Final Results

28 June 2012

NOVENTA LIMITED

("Noventa" or the "Company")

Final Results for the Year Ended 31 December 2011

The Board of Noventa is pleased to announce the Company's audited results for the year ended 31 December 2012. A copy of the annual report and accounts is available to download from the Company's website, www.noventa.net.

Chief Executive Officer's statement

Dear Shareholder,

2011 and subsequently 2012 to date have been a difficult period for the Group during which the funding requirements to bring the Marropino process plant upgrade to completion have increased materially. In August 2011 the Group secured additional funds of approximately $36.9m (of which $6.8m has been received during 2012) and is now exploring two alternative options to provide a further up to $35.0m (pre issue expenses) of which $16.7m relates to Marropino (including the repayment on 31 July 2012 of a bridging loan facility of $10.0m provided by Richmond, of which $7.7m has been drawn as at the date of this report), $16.3m is required for the development of the Group's remaining mine sites, including $13.3m for Morrua, $0.5m for initial activities at Mutala, $2.5m for our licenses in the Katanga province of the Democratic Republic of Congo ('DRC') and $2.0m is provisioned for expenses. Of the total figure being sought, approximately $21.2m (after expenses) is required to complete the Marropino ramp-up, repay the bridging loan facility of $10.0m and conduct certain minimum activities to protect legal title relating to Morrua, Mutala and the DRC.

To a large extent the Marropino funding requirements reflect the repeated delay to the commissioning of the new process plant with a consequential delay to the expected date when the Marropino mine (the 'Marropino Mine') will be self-sustaining in terms of cashflow. Further they reflect the increasing capital investment needed for the new plant, particularly in the latter nine months, and the increasing infrastructure and support expenditure required in practice to support the mining and processing operations, such as the pump and pipe system implemented during Q4-2011 to provide process water for the Marropino plant. The impact of these delays and additional expenditure has been exacerbated by the poor performance of the old processing plant at Marropino, reflecting the state of repair of that plant which led to repeated mechanical breakdown, the plant downtime arising from interruptions to the power supply at Marropino, insufficient process water during the first nine months of 2011 and the inadequate human resources at Marropino to effectively address the significant issues arising in the operation.

We believe that these issues are now behind us, or we have actions in place that will remedy them in the short term. A significant milestone for the Group has been the commissioning of the new process plant on 4 May 2012. Initial start- up difficulties have now been rectified and from 19 June 2012 the plant has continually been processing ore. We anticipate that the ramp up to full production of 50,000 lbs contained Ta2O5 per month will be completed during Quarter 1-2013.

We have also been successful in renegotiating the terms of both of our long term supply contracts during 2011 and 2012 such that these now reflect sales prices and volumes that are expected to generate a net positive cash flow per lbs Ta2O5 sold, after allocation of all expenditure including administrative overhead. The margins will not be significant though while the Group continues to operate a sole plant, in a single country producing only tantalum concentrate. Geographical expansion into other African countries is critical to the Group, as is the development of the Group's remaining mining concessions in Mozambique.

The Group has initiated its geographical expansion through the establishment of operations in the Katanga province of the DRC. The Katanga province is a conflict free zone with rich tantalum and tin mineralisation and we are of the opinion that a significant portion of the world's tantalum feedstock will soon be produced in this region. Initial supplies of conflict free tantalum have already been exported from the DRC for processing in the United States of America under the American led 'Solutions for Hope' programme. The Group plans to use a similar validation process for its tantalum concentrate exports from the DRC which we anticipate will commence in early Quarter 4-2012. $2.5m of the funding currently being sought will allow us to significantly increase our presence in DRC and we anticipate will allow us to immediately generate net positive cash returns.

