Final Results

Noventa Limited

("Noventa" or the "Company")

Unaudited Preliminary Final Results for the Year Ended 31 December 2010

3 February 2011

Dear Shareholder,

2010 has been an important year for the Noventa Group. The new Board, appointed in 2009, faced many challenges, the most important of which was the need to re-establish a coherent strategy for producing tantalum concentrate, on a profitable basis, through improving the efficiency of our recovery process.

During 2010, despite a difficult economic climate, the Group raised $35.1 million (before expenses) through equity issues. These funds will be used to part finance the enhancement and substantial expansion of our mining and processing capacity. The Group requires a further $10 million to fund its proposed expansion, and will either borrow these funds from two European Development banks by way of a secured term loan for which it has received a term sheet, or by a combination of issuing Unquoted Redeemable Unsecured Convertible Shares and funds from warrant holders exercising their outstanding warrants.

During 2010, the Group recovered $502,000 of Mozambique Value Added Tax, which had previously been written off, and we have an expectation of recovering a further $638,000 in due course. The Group also raised a further $1,111,000 on the sale of its consignment stocks of morganite and terminated the agreement with its distribution partner.

There is a growing demand for tantalum concentrate. From the time I became Chairman, the spot price of Tantalum concentrate rose from $37 per lb contained Ta2O5 to around $120 per lb contained Ta2O5. In the summer, the Group entered into an off take agreement with H.C. Starck GmbH of Germany, which is in addition to the renegotiated off take agreement we already had with Cabot Corporation Inc. based in the USA.

In April, we recommenced operations at our open pit mine at Marropino, on a limited scale industrial basis to test processes and procedures, using tailings (discarded material from previous operations). Results have exceeded expectations. Recovery has been consistently greater than 51%, despite the age of the existing process plant and the fact that we have only used the tailings material which had a relatively low grade of 118 ppm1. As a consequence, five shipments of tantalum concentrate were dispatched to our off take customers from the Mozambique ports of Quelimane and Nacala, which are less than one day's drive from the Mine and the Company is now confident it has a proven and robust tantalum concentrate export process.

During 2010, the Group generated sales of $2,301,000 (including the sale of its consignment stock of morganite), against which it reported a gross loss of $2,294,000.

Throughout the year we developed our strategic plan for the re-establishment and expansion of production at Marropino. This will be conducted in two phases:

·; In Quarter 1 - 2011, the re-opening of the pit where the average grade is 223 ppm, the introduction of an interim comminution (crushing) circuit and the move to full 24 hour, 7 days a week operations. This is expected to increase production from 50,000 lbs p.a. to ca.200,000 lbs p.a. of contained tantalum (Ta2O5), bringing us closer to break-even.

·; In Quarter 3 - 2011, the commissioning of a new, fully-upgraded, processing plant which is expected to be capable of producing more than 600,000 lbs p.a. of Ta2O5 contained in tantalum concentrate, pushing the Group into profitability. We also plan to bring our two concessions at Morrua and Mutala into production as soon as practicable. Given the current strong market for tantalum, the Group is examining the case for accelerating the production at Morrua, where we have an estimated 3.6 million tons of contained Ta2O5 resources providing an expected 7 to 8 year mine life.

_________________

The Group aims to be a major, low cost, sustainable producer of tantalum concentrate, expanding its resources wherever possible. In the summer of 2010, the Group sponsored a wide-ranging exploration project in cooperation with the University of Glasgow and Universidade Eduardo Mondlane of Maputo. The project included a full review of the geological potential of our mining concessions and exploration licences in Mozambique. This work resulted in the discovery of Marropino South, and subsequently the Marropino South Pegmatite and the Marropino Extension, all of which are now being evaluated. It is intended that work will be continued to explore all these areas for tantalum and other minerals, such as rare earths and lithium.

We have successfully relocated our operational headquarters from Johannesburg to Maputo in order to be nearer to our operations in Zambezia Province. This has also helped to forge closer ties with both the Government of Mozambique and the Provincial Government in Quelimane as well as helping to resolve several legacy issues, which has created a stronger reputation in Mozambique for Noventa and its principal operating subsidiary, Highland African Mining Company Limitada ('HAMCL').

The success of our plan depends much on the community in which we operate. Accordingly, we have adopted a strong social and environmental policy, supporting the local community at Marropino, and "putting something back in return for what we take out of ground". In November, building on the success of the primary school which we had constructed at Marropino, and the drilling of boreholes which deliver clean water to the Marropino Village, we opened a new medical clinic serving the Village and surrounding area. Our paramedic at the Mine has treated many cases of malaria both at the Mine and in the Village. We have allocated land, close to our Namarra Dam, offered technical support to develop farms, and repaired a number of dams in the area which had fallen derelict. All this has been achieved at a relatively low cost, but has been extremely well received by the villagers. We also aim to introduce a further scheme between the University of Glasgow and Universidade Eduardo Mondlane, Maputo, which will bring doctors and medical students to operate at the new clinic in Marropino, with the nurses being provided by the Government of Mozambique. We are now perceived by the Government and people of Mozambique to be a "good corporate citizen", continuing to meet our social and environmental responsibilities.

This year we have strengthened both the Board and the Management Team. We are delighted to welcome Leslie Heymann, who is a professional engineer with more than three decades of experience in mining as well as introducing innovations to increase plant efficiency and recovery. In the summer, John Allan relinquished his position as interim CEO, but remains on the Board and has agreed to take the new role of Project Director, overseeing the delivery of the new process plant upgrade. Patrick Lawless became Chief Executive Officer and a Director, previously having been Chief Operating Officer. Early in the year, Daniel Cassiano-Silva, formerly seconded from Deloitte LLP, joined as Chief Financial Officer. Mr Delio Darsamo became general mine manager in February and was elected to the Board of Directors of HAMCL. We believe we are the only mining company in Mozambique whose mine general manager, is a citizen of Mozambique. Mr Neville Norris was also appointed as metallurgical manager and elected to the Board of HAMCL. The composition of the Management Team, all of whom are based in Mozambique and speak Portuguese, reflects our determination to build a strong and sustainable presence in Mozambique.

At the end of the year, we fulfilled a key commitment to our shareholders by listing our shares on the Toronto Stock Exchange. By doing so, we expect to benefit considerably from trading on a stock market in which mining is a major activity, and where the importance of rare metals and rare earths is well understood.

Our achievements in 2010 would not have been possible without the dedicated work of the Management Team and all our employees. The Management Team, led initially by John Allan and more recently by Pat Lawless, has shown an example without which the Group could not have achieved its current position. I would like to thank the members of the Board, our advisors, contractors, partners and other stakeholders for their commitment and continued support during 2010. I look forward to a year of further progress as we move into substantially increased and profitable production.

In conclusion, I believe that the many achievements that we have recorded this year provide encouraging signs that our strategy is valid and our recovery plan is well under way. I would like to thank our existing shareholders and new investors for their continued support and for the key role they are playing in enabling us to become one of the world's largest, low cost, producers of conflict-free tantalum concentrate.

Eric Kohn TD

Chairman 

BASIS OF PREPERATION AND RESPONSIBILITY STATEMENT FOR THE PRELIMINARY ANNOUNCEMENT

The Directors are required to prepare Group financial statements in accordance with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board ('IASB') as required by The Toronto Stock Exchange and by the AIM rules of the London Stock Exchange (the 'AIM rules'). The Group financial statements are also required by law to be properly prepared in accordance with the Companies (Jersey) Law 1991, as amended.

The financial information set out in the announcement does not constitute the Group's statutory accounts for the years ended 31 December 2009 or 31 December 2010. The financial information for the year ended 31 December 2009 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors have reported on the financial year 2009 accounts: their report was unqualified, despite drawing attention to an emphasis of matter concerning the going concern of the Group and Company and did not contain statements under article 113B (3) or (6) of the Companies (Jersey) Law 1991 (as amended). The audit of the statutory accounts for the year ended 31 December 2010 is not yet complete. While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ('IFRS's), this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full financial statements that comply with IFRSs and are based on the financial information in this preliminary announcement, this month (February 2011) which will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The financial statements have been prepared on the historical cost basis, except for certain financial instruments and share based payments. There has been no change in the principal accounting policies adopted by the Company from those disclosed in the Company's financial statements for the year ended 31 December 2009. The financial statements have been prepared on a going concern basis for the reasons outlined in the 'Going Concern' section of the Directors' Report and Management Discussion & Analysis.

The responsibility statement below will be included in the Company's full annual report for the year ended 31 December 2010, once finalised. Certain parts thereof are not included within this announcement. We confirm to the best of our knowledge:

·; the financial statements, prepared in accordance with IFRSs, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the Group consolidation taken as a whole; and

·; the management report, which is incorporated into the Directors' report and management discussion & analysis, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.

