareholders
Morganite production has increased - producing 7,000 kilograms compared to previous forecast of 5,000 kilograms for the full year
Line power from the Mozambican national electricity provider is expected in Q2 2009
Trading update for the 3 months ended 30 November 2008
Operating performance at the Marropino mine continues to improve, with the average daily production increasing by 40% between August and November 2008. Despite the improved production levels operational cash breakeven has not yet been achieved. Indications are that operational cash breakeven will be achieved in Q1 of 2009.
Noventa has been affected by the global banking crisis, which has impacted on the Company's existing credit and loan arrangements. As a sign of continued commitment the Company's major shareholders have agreed to inject $5 million of new capital to compensate for these effects. The current state of world equity markets has temporarily delayed the raising of the necessary capital, on acceptable terms, for the procurement and installation of a hard rock circuit at the Marropino mine.
Operating costs continue to be impacted by the delay by the Mozambican national electricity utility in providing line power to the Marropino mine. Line power is now expected in Q2 of 2009 and a recent onsite inspection supports this timetable. As a result of the delay, the Company has had to rely on diesel generators to provide power to its operations, which has resulted in operational costs being 20% higher than if line power had been available. Furthermore, in order for the Company to process the unweathered transitional and hard rock ore which it anticipates to start mining in Q2 of 2010, it needs to procure, construct and commission a hard rock circuit. The construction lead time of the hard rock circuit is 12 months. Should the Company not be able to secure the funding for the hard rock circuit by the end of Q1 of 2009, future production will be significantly impacted should the soft weathered ore be mined out before the hard rock circuit is operational. It is not economically viable to use diesel generators to provide power to the proposed hard rock circuit.
The morganite operation is performing better than anticipated, with 7,000 kilograms having been extracted to date compared to a budget of 5,000 kilograms for the full year. The price being received in is line with expectations.
Tantalum market
In a recent development, the Company notes that the world's largest producer of tantalum concentrate has indefinitely suspended its tantalum operations. It is understood that its customers were unwilling to renew their contracts due to the high asking price.
On completion of the Morrua project, the Company's second most advanced project, Noventa will be well placed to supply a significant portion of these customers' requirements from its mines in Mozambique. As a low cost industrial scale producer the Company is capable of profitably expanding production at prices currently being paid for quality, reliable and legitimate tantalum concentrate.
These recent developments further confirm Noventa's strategy to be one of the world's largest, lowest cost industrial scale suppliers of tantalum concentrate
Issue of Convertible Loan Notes
Noventa has secured subscription undertakings for an additional $5 million in the form of Zero Coupon Convertible Unsecured Loan Notes (the "Convertibles"). The Convertibles will be subscribed in two tranches: $2 million on 15 December 2008 and $3 million on 26 January 2009. The Convertibles are being subscribed by Highland African Ventures Limited and Blackrock World Mining Trust plc, both existing substantial shareholders.
The Convertibles have the following principal terms:
Convertible into 22,296,544 ordinary shares (representing 36.1% of the post conversion issued share capital) at an effective 15p per share.
Convertible at the holder's discretion or the Company's discretion into ordinary shares at any time following the passing of a special resolution of Noventa to approve the issue of the new ordinary shares arising on conversion of the Convertibles. It is expected that the special resolution will be proposed at Noventa's 2009 AGM.
The holder may require some or all of the Convertibles to be repaid in the event of an issue by the Company of new ordinary shares for cash on the basis that the entire proceeds are immediately applied by the holder in subscribing for its entitlement to such new ordinary shares.
If the Convertibles are not converted, the principal amount is repayable on 31 December 2020.
No interest shall be payable by the Company in respect of the Convertibles.
The directors, in consultation with Investec Bank (UK) Limited, their nominated advisor, consider the terms of the transaction to be fair and reasonable insofar as its shareholders are concerned.
15 December 2008
For further information please contact:
Clinton Wood
Noventa Limited
+27 (0) 82 880 3392 / +27 (0) 11 823 1400
www.noventa.net
Gerard Kisbey-Green
Investec Investment Banking
+44 (0) 20 7597 5167
Gareth Tredway / Ed Portman
Conduit PR
+44 (0) 20 7429 6612 / +44 (0) 7785 974264
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