Tertiary Minerals Regulatory News (TYM)

7 Dec 2005 11:30

Tertiary Minerals PLC07 December 2005 TERTIARY MINERALS PLC SAUDI COMPANIES BACK TERTIARY WITH FUNDING PACKAGE FOR GHURAYYAH FEASIBILITY STUDIES • US$7m Financing Includes Placing of 5 Million Tertiary Shares At 100% Premium • Tertiary To Retain 50% of World's Largest Tantalum Project after Bankable Feasibility Study • Local Project Financing Environment May Minimise Equity Requirement On US$100m Project Tertiary Minerals plc ("Tertiary" or "the Company") is pleased to announce thatit has signed a Preliminary Agreement with a consortium of Saudi Arabianinvestors ("the Consortium") that will provide a funding package of up to US$7million for the completion of Preliminary and Bankable feasibility studies forthe development of the Company's world-class Ghurayyah tantalum-niobium projectin Saudi Arabia. Assuming successful completion of these studies a specialpurpose vehicle, funded and owned equally by Tertiary and the Consortium, willbe incorporated to develop the Ghurayyah deposit. The Consortium comprises two of Saudi Arabia's leading family companies -A.H.Algosaibi & Bros. Co. and AlNahla Trading & Contracting Co. Both arediversified industrial companies with a range of domestic and internationalbusiness interests. This joint venture is believed to be the first mineralsbased joint venture to be established between Saudi and foreign companies underthe terms of the current Saudi Investment Code and the newly introduced MiningCode. Under the Preliminary Agreement the Consortium will immediate subscribe £500,000for 5,000,000 new ordinary shares in Tertiary Minerals plc at a price of 10pence per share, representing a 100% premium over the current market price. Theparties will then seek to implement a binding joint venture agreement based onthe terms of the Preliminary Agreement whereby the cost of the PreliminaryFeasibility study, estimated at US$2,000,000 will be funded US$300,000 byTertiary, US$850,000 from the issue to the Consortium of zero-coupon convertibleloan notes and a further US$850,000 direct contribution to the joint ventureexpenses from the Consortium. The loan notes will be convertible to ordinaryshares in Tertiary at any time prior to completion of the PreliminaryFeasibility Study at a price equal to the higher of 15p per share or 80% of theweighted average market price in the 30 days prior to conversion. The shareplacement and full conversion of the loan notes would result in the Consortiumholding a 15% interest in the enlarged issued share capital of Tertiary.The costs of a subsequent Bankable Feasibility Study, estimated at US$5 million,will be met 90% by the Consortium and 10% by Tertiary by direct contribution tojoint venture expenses. On construction, the project partners will seek to maximise the benefit offavourable debt funding available in Saudi Arabia, including that from the SaudiIndustrial Development Fund and the Al Yamamah Offset programme, which couldreduce Tertiary's project equity requirement to as little as 6.5% of theUS$75-100 million total capital costs of the project estimated in the 2003Scoping Study. Commenting today, Mr Patrick Cheetham, Executive Chairman of Tertiary said:"This agreement is a major step forward in unlocking the huge potential of theGhurayyah deposit. The agreement comes at a time when the tantalum market hassubstantially recovered from the volatility of the year 2000 'electronicsbubble' and demand is now growing at 5-8% per year. I believe that Ghurayyah hasthe potential to become a significant supplier to this exciting market and Ilook forward to working with our new partners to bring Ghurayyah to production." Tantalum Background Tantalum's has the ability to store and release electronic charge and its mainuse is in the manufacture of capacitors, components that regulate the flow ofelectricity in electronic circuit boards. Capacitors are widely used in mostelectronic devices, especially mobile phones, digital cameras, DVD,s gamingplatforms and laptops. Being inert, with a high melting point, tantalum is also used in medicalimplants and in special alloys for the aerospace industry where the markets arealso expanding. With increasing demand from China as its processing andelectronics industries develop, demand has recovered to its pre-bubble recordlevels. Raw material demand is currently 5,000,000 lbs/year tantalum pentoxideand growing at an estimated 5-8% per year, after averaging over 8% annual growthin the 1990's. Major Western raw material processors currently source the majority of their rawmaterial supply on long-term contracts from Sons of Gwalia's hard-rock miningoperations in Western Australia. Another significant supplier of raw materialsto the market is the U.S. Defence Logistics Agency, which traditionally sellsaround 500,000lbs per annum of tantalum pentoxide in concentrates. However, itsstockpile will be depleted within 12 months at current disposal rates. Ghurayyah Project Tertiary Minerals plc's Ghurayyah Ta-Nb-Zr-U-REE(tantalum-niobium-zircon-uranium-rare-earth element) deposit is located in NWSaudi Arabia, 55km from the Red Sea port of Dhuba. An Inferred Mineral Resourceof nearly 400 million tonnes grading 245 grammes/tonne of Ta2O5 and 2,840grammes/tonne of Nb205 is defined by drilling of a 900m diameter plug ofmineralised granite, open at depth. The deposit exhibits remarkable gradecontinuity, no internal waste, and can be extracted by cheap open-pit miningmethods. The fine-grained Ta and Nb containing ore-minerals can be concentratedby flotation with good recoveries with subsequent magnetic separation of azircon by-product. A number of different processing routes have been consideredfor production of marketable products, including a Fe-Nb-Ta alloy. A detailedeconomic and technical scoping study suggests the deposit has commercialpotential as a future source of supply of tantalum, niobium and zircon rawmaterials and at an extraction rate of 1.5 million tonnes/year would have a minelife of over 200 years. The extraction of significant contents of uranium andrare-earth-element has yet to be evaluated. For further information please contact: Patrick Cheetham, Executive Chairman, Tertiary Minerals plc. Tel: + 44 (0)1625-626203 Ron Marshman/John Greenhalgh, City of London PR Limited. Tel: +44 (0)20-7628-5518 This information is provided by RNS The company news service from the London Stock Exchange