This responsibility statement was approved by the board of directors on 2 February 2011 and is signed on its behalf by:

All results derive from continuing operations. The loss for the financial year and total comprehensive loss are wholly attributable to equity holders of the parent company.

 UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010

NOTES TO THE PRELIMINARY ANNOUNCEMENT

1. GENERAL INFORMATION

Noventa Limited is a company incorporated in Jersey, the Channel Islands under the Companies (Jersey) Law 1991, as amended, with registered number 95036. Further details, including the address of the registered office is given on the Company's website at www.noventa.net. The nature of the Group's operations and its principal activities are set out in the business review section of the Directors' report and management discussion & analysis.

The financial information is a consolidation of the Company and its subsidiaries. This information presented in United States Dollars ('US$' or '$') because that is the currency of the primary economic environment in which the Group operates. Foreign operations are included in accordance with the policies set out in note 3 to the Group's financial statements for the year ended 31 December 2009.

2. REVENUE

An analysis of the Group's revenue is as follows:

Tantalum concentrate sales

During 2010 the Group sold 89,000 lbs of tantalum concentrate containing 23,000 lbs of Ta2O5.

Three shipments were completed via the port of Quelimane, Mozambique, to H C Starck GmbH in Thailand realising revenue of $690,000. Two shipments were completed via the port of Nacala, Mozambique, to Cabot Corporation Inc. in the United States of America realising revenue of $500,000. These shipments have confirmed the viability of these ports in Mozambique for exports to the Group's customers.

Morganite sales

During Quarter 1-2010, the Group reached agreement with LJ International Limited for the sale of consignment stock held by Goldleaves Trading Limited and Miranda Gems (HK) under the Morganite Joint Venture Agreement between the Group, and these parties. The Morganite Joint Venture Agreement has been terminated, with payment of $1,000,000 received by the Group for the sale of the consignment stock.

Additionally, the Group realised revenue of $111,000 through the bulk sale of the Group's remaining rough Morganite inventory held at the Marropino Mine.

The weighted average number of Ordinary Shares for 2010 and 2009 excludes 1,743,928 shares held by the Noventa EBT.

Subsequent to 31 December 2010, the Group has issued 2,803,747 Ordinary Shares. Further details are disclosed in the section of the Directors report and management discussion & analysis titled 'Capital stock'.

6. RELATED PARTIES

The following represents a list of the subsidiaries of the Company, all of which are 100% owned in the Group:

Highland African Ventures Limited is a related party of the Company by virtue of its significant shareholding in the Company. Fleming Family & Partners (Suisse) AG and Bridgewater Pension Trustees Ltd A/C Pathfinder Private Pension No. 0450 are related parties of the Company by virtue of their relationship with Mr. R J Fleming, who has a significant shareholding in the Company. Highland African Ventures Limited is owned by a trust whose trustee is Fleming Family & Partners Liechtenstein and Mr. R J Fleming is one of the potential beneficiaries. As at the date of this report Fleming Family & Partners Liechtenstein has a total interest, including through Highland African Ventures Limited, in a total of 89,203,154 shares (17.59% of the issued Ordinary Shares). As at the date of this report Mr. R J Fleming has an interest, including through Highland African Ventures Limited, in a total of 85,208,892 shares (16.80% of the issued Ordinary Shares).

Barons Financial Services SA, Barons Financial Services Limited, Barons Financial Services (UK) Limited, Ekasure Limited, Carey Olsen, Goldline Global Consulting (Pty) Limited, Hainstech Engineering Company Limited and IGAS Research are related parties to the Group by virtue of common directorship / employment as follows:

All related party transactions are transacted on an arm's length basis, in accordance with standard commercial terms applicable to the type of transaction.

DIRECTORS' REPORT AND MANAGEMENT DISCUSSION & ANALYSIS

This Directors' report and management discussion & analysis ('MD&A') has been prepared as of 2 February 2011 and should be read in conjunction with the financial information included in the Group's preliminary announcement and notes thereto for the year ended 31 December 2010.

Listing details

Noventa is a Jersey company listed on the AIM Market ('AIM') of the London Stock Exchange under symbol NVTA and the Toronto Stock Exchange ('TSX') under symbol NTA. On the TSX, Noventa has Designated Foreign Issuer status.

Principal activities

Noventa's principal activity is the production of tantalum concentrate. Tantalum is a rare heavy metal that is used in the manufacture of electronic capacitors, turbine blades, medical applications, and industrial cutting tools.

The wholly owned Mozambican subsidiary of Noventa, Highland African Mining Company Limitada, holds title to mining concessions at Marropino, Morrua and Mutala in the Zambezia province of Mozambique and exploration licences over various adjacent areas. The mining operations are currently at the Marropino Mine which has been operated by the Group intermittently since 2003, but was placed in care and maintenance in May 2009. Operations at the Marropino Mine recommenced in April 2010 on a deliberately limited industrial scale to test improvements to the process, and to train personnel. These personnel will be used to train others when full scale operations start. The Directors anticipate that the Marropino Mine will commence production from the primary hard rock deposit at Marropino in February 2011, with full production capacity in excess of 600,000 lbs per annum of contained tantalum achieved once the upgraded processing plant is commissioned in Quarter 3-2011.

In addition to tantalum, the Marropino ore body also contains a pink beryl gemstone commonly known as morganite. The morganite is associated with the quartz waste in the ore body and is extracted only as and when encountered.

BUSINESS REVIEW

Strategic plan and outlook

On 10 June 2010 (updated 22 December 2010) the Board of Directors approved a new three year strategic plan (the 'Plan') designed to optimise the profitability, cash generation and sustainability of the Group, enhancing value for shareholders.

The core development aspects of the Plan are:

·; to upgrade the Marropino plant capacity to more than 600,000 lbs of contained tantalum in concentrate per annum during 2011 (refer to the section of the MD&A titled 'Process plant upgrade');

·; to broaden the customer base for the Group's tantalum concentrate and increase the average selling price (refer to the section of the MD&A titled 'Sales contracts');

·; to upgrade the capability and infrastructure of the Marropino plant to handle material from the Group's Mutala, Morrua and other surrounding sites during 2011 (refer to the section of the MD&A titled 'Process plant upgrade');

·; to bring Morrua into production by 2012, and work towards bringing Mutala into production as soon as practicable, but no later than 2015, leveraging off the infrastructure at Marropino in both cases (refer to the section of the MD&A titled 'Mineral resources, exploration sites and geological outlook); and

·; to complete further geological exploration on the mining concessions and exploration licences held by the Group to assess the existence of economic Ta2O5 deposits, or other materials (refer to the section of the MD&A titled 'Mineral resources, exploration sites and geological outlook).

The Board is satisfied with the progress against the Plan to date.

Mineral resources, exploration sites and geological outlook

The Group holds mining concessions and mining licences in the Alto Ligonha Pegmatite Belt of Zambezia Province in Mozambique, grouped at Marropino, Morrua, Mutala, Gilé and Ginama. The most geologically well understood properties are Marropino and Morrua.

On 27 September 2010, the mineral resources of the Group were estimated by Scott Wilson Roscoe Postle Associates Inc. for the purposes of their NI 43-101 report (the 'Scott Wilson 2010 report') which was a pre-requisite for the Company's listing on the TSX. The results were:

Notes:

1. CIM definitions were followed for Mineral Resources

2. Mineral Resources are estimated at cutoff grades of 150 ppm Ta2O5

3. Mineral Resources for Marropino are estimated using a base price of $60.32/lb Ta2O5 and for Morrua using a price of $45.50/lb Ta2O5

4. A minimum mining thickness of 2 meters was used

5. Includes 1.69 MM t @ 470 ppm Ta2O5 in-situ ore and 1.43 MM t @ 300 ppm Ta2O5 stockpiled oversize material

The Group intends to initially exploit the Marropino deposit (the 'Marropino Ore Body') and subsequently, once the Marropino Ore Body (and any satellite resources - see below) is exhausted, move to full scale mining at the Morrua deposit commencing with the oversize stockpiles and subsequently the hard rock deposit. Pre-concentrate produced at Morrua will be transported to Marropino for final concentration. The Scott Wilson 2010 report was limited to a review of the Mineral Resources at Marropino and Morrua. In Quarter 2-2011, it is intended to complete further geological work at Mutala with an updated NI 43-101 report. Subject to the completion of further geological studies at Mutala, which the Group believes is the most advanced and well understood of the Group's additional sites, the Group intends to supplement the feed for Marropino with a pre-concentrate from Mutala.

In addition to the Marropino, Morrua and Mutala concessions, the Group has various sites with significant exploration potential at Ginama, Gilé, and the satellite pegmatites and surficial deposits at Marropino. Of particular interest currently are the sites surrounding the Marropino pegmatite due to the significant impact that these sites may have on the Marropino life of mine.

