Tertiary Minerals Regulatory News (TYM)

30 Mar 2006 07:00

Tertiary Minerals PLC30 March 2006 Tertiary Minerals plc 30 March 2006 SAUDI INDUSTRIALISTS SIGN JV AGREEMENT TO EXPLOIT WORLD'S LARGEST TANTALUM DEPOSIT • Ghurayyah Deposit Planned To Initially Supply 10% Of World Annual Demand • Uranium Content Worth US$12/Tonne In Situ To Be Evaluated In Ongoing Studies • Soft Loans For US$100m Project May Require Tertiary To Find Only 6.5% Funding Tertiary Minerals plc ("Tertiary" or "the Company") announces that its Saudipartners ("the Consortium") have now signed the Joint Venture Agreement for theUS$7 million funding of feasibility studies for the development of the Company'sworld-class Ghurayyah tantalum-niobium project in Saudi Arabia. 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. The Joint Venture Agreement follows from the Preliminary Agreement announced on7 December 2005 whereby the Consortium subscribed £500,000 for 5,000,000 newordinary shares in Tertiary Minerals plc at a price of 10 pence per share(representing a 100% premium over the then current market price). As a result ofthe Joint Venture Agreement the cost of the Preliminary Feasibility Study,estimated at US$2,000,000 will be funded US$300,000 by Tertiary, US$850,000 froman immediate issue to the Consortium of zero-coupon convertible loan notes and afurther US$850,000 immediate direct contribution to the joint venture accountfrom the Consortium. The loan notes will be convertible to ordinary shares inTertiary at any time prior to completion of the Preliminary Feasibility Study ata price equal to the higher of 15p per share or 80% of the weighted averagemarket price in the 30 days prior to conversion. The full conversion of the loannotes would result in the Consortium holding a 15% interest in the enlargedissued share capital of Tertiary given their existing interests in the Company.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. Assuming successful completion of these studies a special purpose vehicle,funded and owned equally by Tertiary and the Consortium, will be incorporated todevelop the Ghurayyah deposit. In arranging financing for construction theproject partners will seek to maximise the benefit of favourable debt fundingavailable in Saudi Arabia, including that from the Saudi Industrial DevelopmentFund and the Al Yamamah Offset programme, which could reduce Tertiary's projectequity requirement to as little as 6.5% of the US$75-100 million total capitalcosts of the project estimated in the 2003 Scoping Study. Commenting today, Mr Patrick Cheetham, Executive Chairman of Tertiary said: "Weare delighted to have entered into this Joint Venture with strong financialpartners who are committed to the project. We are also grateful for thepractical help our partners are giving us with the work programmes already inprogress and look forward to their continued cooperation and to bringingGhurayyah successfully into production". The work programmes in progress include a 3,000m drill programme to collect asample of approximately 80 tonnes for metallurgical processing testwork and toprovide data for resource upgrading. The feasibility studies will also evaluatethe potential value of the uranium and rare-earth minerals that are known tooccur at Ghurayyah. Whilst previous resource estimates at Ghurayyah (InferredMinerals Resource of 385 million tonnes) did not include an estimate of theuranium grade, uranium is known to be present at consistent levels and theaverage uranium content of drill samples on which the resource estimate wasbased is 133ppm (or 0.3 lb/tonne) U3O8 - a grade which has a current equivalentin-situ value of over US$12 per tonne of ore. Importantly uranium was recoveredalongside tantalum and niobium in the mineral concentrates produced in previoustestwork. These concentrates also contained 6% Y203 (yttrium oxide) a rare-earthelement used in electronics, the value of which is yet to be evaluated. Tantalum Background Tantalum has the ability to store and release electronic charge and its main useis 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, DVDs 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 demand isexpanding. With the development of China's processing and electronicsindustries, demand has recovered to its pre-bubble record levels. Raw materialdemand is currently 5,000,000 lbs/year tantalum pentoxide and growing at anestimated 5-8% per year, after averaging over 8% annual growth in 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 soon be depleted 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)1625-626203Ron Marshman/John Greenhalgh, City of London PR Limited. Tel: +44 (0)20-7628-5518 The information in this release has been compiled and reviewed by Mr. PatrickCheetham (MIMMM, MAusIMM) who is a qualified person for the purposes of the AIMGuidance Note for Mining Oil & Gas Companies issued on March 16, 2006. MrCheetham is a Member of the Institute of Materials, Minerals & Mining and also amember of the Australasian Institute of Mining & Metallurgy. The InferredMineral Resource referred to was estimated by SRK Consulting in November 2001 incompliance with JORC. This information is provided by RNS The company news service from the London Stock Exchange