Tertiary Minerals Regulatory News (TYM)

27 Oct 2005 07:00

Tertiary Minerals PLC27 October 2005 TERTIARY MINERALS PLC QUARTERLY REPORT ON ACTIVITIES FOR THE PERIOD ENDED 30 SEPTEMBER 2005________________________________________________________________________________ INTRODUCTION This report gives details of corporate developments, the results of explorationand development work carried out by Tertiary Minerals plc ("Tertiary Minerals"or "the Company") and significant developments reported by its associate SunriseDiamonds plc ("Sunrise Diamonds") during the quarter ended 30 September 2005 andup to the date of this report. CORPORATE Sunrise Diamonds plc Associated company Sunrise Diamonds continues to report good progress from itsKuusamo diamond exploration project in Finland. Since the date of the lastquarterly report Sunrise Diamonds has made two announcements advising : • The discovery of two new kimberlites in the Kuusamo project whilst drill testing Anomalies 45 and 47 • The recovery of 5 micro-diamonds from a 23kg sample of the kimberlite discovered at Anomaly 45 Sunrise Diamonds shares continue to trade at a premium to the issue price at thetime of Admission to trading on AIM. Tertiary Minerals currently holds20,000,000 ordinary shares in Sunrise Diamonds (26.53% of the issued capital). Sunrise Diamonds shares management and office facilities with Tertiary Mineralsplc for the time being. This provides cost advantages to both companies. TANTALUM PROJECTS The Company has recently presented a paper at the Tantalum and Niobium WorldSymposium in Thailand organised by the Tantalum and Niobium International StudyCentre (TIC). The abstract of this paper entitled "The giant Ghurayyah tantalum-niobiumdeposit, Saudi Arabia - a future source of raw materials" is appended to thisreport and a complete copy of the Company's presentation can be found on theCompany's website www.tertiaryminerals.com. Tantalum Market Participation in the TIC Symposium allows the Company to update shareholders oncurrent tantalum market conditions and developments. Presentations made at the Tantalum and Niobium World Symposium confirm that themarket for tantalum has now recovered to the record volumes of the year 2000volumes following the bursting of the "tech" bubble in 2000/2001. Demand fortantalum raw materials is currently running at 6 million pounds (lbs) per annumTa2O5. After a strong recovery last year, anecdotal evidence suggests that the rise inspot prices for tantalum has stalled in recent months whilst processorinventories remain above normal levels. Spot prices account for a relativelysmall percentage of overall tantalum raw material sales with most sales beingmade on long-term take-or-pay contracts at higher than current spot prices. The structure of the raw material processing industry (i.e. the customers forthe Company's future tantalum production) continues to evolve, with increasingdemand from China for tantalum raw materials as its domestic processing andelectronics industries develop. Most Chinese raw material demand is met by thespot market and is mainly sourced from Africa, often from organised artisanalmining activities on alluvial or soft, weathered-rock tantalum and niobiumdeposits. These sources have natural supply and expansion limitations. The majorWestern raw material processors currently source the majority of their rawmaterial supply on long-term contracts from Sons of Gwalia's Australian highercost hard-rock mining operations in Australia. A significant supply of rawmaterial, the US Defence Logistics Agency (DLA) stockpile, which traditionallysupplies approximately 500,000 lbs per annum of Ta2O5 in concentrates, will bedepleted within 12 months at current disposal rates. The market for tantalum has historically grown at 8% per annum and whilst thecurrent growth-rate is unclear, the mid-range estimate presented by Sons ofGwalia suggests 5% per annum at present. Tantalum's main use is in themanufacture of capacitors where the trend to smaller case sizes has led toreduced tantalum consumption per capacitor unit. However this reduction in unitconsumption is offset by the need for an increased number of capacitor units ineach operating device (e.g. mobile phones and gaming platforms) to deliver theirever-increasing functionality. Strong growth for tantalum is also coming fromthe semiconductor chip manufacturing industry where the trend to substitutecopper for aluminium in wiring lines requires a tantalum coating. Another stronggrowth market for tantalum is for use in medical applications. The market for niobium, another important component of the Company's Ghurayyahore, continues to grow strongly on the back of strong demand for ferro-niobiumuse in steel, the dominant market for niobium. Annual niobium demand iscurrently 120,000,000 lbs per annum