Of the Marropino surficial deposits, the Marropino South deposit lying two kilometres South East of the Marropino Mine and measuring approximately one kilometre square is potentially of significant interest. During Quarter 3-2010, samples from three pits at Marropino South were independently assayed and reported tantalum grades of 2,697 ppm, 3,836 ppm and 7,577 ppm. These compare to the average 223 ppm of the Marropino Ore Body. The Company is currently working on a detailed evaluation of the Marropino South site and has embarked on a programme of dense pit sampling to define the extent and quality of the Marropino South tantalum deposit. In addition to the initial sampling programme, a grid of 56 sampling pits was laid out in an area of 140m x 160m, with a pit spacing of 20m. Bulk samples of about 200 kg are now being extracted from the pit walls and being treated in a new and small (pilot scale) processing plant to produce concentrate for further analysis at an independent laboratory. Results are expected in Quarter 1-2011.

Exploration work at Marropino South has shown that this surficial deposit results from the erosion of a 700m long pegmatite outcrop, covering an estimated area of about 7.4 hectares (the "Marropino South Pegmatite"). The width and depth of the pegmatite and the grade of the tantalite mineralisation contained therein and its distribution within the pegmatite have not yet been defined. Noventa is undertaking exploration work on the Marropino South Pegmatite, which commenced in January 2011, consisting of trenching and bulk sampling. If results are encouraging, a programme of drilling to test the deposit at depth will be initiated. Results from the exploration programme are anticipated to be available during Quarter 2-2011.

Ongoing geological studies undertaken by the Company have identified that the Marropino Ore Body extends for an estimated further 550m to the North East with a width of between 60m and 80m (the "Marropino Extension"). This extension of the Marropino Ore body is particularly hard to distinguish; half of the area is covered with tailings dump material from the mine, the rest is covered with bush and deeply weathered material. Despite this, it has been possible to trace this North East extension by outcrops along a 2m - 3m deep drainage channel on the site and by artisanal mining works on the flanks of the pegmatite. The extent of the tantalite mineralisation and the distribution and grade of tantalite in relation to the known zones of the main pegmatite will be tested by a diamond drilling programme, with results expected in early Quarter 2-2011.

Operations Overview

The Group has operated from a single mine in Marropino, Mozambique since 2003. The productivity and profitability of operations were significantly lower than expectation since production began, with failure to achieve a profit in any year of operation. The continuing operating losses at the Marropino Mine led to it being placed in care and maintenance in May 2009. From July 2009 a new Board and Management Team led by the Chairman, Mr E F Kohn TD, and the interim CEO Mr J N Allan, worked on assessing the viability of re-opening the Marropino Mine on a sustainable and profitable basis.

During 2010 the Group has focussed on the following key areas:

·; Recommencing production at the Marropino Mine;

·; Production efficiency and improving recovery rates;

·; Renegotiating and securing medium term sales contracts to take advantage of the rising price of tantalum concentrate and provide security over the revenue forecasts in the Plan;

·; Proving the viability of the Group's supply chain from Mozambique to its customers;

·; Initiating the Group's geological exploration plan across the various mining licenses and concessions to which the Group holds title in Mozambique;

·; Finalising the test and design work for the Marropino process plant upgrade in order to commence the procurement and construction phases of the project;

·; Preparing for 24 hour production and initial mining in the Marropino pit;

·; Obtaining the Company's listing on the TSX; and

·; Securing funding to allow the Group to implement the Plan.

The Marropino Mine recommenced production on 23 April 2010. The restart was deliberately modest using tailings material. Production results to date have surpassed expectation and prove that the current process, with the improvements introduced by the new Management Team, can deliver better results than had previously been achieved. During Half 2-2010 the operation has consistently achieved a recovery rate of 51% compared with an average rate of 30% to 35% achieved before the Marropino Mine was placed in care and maintenance.

In June 2010, the Group successfully renegotiated and signed an amendment to its then sole off-take agreement with Cabot Corporation Inc. which has allowed the Group to reduce annual quantities of tantalum concentrate and sell on a non-exclusive basis to this customer. This has allowed the Group to sell the remaining annual production to other parties, and to benefit from increased market prices and a more diversified customer base.

In July 2010, the Group signed a three year off-take agreement for the sale of a substantial proportion of its projected production of tantalum concentrate with HC Starck GmbH at market related prices at the date of signing. This new off-take agreement has allowed the Group to take advantage of the rising price of tantalum concentrate and reduced the risk of changes in prices on the revenue forecasts in the Plan.

The Group completed its first five shipments of tantalum concentrate during 2010, with three shipments from the port of Quelimane in Mozambique to Thailand and two shipments from the port of Nacala in Mozambique to the United States of America. These shipments have allowed the Group to prove that tantalum concentrate production can reliably be exported from Mozambique, rather than from Walvis Bay in Namibia which was previously used. The Group anticipates significant savings in distribution costs arising from using ports near the Marropino Mine.

During 2010 the Group implemented the initial phase of its geological research plan on its nine mining exploration sites (principally surrounding the Morrua concession) and the less well geologically mapped areas of its concessions to assess the viability of economic extraction of tantalum concentrate from these sites. The initial phase of this geological research was conducted during July and August 2010 in partnership with the University of Glasgow, United Kingdom, and Universidade Eduardo Mondlane, Maputo, Mozambique, involving field work by eighteen students under the supervision of a consultant geologist of the Group. The work undertaken led to the discovery of Marropino South. Subsequent geological exploration at Marropino South has identified the existence of the Marropino South pegmatite and the Marropino Extension (refer to the section of the MD&A titled 'Mineral resources, exploration sites and geological outlook'). These sites will be subject to further exploration work in Half 1-2011 in order to determine their tantalite mineralisation and its grade and distribution. Collectively, these sites have the potential to increase the Marropino life of mine and significantly enhance the economics of the Plan. In combination with the geological work, work commenced in 2010 on updating the Marropino Environmental Impact Assessment ('EIA') and the commissioning of a separate EIA for Morrua and Mutala.

The Marropino process plant upgrade project was initiated in Quarter 1-2010, with the final detailed design stages completed during Quarter 1-2011. In order to achieve commissioning of the new plant by Quarter 3-2011, the Group commenced procurement of key long lead time items for the upgrade such as the spiral banks, transformers and motor control centres ('MCC's). Based on the test and design work to date combined with operational experience, the Group anticipates that the Marropino plant will operate at greater than 47.5% recovery to provide in excess of 600,000 lb per annum of Ta2O5 contained in a concentrate at a minimum contained percentage of 25%.

In preparation for full scale mining once the Marropino process plant upgrade is completed, the Marropino Mine is now operating 24 hours a day and the Group is constructing an interim comminution circuit to allow mining of the Marropino pit from February 2011. The pit has been prepared for mining with the update to the pit optimisation plan and the completion of the hydro-geological study in December 2010. The necessary mobile equipment has been procured, with a Bell D30 Articulated Dump Truck ('ADT') delivered in December 2010, and two CAT 740 ADT's and a CAT 345C Excavator subsequent to the year end in January 2011. A further drill rig has been procured to support the volume of ore that will be processed at Marropino. It is anticipated that production will ramp up with run of mine feed from the pit from February 2011 to an annual equivalent rate of 200,000 lbs of contained tantalum with an associated increase in sales thereafter.

The Company's Ordinary Shares were admitted to listing on the TSX on 23 December 2010, providing access to a broader investor base. Noventa has the status of a Designated Foreign Issuer on the TSX.

Funding for operations and the Marropino process plant upgrade during the year has been from phased shareholder investment, in accordance with the Plan, with total funds committed in 2010 of $34,925,000 (2009: $10,102,000), of which $1,014,000 will be received subsequent to the year end by 31 March 2011. The Group requires a further $10,000,000 to fund its proposed expansion, and will either borrow these funds from two European Development banks by way of a secured term loan for which it has received a term sheet, or by a combination of issuing Unquoted Redeemable Unsecured Convertible Shares and funds from warrant holders exercising their outstanding warrants.

Production

The Group recommenced production at the Marropino Mine on 23 April 2010 on a deliberately limited scale basis, processing material from the tailings dams. Between 23 April 2010 and 30 September 2010 the Group operated a single shift achieving monthly production of around 3,000 lbs of tantalum (contained within concentrate). From 1 October 2010 to 31 December 2010, the Group has operated a second shift in anticipation of operating 24 hours a day in Quarter 1-2011. Production has increased to 4,200 lbs of tantalum (contained within concentrate) per month in December 2010. Total production in 2010 was 27,500 lbs of tantalum (contained within concentrate). While these volumes are relatively low compared with the projected output from the Marropino Mine (once the new processing plant is commissioned), they indicate a significant improvement in the recovery of the tantalum in the ore body compared with the previous mining operations - the Group is consistently achieving recovery rates of 51.0%, which compares with the previous rates achieved of 30.0% to 35.0%. Processing tailings is more technically challenging than processing run of mine material because the feedstock is of a lower quality, so the high recovery rate is encouraging, and underpins the Group's approach to testing each stage of production in a measured and controlled manner in order to optimise the production process and increase overall recovery.

The Group has begun preparation for mining in the pit at Marropino from February 2011, including an update in Quarter 4-2010 of the Pit Optimisation study (commissioned in Half 1-2010) to reflect the production capability of the revised plant design, completion of the hydro-geological study, the repair and procurement of necessary mobile equipment, and the construction of an interim comminution circuit. Mining the pit prior to the full commissioning of the upgraded process plant at Marropino will allow the Group to establish grade control in the pit and ensure that employees have the necessary skills and training. In the short term it will also provide the Group with run of mine material at an average 223 ppm (compared with 118 ppm for the tailings) with an increase in monthly production and sales of tantalum concentrate to an annual equivalent rate of 200,000 lbs contained tantalum.

The Group continues to work to lower the already small levels of radioactive intensity of its tantalum concentrate. As a consequence, it has been possible to reduce the shipping classification of the product to 'Class 7, Exempted Package, UNMO 2910'.

Sales contracts

During Half 1- 2010 the Group had a single exclusive long term off-take agreement with Cabot Corporation Inc. for the sale of all of its production of tantalum concentrate, which was initially negotiated in 2007.

In June 2010, the Group successfully renegotiated and signed an amendment to this off-take agreement which has allowed the Group to reduce annual quantities of tantalum concentrate and sell on a non-exclusive basis to this original customer. This will allow the Group to sell the remaining annual production to other parties, and to benefit from increased market prices and a more diversified customer base.

In July 2010 the Group signed a three year off-take agreement for the sale of a substantial proportion of its projected production of tantalum concentrate with H C Starck GmbH, a major processor and refiner of specialist metals and advanced ceramics. The agreement is for similar quantities as for the Group's existing renegotiated off-take agreement.

Delivery chain

The Group had historically shipped its tantalum concentrate from Walvis Bay, Namibia. This shipping route was not cost effective due to the significant distance that the product had to travel from the Marropino Mine to shipping point (around 3,900 Km).

During 2010 the Group commenced shipping material directly from the Mozambican ports of Quelimane (320 Km from the Marropino Mine) to Thailand and Nacala (600 Km from the Marropino Mine) to the United States of America, establishing the viability of these export ports to both of the Group's customers. The Group is realising significant cost savings from using shipping ports near the Marropino Mine.

Supply chain

Due to the remote location of the Marropino Mine in Mozambique, and the relative reliance on The Republic of South Africa for the procurement of spares and equipment, the Group has focussed on the procurement process within the operating subsidiaries to ensure that parts and equipment are available in a timely manner, without tying up unnecessary working capital.

During 2010 the Group implemented a common ERP system across the Group operations in Mozambique and South Africa. This system, coupled with a full review of all items of inventory to identify inventory that is surplus to requirements, has significantly improved the inventory and supply chain management in the Group.

Infrastructure

The Group has established the appropriate infrastructure to support the current operations at the Marropino Mine.

The Marropino Mine was connected to the national electricity grid in December 2009. Initial connection issues have been resolved and the Marropino Mine now has a reliable power supply. This is supplemented by diesel generators for back up. The mains electricity supply not only reduces the cost of power, but also provides a continuous current which improves the productivity of the processing plant and increases the working lives of certain consumable items of the plant such as pump impellers.

Water is sourced on site from boreholes and the natural lake on the Marropino site providing a cost effective and reliable supply.

During 2010 the Group completed an optimisation project of the existing buildings and facilities at the Marropino Mine, centralising the stores into one building, relocating the workshop and dry processing plant to more appropriate locations for production purposes, refurbishing and expanding the accommodation at the Marropino Mine in order to provide appropriate conditions for employees and visitors to the site and the construction of the laboratory building. The Group has also improved local sourcing of food products, with established relationships now in place to provide a reliable supply to the Mine.

Process plant upgrade

The Marropino Mine has made losses in every year of operation by the Group due to a combination of factors, including, but not limited to, the incorrect design of the processing plant and significant rejection of the ore to oversize. These failings impacted significantly on the ability of the processing plant to recover the tantalum contained in the ore.

In April 2010, the Group engaged Paradigm Project Management ('PPM') as the engineering consultant for the Marropino Mine plant upgrade project. PPM, employees of the Group and expert independent consultants have contributed to the design of the new plant which will process all material to achieve higher recovery and efficiency. Their work has been supported by two independent studies commissioned by the Group from Mintek and The University of Glasgow into the liberation process and separation technique of the ore body at Marropino, which show that a three size fraction separation within the band of 1mm is necessary to optimise recovery through gravity separation across different spiral banks and shaking tables. In order to reduce the overall risk of the project, the Group is finalising the terms of an engineering, procurement, construction and management ('EPCM') contract with a specialist project manager; it is hoped that project insurance will be secured with a reputable international insurer.

The test work and design for the new plant was completed in 2010, with plant production ramp up to be achieved in two stages - initially through the mining of the main pit using the existing plant supplemented by an interim comminution circuit from February 2011 and subsequently with the commissioning of the fully upgraded plant in Quarter 3-2011.

The Group commenced the procurement phase for both the interim comminution circuit and the full plant upgrade in Half 2-2010, with orders placed for the necessary long lead time equipment.

The total capital expenditure on the plant is currently estimated to be approximately $31,400,000, including the interim comminution circuit and mobile fleet upgrade, of which around $3,500,000 has been spent in 2010. The projected cash flows for the upgrade project are anticipated to be expended during Half 1-2011. Further details on the source of funds for the plant upgrade are provided in the section of this MD&A titled 'Liquidity and capital resources'.

In accordance with the Plan, the necessary funding for the Marropino upgrade project has been obtained through phased capital inflows, all of which were from shareholder investment during 2010. The Group requires a further $10,000,000 to fund its proposed expansion, and will either borrow these funds from two European Development banks by way of a secured term loan for which it has received a term sheet, or by a combination of issuing Unquoted Redeemable Unsecured Convertible Shares and funds from warrant holders exercising their outstanding warrants. 

The Directors believe that once commissioned in Quarter 3-2011, the upgraded plant will provide the levels of production needed at a production cost which is profitable based on current off-take agreements.

Health and Safety

The Group is committed to maintaining a safe working environment at the Marropino Mine both in terms of the working policies and practices adopted and the operating environment at Marropino.

Policies and practices

Commitment starts through leadership influence on the shop floor and the continuous drive to institutionalise best practices from safety systems in mining and environmental management. The provision of appropriate protective clothing and equipment to all employees and maintaining a culture of awareness of health and safety risks has driven the safety culture forward. This is embedded in the working culture at the Marropino Mine, with daily Health and Safety update meetings, weekly Health and Safety topics highlighted to employees through posters and notices at the mine site and a continued focus by management and supervisors on Health and Safety related issues. During 2010 the Group had two vehicle incidents and two Lost Time Incidents ('LTI's) and 227 days LTI free since June 2010. All injuries were minor in nature but from which lessons have been learnt to further strengthen the Group's safety culture.

Operating environment

The Group activities result in significant deposits of oversize material and tailings at Marropino which pose risks of subsidence. The Group manages the risks associated with the creation of these deposits through monitoring of the stability of the oversize dumps and the structural effectiveness of the tailings dam walls. As at the date of this report, these are considered effective based on recent inspections and pose limited risk of serious injury or death. None of the accommodation facilities are in areas that could be affected by these deposits.

Non-Financial Resources

The Group's non-financial resources relate to the Group's human resources, infrastructure, systems, technologies, and processes and community relationships. The Group also has other non-financial resources in its mineral resources and exploration sites which are discussed in the section of this MD&A titled 'Mineral resources, exploration sites and geological outlook'.

Human resources

The Group has recruited at all levels of the organisation, with a particular focus in Mozambique on the recruitment of Mozambican citizens who are experienced managers and skilled plant operatives. The Group always gives preference to Mozambican nationals, or Portuguese speaking individuals if Mozambican nationals are not available. This approach has proved invaluable to maintaining good working relationships with the Mozambican authorities, and the local community in the area in which the Marropino Mine is situated. It also promotes the economic and social development of Mozambique, and the participation of the workforce at the Marropino Mine in the overall development of the operations. The benefits of this approach are seen in the excellent results achieved by the Marropino Mine in 2010.