and raw material prices remain stable. Ghurayyah - TantalumSaudi Arabia - Tertiary Minerals 100% During the quarter work commenced on the Preliminary Feasibility Study forGhurayyah. This study will include metallurgical testwork designed to optimisethe process flow sheet, resource upgrading and further financial, technical andmarketing studies. Seven tonnes of representative mineralised material from previous drillingprogrammes has been assembled in Jeddah for shipment to selected metallurgicallaboratories for further metallurgical testwork. The full scope of further preliminary and bankable feasibility studies is beingfinalised by St. Barbara Consulting. SRK Consulting has designed a programme offurther drilling and sampling to upgrade the current large Inferred MineralResource of 385 million tonnes to Indicated Resource Status and to allow 20years of reserves to be established on finalisation of a feasibility study. The current market dynamics in the tantalum industry are considered by theCompany to be very positive for the orderly development of the Ghurayyahproject: • Manufacturers of electronic circuitry are concerned that there is no long-term stable supply of tantalum. These fears lead directly to the tantalum price bubbles including that in the year 2000. Ghurayyah has a projected mine life of over 200 years at the scoping study level of production. • The need for further diversity in the raw material supply chain is heightened by the fact that Sons of Gwalia remains in Administration. • The long-term growth in the market for tantalum and the depletion of a significant raw material source in the DLA stockpiles provides an opening for new producers to enter the market without creating an oversupply in the short term. Further meetings and negotiations have been taking place in the UK and in SaudiArabia with parties interested in funding the further feasibility studies on theCompany's world-class Ghurayyah tantalum-niobium project. These discussions havebeen positive and we are hopeful of concluding an attractive joint ventureagreement. BASE METAL PROJECTS Nottrask Nickel ProjectSweden - Tertiary Minerals 100% Last quarter it was reported that a drill programme to test possible sulphideconductors for nickel-copper mineralisation was curtailed after preliminaryassays from the first drill hole, which intersected multiple narrow (10cm andless) bands of massive sulphides within a 50m wide zone, returned only lownickel and copper values (but elevated values in platinum and gold). More comprehensive assaying of this massive sulphide zone has now beencompleted. The dominant sulphide is pyrrhotite and assay results for nickel andcopper were uniformly low and no higher values in gold or platinum were found. Based on detailed core logging it is now considered that the new zone ofsulphide mineralisation discovered by the recent drilling is the result ofassimilation of barren sulphide-bearing sedimentary rocks into the interior ofthe Nottrask intrusion. No further work is planned for this zone. OTHER PROJECTS No work was carried out on the Company's other base metal and gold projectsduring the quarter but further work programmes are planned. Patrick Cheetham 27 October 2005Executive Chairman 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 ________________________________________________________________________________ The Giant Ghurayyah tantalum-niobium deposit, Saudi Arabia - a future source of raw materials. ABSTRACT Tertiary Minerals plc's Ghurayyah Ta-Nb-Zr-U-REE deposit is located in NW SaudiArabia close to the Red Sea. An Inferred Mineral Resource of nearly 400 milliontonnes grading 245 grammes/tonne of Ta2O5 and 2,840 grammes/tonne of Nb205 isdefined by drilling of a 900m wide plug of mineralised granite, open at depth.The deposit exhibits remarkable grade continuity, no internal waste, and can beextracted by cheap open-pit mining methods. The fine-grained Ta and Nbcontaining ore-minerals can be concentrated by flotation with good recoverieswith subsequent magnetic separation of a zircon by-product. A number ofdifferent processing routes have been considered for production of marketableproducts, including a Fe-Nb-Ta alloy. A detailed economic and technical scopingstudy suggests the deposit has commercial potential as a future source of supplyof Ta, Nb and zircon raw materials and a mine life of over 200 years.Significant contents of U and REE have yet to be evaluated. Theproject-financing regime in Saudi Arabia is very favourable with Governmentfunding and a new mining code supporting the development of the project iffeasibility studies, now in progress, are positive. ________________________________________________________________________________ This information is provided by RNS The company news service from the London Stock Exchange