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled every effort is made to ensure that their employment with the Group continues and that appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

The Group places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on the various factors affecting the performance of the Group. This is achieved through formal and informal meetings. Employee representatives are consulted regularly on a wide range of matters affecting their current and future interests.

The Directors believe that the human resources in the Group are appropriate to the current and projected level of activity in the Group, both at the Marropino Mine, and in the administrative support functions.

Systems, technologies and processes

The Group has completed a review of all systems and processes throughout the Group in 2010, and identified areas for improvement. A new ERP system has been installed allowing a common platform for the Group operations at Marropino, Maputo and Johannesburg. This system provides a significantly enhanced stock management platform. Once integrated with the Group maintenance system in 2011 (which is planned for 2011), this will provide a streamlined and efficient maintenance planning, stock control, and financial reporting system.

Community relationships

The Marropino Mine is located in a remote location in Mozambique. The operations of the mine provide much needed direct employment to the region, direct local economic benefits through local procurement, and indirect economic benefits from the increased economic activity in the region. These benefits, coupled with the Group focus on employment of Mozambican nationals wherever possible, provide a basis for strong community relationships.

The Group additionally contributes directly to the local community, undertaking projects for the improvement of living conditions in Marropino and the surrounding areas. During 2010 the Group completed the construction of the medical clinic in Marropino which was officially inaugurated on 2 November 2010. Further, the Group has drilled four new water bore holes in Marropino and the surrounding area and has provided the necessary pumping equipment. On an ongoing basis the Group contributes to the maintenance of the road infrastructure around the Marropino Mine.

Initiatives have also been agreed with the villagers at Marropino to produce fresh produce for the Marropino Mine. The Marropino Mine has established a cash fund from which local producers can draw down funds for the construction of facilities to support this local produce.

An additional initiative is underway to promote health in the Marropino community through the development of a University of Glasgow and Universidade Eduardo Mondlane, Maputo, joint project; this may result in the mutual exchange of medical doctors and students, and the provision of enhanced medical care through the Group sponsored clinic at Marropino. The initiative is in early development but could, if successful, lead to a fruitful long term partnership.

The Directors believe that the community relationships at Marropino, and with the regional government based in Quelimane, are good and provide an appropriate level of stability for the current and projected level of activity at Marropino.

Markets and competition

Tantalum is a rare specialty metal that has become crucial for the electronics industry and other new technologies such as the following:

With electronic devices becoming smaller, lighter, with more processing power, tantalum usage is increasing. Global tantalum demand is expected to grow at a CAGR of 6% per annum reaching 7Mlb by 2012 (Global Capital Magazine, October 2008). Global supply has fallen behind global demand and is expected to continue lagging for the foreseeable future.

Four developments have made the supply problem critical:

1 Suspended Production:

• Tantalum Mining Corporation of Canada Limited ('TANCO'), the captive producer for Cabot Corporation Inc., whose production facility we believe to be in care and maintenance.

• Global Advanced Metals ('GAM') (Formerly Talison Tantalum) suspended production in 2008 at the Wodgina and Greenbushes underground mine in South Western Australia due to falling world prices.

• Noventa, when the Marropino Mine was placed in care and maintenance in May 2009.

2 Drained Inventories:

• The United States Defense Logistics Agency, the second largest supplier of tantalum during 2001 to 2007 (500,000+ lb per annum), exhausted its captive supply and stopped sales. It has now announced that it intends to rebuild stocks creating demand pressure.

3 Recycling Difficulties:

• Recycling has become more difficult due to the smaller size of electronic components.

4 Restrictions on Product from Conflict Regions:

• Increasing international sanctions on conflict minerals - for example, The Democratic Republic of Congo.

• US legislation which would make it illegal to buy or sell conflict minerals anywhere in the supply chain is advancing and gaining support.

In this context, the market is characterised by supply shortage from ethical producers, which is placing upwards pressure on spot prices of tantalum concentrate. Since 1 January 2010 to the date of this report, the price per pound of contained Ta2O5 has increased from $37.00 to around $120.00. While GAM announced in January 2011 that it will now recommence mining at Wodgina with processing at Greenbushes, and Noventa has resumed production during 2010, the market still has excess demand and prices are expected to continue rising.

Although the spot price has shown significant increases in 2010 and subsequently, supply prices are normally set by way of long-term off-take deals between miners and processors. Noventa has renegotiated, or entered into off-take agreements with major customers, that capitalise on the increasing tantalum concentrate price (refer to the section of this MD&A titled 'Sales contracts') and provide a stable price for economic production once the Marropino Mine upgrade is completed. As an applicant member of the Electronics Industry Citizenship Coalition ('EICC'), an organisation dedicated to ensuring worker safety and fairness, environmental responsibility and business efficiency in the electronics industry, Noventa is one of the few suppliers which can provide tantalum concentrate to these customers.

The Group believes that it is in a strong position in this market to expand operations on a profitable and sustainable basis.

Risk assessment

The following table summarises the principal risks and uncertainties faced by the Group, and the actions taken to mitigate these risks:

Financial review

The following table provides selected unaudited quarterly financial information for the eight most recent fiscal quarters to 31 December 2010, prepared under International Financial Reporting Standards ('IFRS') and presented in thousands of United States Dollars, except per share amounts:

results overview

It is not meaningful to compare the performance in 2010, during which the Group operations were focussed on a deliberately modest industrial scale restart of the Marropino Mine and preparation for the process plant upgrade in 2011, with 2009 when the Marropino Mine was placed under care and maintenance in May. The financial section of this Directors' report and management discussions & analysis focuses on the current reporting period, events subsequent to the reporting period end, and management's future intentions.

Results overview for the year

During 2010, the Group reported a gross loss of $2,294,000 on sales of $2,301,000. The Group recognised revenue of $1,190,000 on five shipments of tantalum concentrate produced at the Marropino Mine since production restarted in April 2010. Tantalum concentrate revenue for the year is relatively low reflecting the production design constraints on the current processing plant which limit the volumes that can be fed to the plant, the relatively low grade of the tailings which are being processed (118 ppm compared with the Marropino Mine pit average grade of 223 ppm) and production being on one shift until 30 September 2010. These constraints have been offset by a significant improvement in recovery rates of tantalum to 51% from historic rates of between 30% - 35%. In October 2010, the Marropino Mine moved onto a two shift pattern in preparation for 24 hour production. The fourth quarter of 2010 saw an increase in revenue, with three shipments completed realising revenue of $701,000 reflecting the increased monthly production from the second shift. The Group has also implemented actions to recommence mining of the Marropino pit from February 2011 once the interim comminution circuit is commissioned, which will provide run of mine feed to the plant at an average 220 ppm further increasing production volumes and revenue.

The Group recognised $1,111,000 of revenue on the sale of its entire Morganite inventory. $1,000,000 of this inventory had been held by the Group's distribution partner at 31 December 2009. The sale and distribution agreement with this partner was terminated in the year.

Production volumes have not reached break even in 2010 and Cost of sales for the year is greater than revenue due to the impact of fixed and semi fixed costs of operating the Marropino Mine on the per lb production cost of the tantalum concentrate. Additionally, one off expenditure charged to Cost of sales was incurred in 2010 to restore part of the mobile fleet to operating conditions and to repair and maintain the infrastructure at Marropino in anticipation of the Marropino Mine process plant upgrade in Half 1-2011. Cost of sales relative to revenue decreased in Quarter 4-2010 due to the fixed and semi-fixed element of the Marropino cost being spread over increased production and sales and the relatively lower expenditure on restoration of mobile equipment in Quarter 4-2010 compared with previous quarters.

Recurring administrative expenses for the year were $4,250,000 and are currently between $950,000 and $1,050,000 per quarter. Additional one off expenditure of $3,891,000 (refer to the section of this MD&A titled 'Administrative expenditure') was incurred in the year offset by the net release of provisions against IVA recoverable assets of $1,081,000. A net exchange loss of $122,000 arose from gains on the revaluation of trade creditors denominated in Mozambique Metical, offset by losses on the revaluation of IVA recoverable assets denominated in Mozambique Metical and exchange losses on non US$ denominated bank balances.

During 2010 the Group raised $34,925,000 before expenses from new Shareholder investment in July, September and December 2010 of which $33,911,000 has been received during the year. An additional $208,000 was received from the exercise of warrants over 1,523,847 Ordinary Shares.

The funds are being used to finance working capital and the phased capital inflows required for the process plant upgrade programme (refer to the section of this MD&A titled 'Process plant upgrade').

Warrants issued with the September 2010 fundraisings are classified as derivative financial liabilities under IFRS reflecting their denomination in GBP when the functional currency of the Company is US$. The warrants were fair valued on initial recognition at $2,485,000 which is recorded within 'Derivative financial liabilities', a balance included in Current liabilities in the Statement of financial position. Changes in the fair value of the warrants reflecting underlying changes in the GBP fair value and changes in the US$ / GBP exchange rate, are recorded in the Consolidated statement of comprehensive loss within finance income / expense. The change in fair value reported on warrants in the year is $843,000. 1,153,847 of these warrants were exercised in the year, with $110,000 of the derivative financial liability balance released to the Share premium account on exercise.

The Company's brokers and sub-placing agents for the December 2010 placing were granted a total of 8,000,000 warrants over Ordinary Shares. These warrants are treated as share based payments under IFRS. The fair value of the warrants was $529,000 which has been expensed to the Share premium account.

In addition to the fundraisings and the exercise of warrants, a further 7,715,065 Ordinary Shares were issued for services rendered by Directors and employees, including the issue of 3,000,000 bonus shares under bonus agreements established in 2009.

From September 2010 the Group commenced the procurement of long lead time items of equipment necessary for the Marropino Mine process plant upgrade and the interim ramp up of production from February 2011 when the Group will re-commence mining the pit at Marropino. Principal amounts recorded within Property, plant and equipment are $2,062,000 for engineering consultant fees, $414,000 for stage payments on the construction of spirals, $293,000 for mobile equipment (including deposits on 2 CAT 740 ADT's and one CAT 345C Excavator and the purchase of one Bell B30 ADT), $200,000 for stage payments on equipment for the interim comminution circuit and $133,000 for construction work on accommodation and buildings at the Marropino Mine.

During Quarter 1-2010, the Group initiated legal proceedings in South Africa against SRK Consulting (South Africa) Limited, a company incorporated in accordance with the laws of South Africa, for breach of contract and negligence in the preparation of the Independent Competent Persons' Report on the Material Properties of Highland African Mining Company Limited in March 2007. As at the date of this report, a statement of the defendant's exception to the claim has been received, but no court date has been set. During 2010 the Group incurred legal expenditure of $439,000 (including 700,000 Rand deposited in a Trust Account as a deposit for costs) with respect to this claim, which has been fully expensed in the year.

Results overview for Quarter 4-2010

Quarter 4-2010 saw an increase in revenue from $600,000 in Quarter 3-2010 to $701,000. The increase reflects the contribution of the additional monthly production from the second shift which started in October 2010. Gross loss improved from $1,391,000 in Quarter 3-2010 to $658,000 reflecting the contribution of additional revenue, the reduction in one off expenditure on repairing mobile equipment incurred in Quarter 3-2010 and the positive contribution of $303,000 uplift to the carrying value of spares and consumable inventory reflecting a revision to the assessment of recoverability of the inventory.

Recurring administrative expenses, including certain support and indirect costs at the Marropino Mine were $1,050,000 (of which $132,000 relates to share based payments). During Quarter 4-2010 the Group recorded expenditure of a significant or non-recurring nature for the following items:

·; $300,000 of consulting costs related to the confirmation of geological properties, engineering and metallurgical processing at the Marropino Mine;

·; $70,000 of consultancy costs for the assessment of the environmental impact of operations at Marropino, Morrua and Mutala and the preparation of the EIA's for these properties;

·; $104,000 of financial advisory consulting costs related to the restructuring of the Group's operations;

·; $80,000 of other consulting costs;

·; $392,000 of legal costs incurred with respect to the claim against SRK Consulting (South Africa) Limited noted above and various reviews and revisions to the Group's contracts and agreements;

·; $107,000 of legal and consulting fees related to the completed TSX listing of the Company;

·; $149,000 exchange loss arising on non US$ denominated bank balances;

·; $180,000 exchange loss arising on the revaluation of non US$ denominated trade creditors, principally reflecting the appreciation in Quarter 4-2010 of the Mozambique Metical in relation to the US$; and,

·; $66,000 exchange loss arising on the revaluation of non US$ denominated IVA recoverable balances principally reflecting the appreciation in Quarter 4-2010 of the Mozambique Metical in relation to the US$.

Net finance expense in Quarter 4-2010 was $9,000 reflecting adjustments to the fair value of derivative financial warrants of $11,000 offset by $2,000 interest receivable.

During Quarter 4-2010 the Group raised $23,844,000 of additional equity funding. Further details are provided in the section of this MD&A titled 'Ordinary shares issued for cash consideration'.

Revenue

During 2010 the Group completed three shipments of tantalum concentrate via the port of Quelimane, Mozambique, to HC Starck GmbH realising revenue of $690,000 and two shipments to Cabot Corporation Inc. via the port of Nacala, Mozambique, realising revenue of $500,000. These shipments have proven the viability of using Mozambican ports to export to the Groups' customers. Three of these shipments were completed in Quarter 4-2010 realising revenue of $701,000. The relative increase in quarterly revenue reflects the increased production at the Marropino Mine following the implementation of the second shift.

During Quarter 1-2010, the Group reached agreement with LJ International Limited for the sale of consignment stock held by Goldleaves Trading Limited and Miranda Gems (HK) under the Morganite Joint Venture Agreement between the Group, and these parties. The Morganite Joint Venture Agreement has been terminated, with payment of $1,000,000 due to the Group for the sale of the consignment stock. In accordance with this agreement, $300,000 was received in February 2010, $200,000 in March 2010, and $100,000 per month thereafter. All amounts due under the settlement have been received.

 The Group realised further revenue of $111,000 through the bulk sale of the Group's remaining rough morganite inventory.

Gross loss

The Gross loss (Revenue less Cost of sales which includes direct operating costs of the Marropino Mine irrespective of whether it is producing tantalum concentrate) was $2,294,000 in the year. The Gross loss in the year arises due to the relatively low production and sales volumes, reflecting the design constraints on the current processing plant which limit the volumes that can be fed to the plant and the relatively low grade of the tailings which are being processed (118 ppm compared with the Marropino Mine pit average grade of 223 ppm) and production being on one shift until 30 September 2010. Due to the low volumes, fixed and semi-fixed costs per lb of Ta2O5 recovered exceed the realisable revenue. Additionally, significant maintenance was completed on mobile fleet and infrastructure at the Mine during the year which is charged to Cost of sales. Quarter 4-2010 saw a relative reduction in gross loss to $658,000 from $1,391,000 in Quarter 3-2010, principally reflecting the positive impact of increased sales as the Group moved to productions on two shifts, the reduced Quarter 4-2010 spend on one off expenditure for refurbishment of mobile equipment and the recognition of the net realisable value of spares and consumables previously written off with a net book value of $303,000. Once the Group commences mining the Marropino pit in February 2011, it is anticipated that the Gross loss will reduce significantly towards break even.

The Gross loss was also partially reduced in the year due to the sale of $1,111,000 of morganite, which has no attributable cost of sale (morganite recovery arises as a by-product of the tantalum concentrate production and accordingly no costs of production are attributed to it).

Administrative expenses

Recurring administrative expenses, including certain support and indirect costs at the Marropino Mine were $4,250,000 (of which $665,000 relates to share based payments). At the end of 2010, recurring administrative expenses are between $950,000 and $1,050,000 per Quarter. During 2010 the Group recorded expenditure of a significant or non-recurring nature for the following items:

·; $312,000 for sign on bonuses and direct recruitment costs for key management positions, $125,000 of which was paid in Ordinary Shares of the Company;

·; $160,000 for discretionary bonuses for key management staff and Directors reflecting their significant individual contributions to the Group in the period, $60,000 of which was paid in Ordinary Shares of the Company;

·; $1,268,000 of consulting and other costs related to the confirmation of geological properties, engineering and metallurgical processing at the Marropino Mine and the Group's remaining properties;

·; $70,000 of consultancy costs for the assessment of the environmental impact of operations at Marropino, Morrua and Mutala and the preparation of the EIAs for these properties;

·; $440,000 of financial advisory consulting costs related to the restructuring of the Group's operations;

·; $198,000 of other consulting costs;

·; $1,089,000 of legal costs incurred (including $92,000 deposit for defendant costs which has been provided against in the Quarter) with respect to the claim against SRK Consulting (South Africa) Limited noted above and various reviews and revisions to the Group's contracts and agreements;

·; $354,000 of legal and consulting fees related to the completed TSX listing of the Company;

·; $248,000 exchange loss arising on non US$ denominated bank balances;

·; $193,000 exchange gain arising on the revaluation of non US$ denominated trade creditors, principally reflecting the devaluation of the Mozambique Metical in relation to the US$;

·; $67,000 exchange loss arising on the revaluation of non US$ denominated IVA recoverable balances principally reflecting the devaluation of the Mozambique Metical in relation to the US$; and

·; $1,081,000 release of provisions against IVA recoverable assets reflecting the Group's revised assessment of the recoverability of the IVA balances.

Net finance expense

Net finance expense was $846,000 principally reflecting the non cash change in fair value of certain classes of the Group's issued warrants which are classified as derivative financial liabilities (refer to note 4). These fair value movements are reflected within net finance expense because the warrants were issued as a component part of fundraisings completed in September 2010 and September 2009.

Taxation

During 2010 the Group released $24,000 of income tax provisions recorded in 2009 relating to tax liabilities and penalties for the financial years ended 31 December 2005 to 31 December 2008. These are no longer required due to the successful negotiation of settlements of the relevant amounts with the Mozambique Tax Authority in 2010 which resulted in the payment of $45,000 in the year (which was fully provided at 31 December 2009). This release has been partially offset by a provision for income tax in 2010 of $21,000.

The Group has unrecognised gross tax losses in Mozambique of $55,277,000 (2009: $54,285,000) which are available to offset future taxable profits for the foreseeable future.

Liquidity and Capital Resources

The Group has no external credit lines and at the date of this report is funded solely through shareholder investment.

The Group forecasts cash expenditure in 2011 to exceed the cash balance and future predicted cash inflows from sales and committed shareholder investment due to the expenditure required on Property, plant and equipment for the upgrade of the Marropino plant, and the funding of working capital in the phase prior to upgrade and during the ramp up of production at the plant. The Group will therefore be dependent on future loan financing or shareholder investment to fund the development of the Plan. The Group believes that it requires a further $10,000,000 to fund its proposed expansion. The Group is in discussions with two European Development banks to obtain these funds by way of a secured term loan for which it has received a term sheet. Alternately, the Group anticipates that the funds will be obtained by a combination of unsecured credit and / or equity instruments. As at the date of this report, the Group has sufficient funds to commission the interim comminution circuit, all committed expenditure, and fund expenditure at the current level of activity for more than twelve months.

Cash flows from operating activities

Cash used in operating activities was $9,984,000 (2009: $6,136,000) in 2010 as a result of operating losses in the period and the deferred receipt of part of the income arising on the tantalum sales in the year in accordance with the agreed payment terms, offset by the re-imbursement of $502,000 IVA. Non-cash items in the period relate principally to $665,000 share based payments expense, $846,000 net finance expense reflecting the change in fair value of warrants which are accounted for as derivative financial liabilities, the release of provisions against IVA recoverable assets, in excess of the cash received in the period, of $518,000 and net foreign exchange losses of $270,000.

Cash flows from investing activities

Cash used in investing activities was $3,738,000 (2009: $506,000) arising from the purchase of capital assets totalling $3,746,000 offset by $8,000 interest received. The purchase of capital assets reflects the progression of the Marropino plant upgrade project and the availability of funds from the phased fundraisings completed in June, September and December 2010. Principal payments made are listed in the 'Results overview' section of this MD&A.

Cash flows from financing activities

During 2010 the Group received $34,119,000 from the issue of new Ordinary Shares in the Company. Cash Issue expenses of $1,782,000 were incurred. Details are provided in the section of this MD&A titled 'Ordinary Shares issued in the year for cash consideration'.

Ordinary Shares issued in the year for cash consideration

During 2010 the Group received additional shareholder investment in Ordinary Shares of the Company as follows:

(1) In addition to the cash issue expenses, the Company's brokers and sub-placing agents were issued with 8,000,000 warrants to subscribe for Ordinary Shares in the Company at 9.5p, exercisable until 17 June 2012. The fair value of these warrants is $529,000 which has been expensed to the Share premium account.

During 2010 the Group raised $34,925,000 before expenses from new Shareholder investment of which $33,911,000 has been received during the year. A further $1,014,000 will be received before 31 March 2011. An additional $208,000 was received from the exercise of warrants. In June and July 2010, the Group raised $2,157,000 before expenses from the private placing of 22,295,914 Ordinary Shares for £0.065 per Ordinary Share. In September 2010 the Group raised $9,102,000 before expenses from a private placing, additional placing, subscription and additional subscription totalling 90,096,512 Ordinary Shares. The Company issued warrants exercisable at 10p to the subscribers of the September 2010 unconditional private placing, additional placing, subscription and additional subscription on the basis of one warrant for every two Ordinary Shares subscribed. 60,237,001 Ordinary Shares were issued during September 2010 at £0.065 per Ordinary Share raising $6,023,000 before expenses which was received in September 2010. The remaining 29,859,511 Ordinary Shares were secured under an irrevocable commitment, with Ordinary Shares issued in three equal tranches at £0.06587 per Ordinary Share. The first tranche was issued on 15 October 2010 with $1,049,000 received by the Company before expenses and the second tranche was issued on 31 December 2010 with $1,015,000 received by the Company before expenses. The remaining Tranche C is anticipated to be issued on 31 March 2011. In December 2010, the Group raised $23,667,000 before expenses from the placing of 160,000,000 Ordinary Shares for £0.095 per Ordinary Share. The funds are being used to finance working capital and the phased capital inflows required for the process plant upgrade programme (refer to the section of this MD&A titled 'Process plant upgrade').

During 2009 the Group raised $10,102,000 before expenses from new shareholder investment and convertible loan notes. In January 2009, the Group issued $3,000,000 of zero coupon convertible loan notes (the 'Existing Loan Notes') to Highland African Ventures Limited ('HAVL'), completing the subscription made in December 2008 for a total of $5,000,000 in zero coupon loan notes of $4,200,000 by HAVL and $800,000 by BlackRock Mining Trust plc. The Existing Loan Notes were converted into 76,499,388 Ordinary Shares in October 2009 at a conversion price of 4.00p per Ordinary Share. In September 2009 the Group raised $633,000 before expenses from the issue of convertible loan notes (the 'Loan Notes'), $553,000 before expenses from a conditional placing of 8,750,000 Ordinary Shares at 4.00p per Ordinary Share and $3,356,000 before expenses from a placing and open offer of 53,058,880 Ordinary Shares at 4.00p per Ordinary Share. The placing and open offer Ordinary Shares were issued in September 2009. The Loan Notes were converted into 10,000,000 Ordinary Shares in October 2009 when the conditional placing shares were also issued. The Loan Note subscribers and the conditional placing subscribers were issued with a warrant to subscribe for one new Ordinary Share for every two Ordinary Shares held post conversion (where applicable), with an exercise price of 18.00p per share and a life of 18 months. In October 2009 the Group raised a further $2,560,000 before expenses from an additional placing of 40,463,952 Ordinary Shares at 4.00p each.

Financial instruments

The Group's financial instruments principally comprise cash, current receivables and current payables. These instruments expose the Group to credit risk, currency risk and liquidity risk. These risks are limited due to the nature of the instruments. The principal risk to the Group is currency risk. This is mitigated by the Group maintaining funds in US$, or currencies in which liabilities will be settled. All receivables are US$ denominated. The Group also has in issue certain warrants which are designated as financial instruments under IFRS due to the warrants being issued in a currency other than the functional currency of the Company. These warrants do not expose the Group to any risks because, if exercised by the warrant holder, they will be settled by the issue of Ordinary Shares in the Company and the Directors have the authority to allot the requisite number of shares.

Going concern

As at the date of this report, the Group's existing funds are sufficient to finance current committed expenditure, the first stage of development of the Marropino Mine, and operating activities for at least a year, including the commissioning of the interim comminution circuit and other related equipment. The Group requires a further $10 million to fund its proposed expansion, and will either borrow these funds from two European Development banks by way of a secured term loan for which it has received a term sheet, or by a combination of issuing Unquoted Redeemable Unsecured Convertible Shares and funds from warrant holders exercising their outstanding warrants. The Directors have a realistic expectation that the necessary funds can be obtained to complete this planned upgrade subject to satisfactory market conditions. Once the full process plant upgrade is commissioned, the Directors anticipate that the mining operation will be sufficiently cash generative to provide funds for geological exploration and evaluation at the Group's various other properties. Funding for the development of the Group's remaining Mining concessions and Mining licenses may require further debt or equity financing, depending on the timing of the development of the properties.

After making enquiries, and based on the above, the Directors have a reasonable expectation that the Company and Group have adequate resources to remain in operation for the foreseeable future. Accordingly, the Directors have prepared the financial statements on a going concern basis.

Contractual obligations

As at 31 December 2010 the Group had capital commitments of $4,724,000 (2009: $nil) principally related to long lead time items required for the process plant upgrade, mobile equipment, equipment for the interim comminution circuit and engineering contractor fees.

The Group has commitments under operating leases for the rental of premises, with $203,000 due in 2011 and $60,000 due in 2012 (2009: $95,000 due in 2010, $98,000 due in 2011 and $60,000 due in 2012)

As at 31 December 2010, the Group had no further commitments.

The Group expects that payment of contractual obligations will come from funds generated by operations subsequent to the commissioning of the new processing plant at Marropino, and from current funds in the period prior to commissioning.

The Group does not have any off-balance sheet liabilities or transactions that are not recorded or disclosed in the financial statements.

Proposed transactions

As at the date of this report, no agreements to merge with or acquire another entity have been entered into.

Significant proposed transactions relate solely to the raising of debt finance and / or issue of new shares for cash consideration to fund the Plan, the terms of which have not yet been finalised.

Transactions with related parties

During 2010, consulting services were provided by certain Directors, and / or companies in which they have a beneficial ownership, with a fair value of $1,572,000 (2009: $1,035,000). $1,207,000 (2009: $814,000) of these fees is included in the Consolidated statement of comprehensive loss as Administrative expenses and $365,000 (2009: $221,000) is included within the Share premium account. These transactions were conducted in the normal course of business and were accounted for at the fair value of the transactions, which is the exchange amount in all instances other than those involving share based payments, where, in some cases, the fair value is determined by means of a valuation model.

Critical accounting estimates

In the application of the Group's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The effect on the financial statements of changes in estimates in future periods could be material.

The following are the critical judgements that the Directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in financial statements.

Impairment of tangible fixed assets

As described more fully in the Group financial statements for the year ended 31 December 2009, the Group impaired its tangible operating fixed assets held at 31 December 2009. During the year ended 31 December 2010, the Group concluded the overall design of the new processing plant at the Marropino Mine, incurring capitalised engineering consultant fees of $2,062,000. Based on this work, the Group has a sufficiently reliable estimate of the capital investment required in order for the Marropino Mine to be net cash positive after future capital investment and the phases, and timing, of the Marropino Mine restart programme. The Group has commenced the procurement of long lead time items necessary to meet the Marropino Mine restart programme, including items for the interim hard rock circuit at Marropino which will be commissioned in Quarter 1-2011. These items are the principal components of assets in the course of construction included within Property, plant and equipment at 31 December 2010. Additionally, the Group has purchased certain items of equipment, principally light transport vehicles, which are necessary for the current operations, and will continue to be utilised when the plant upgrade is completed.

The recoverability of the carrying value of the Property, plant and equipment asset is dependent on the Group's ability to secure loan funding or additional shareholder investment to finance the total capital expenditure required at the Marropino Mine, and the ability of the Group to realise forecast budgeted results of operations.

Impairment of Intangible Fixed Assets

The Group's intangible assets relate principally to an acquired mining concession in the Zambezia Province of Mozambique. The intangible assets were impaired as at 31 December 2008 and 31 December 2009, reflecting uncertainty in the Group's ability to develop this mining concession. While the Directors remain optimistic for the development of the concession, further geological, metallurgical and engineering studies need to be completed to determine a viable resource and mining plan. The timing of any development in this mining concession remains uncertain and accordingly the intangible assets have remained impaired.

Recoverability of input Value Added Tax

Mozambique Value Added Tax ("IVA") operates in a similar manner to UK Value Added Tax ("VAT"). The Group is exempt from IVA on its exports from Mozambique under the terms of its Mining License Agreement and Mozambique tax law. The Group is able to recover input sales tax on all purchases within Mozambique. The Group is always therefore in a net recovery position of IVA. Since 2004, the Group had not succeeded in recovering IVA from the Mozambique Government. Due to the significant uncertainty over the recoverability of these IVA balances, the Group provided in full against the assets as at 31 December 2009 of $1,611,000 at the US$ to Metical exchange rate of 27.5. As at 31 December 2010, the gross and net IVA recoverable assets are respectively $1,124,000 and $638,000 at the US$ to Metical exchange rate of 32.62.

In August 2010, $502,000 of the IVA recoverable was approved for payment by the Mozambique Tax Authority. This represents 87.3% of the total IVA reclaimed to date by the Group. $78,000 of the on-going claims has been withheld, pending the Group providing additional information to support the amounts claimed. As at the date of this report the approved balance of the two on-going claims has been received by the Group. During 2010, the Group released $1,081,000 of the provision against IVA recoverable assets (measured at the 31 December 2009 US$ to Mozambique Metical exchange rate of 27.5) reflecting the refund of IVA due and the revised assessment of the recoverability of the remaining IVA balances.

As at 31 December 2010, the Group has an expectation that $638,000 of the IVA recoverable balances will be collected in an orderly and timely manner. The remaining IVA recoverable balance of $486,000 remains provided against, with recovery subject to the Group providing satisfactory responses to the additional information requested relating to the on-going IVA claims and further discussions with the Mozambique Taxation Authority regarding the ability of the Group to reclaim IVA recoverable balances that were under declared during 2004 to 2007.

Warrants

Certain warrants issued by the Group are classified as derivative financial liabilities as the warrants are issued in a currency other than the functional currency of the Company. At each reporting date the fair value of the warrants is measured using a Black-Scholes valuation model, with changes in the fair value of the warrants recorded in the Consolidated statement of comprehensive loss within finance income/expense. The valuation is sensitive to the inputs in the valuation model, some of which require judgment. The warrants do not create any obligation on the Company other than to deliver shares in the Company for a fixed price at the option of the holder, over the life of the warrants. 

Capital Stock

The Company has one class of Ordinary Shares which carry no right to fixed income. Each Ordinary Share carries the right to one vote at the general meetings of the Company.

The Company has authorised share capital of 1,250,000,000 Ordinary Shares of £0.0004 each, of which 504,413,035 are issued as at 31 December 2010 (2009: 232,734,868). Details of Ordinary Shares issued in the year are given in note 24. As at the date of this report, the Company has in issue 507,216,782 Ordinary Shares, an increase of 2,803,747 Ordinary Shares from 31 December 2010, reflecting the issue of 330,670 Ordinary Shares to certain Directors and employees as compensation for services provided and 2,473,077 Ordinary Shares upon the exercise of 10.00p warrants. The Company has further entered into an agreement with Compagnie Internationale de Participations Bancaires et Financieres SA ('CIPAF'), a subsidiary of General Mediterranean Holding SA, to subscribe for a further 9,953,971 new Ordinary Shares at a price of 6.59p per share before 31 March 2010.

At 31 December 2010, the Company had instruments that could result in the issue of 90,184,904 Ordinary Shares in the form of warrants, share options and bonus shares. Additionally, as at 31 December 2010, the Company was committed to issuing 285,354 Ordinary Shares to Directors for services provided and 45,316 Ordinary Shares to employees for remuneration contractually payable in Ordinary Shares of the Company. These obligations are reflected in the 'Shares to be issued' reserve, a component of the Company and Group equity.

The Directors have the authority to issue up to 500,000,000 Ordinary Shares.

No person has any special rights of control over the Company's share capital and all issued shares are fully paid.

There are no specific restrictions on the size of a holding of shares nor on the transfer of shares, which are both governed by the general provisions of the Articles of Association and prevailing legislation. The Directors are not aware of any agreements between holders of the Company's shares that may result in restrictions on the transfer of securities or on voting rights.

On 15 March 2007, Highland African Ventures Limited, Kerias Management Trading Limited and Fleming Partners (Liechtenstein) AG (together the 'Connected Shareholders') entered into the 'Relationship Agreement' with the Company governing the exercise by the Connected Shareholders of their rights in relation to the Company following the admission of the Company to AIM. In Quarter 3-2010 and as a result of the September 2010 placing, subscription and additional subscription, this relationship has automatically terminated as the combined shareholding of the Connected Shareholders fell below 30% and thus the Connected Shareholders no longer have certain rights and obligations granted or imposed upon them under the Relationship Agreement which included:

·; the right to appoint two Directors, one of which could be appointed as Chairman;

·; the right to withhold consent from the Company for the issuance of new Ordinary Shares;

·; the right to subscribe to any new Ordinary Shares in proportion to the Connected Shareholders' holdings to prevent dilution of the interests of the Connected Shareholders; and

·; the obligation to offer the Company first refusal of any investment opportunity relating to the tantalum and Morganite business carried on by the Group.

DIRECTORS

The Directors who held office during the year and until the date of this announcement, including changes in the year were:

DIRECTORS' INTERESTS

As at the date of this report, the interests of the Directors and their related entities in the Ordinary Shares of the Company were:

(1) These shares are held by Barons Financial Services Limited, a company in which Mr. E F Kohn TD has a beneficial interest.

(2) These shares are held by Ekasure Limited, a company in which Mr. J Allan has a beneficial interest.

(3) Mr. K Chung is a potential beneficiary of a family trust that holds 5,500,000 Ordinary Shares in the Company.

Directors and key management emoluments

Details of the nature and amount of emoluments payable by the Group for the services of its Directors and key management during the financial year are shown in the table below.