Development of the Group's remaining concessions in Mozambique, being Morrua and Mutala is also a high priority to leverage off the infrastructure at Marropino and the Group's significant understanding of this country. Further, the Group has retained a commitment to the Mozambique Government that it would immediately commence activities on these concessions once the development of Marropino was complete. This commitment, and the on-going indications of support from the Ministry of Mineral Resources in Mozambique, has been critical for the retention of our titles to these concessions which could otherwise have been revoked as there is a minimum production requirement at both Morrua and Mutala which had not been fulfilled either at 31 December 2011 or the date of this report. The Mozambique Government still has the ability to revoke these concessions at any time, but we believe that the planned activities will be sufficient to mitigate this risk. At Mutala we have initiated actions to commence mining activities on a pilot scale basis, including the recruitment of local workers. We will also complete further geological studies at Mutala to inform the mining plan and upgrade the SAMREC compliant inferred resource to a CIM Code Measured resource. At Morrua we will initiate further geological testing including drilling and bulk sampling to hopefully complete a bankable pre-feasibility study while also processing some of the Morrua ore through the Marropino process plant. Funding for these initial activities is covered by the $35.0m of new cash noted above, subject to this funding being available on terms that are acceptable to the Group. Total funding of up to $60.0 million is anticipated to be needed for the full development of Morrua (including all capital expenditure, overburden removal and working capital) of which $13.3m is being sought now. The Group continues to explore ways to reduce the initial investment in Morrua which will be confirmed by the pre-feasibility study. If the Group is successful in completing a bankable pre-feasibility study, we anticipate that a competitive tender to finance Morrua through an off-take agreement will commence during Half 2-2012, with a view to Morrua being in production during 2013, or early 2014.

There have been many changes to the Board of Noventa during 2011 and 2012. The Board needs to be significantly strengthened with high calibre individuals with experience in mining and experience in Africa to support the actions of executive management. New appointments, including a new Non-Executive Chairman, will be made in early Q3-2012.

The Board acknowledges that these have been difficult times for Shareholders many of whom have suffered significant dilution and losses in value through the poor performance of Noventa's share price. I believe that we are now on track to develop the Group into a profitable, value creating Group capable of producing a positive return for existing Shareholders. This development will be supported by the current additional funding being sought of $35,000,000. The Board is exploring two options to raise this finance, being either through loan financing from Richmond (collectively Richmond Partners Master Limited, Richmond Capital LLP, Richmond Master Fund Limited and other affiliated entities), the Company's largest shareholder, or through an equity offering. Proposals previously announced on 11 May 2012 will now no longer be undertaken. In the event that the Company is unable to secure the new funding on acceptable terms, there is a risk that the Company may lose its concessions and that it may also become insolvent, not least due to the requirement to repay $7.7m of short term debt provided by Richmond subsequent to the year-end which falls due on 31 July 2012.

I would like to thank all current and past Directors, management and employees of the Group for the significant efforts that have been made during this difficult period. I believe the remainder of 2012 will be a better period for the Group, but this will only be achieved with your on-going commitment for which I thank you.

Fernando Fernandez-Torres

Chief Executive Officer

For further information please contact:

Consolidated statement of comprehensive loss

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.

Consolidated statement of financial position

The financial statements of Noventa Limited, registered number 95036, were approved by the Board of Directors and authorised for issue on 27 June 2012. Signed on behalf of the Board of Directors

Consolidated cash flow statement

Notes to the consolidated financial statements

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 in the section of this report entitled 'Company information and advisers'. The nature of the Group's operations and its principal activities are set out in the Directors' report. A list of the significant investments in subsidiaries, including the name, country of incorporation, operation and ownership interest is given in note 27.

The financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRSs') as adopted by the Eurpoean Union as required by the AIM Rules of the London Stock Exchange (the 'AIM Rules').

The financial information is a consolidation of the Company and its subsidiaries. These financial statements are 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.

2. ADOPTION OF NEW AND REVISED STANDARDS

In the current year, no new and revised Standards and Interpretations have been adopted that have affected the amounts reported or disclosed in these financial statements.

2.1 New Standards and Interpretations adopted with no significant effect on the financial statements

The following new and revised Standards and Interpretations have been adopted in these financial statements. Their adoption has not had any significant impact on the amounts reported in these financial statements, but may impact the accounting for future transactions and arrangements.

2.2 New Standards and Interpretations in issue but not yet effective

At the date of authorisation of these financial statements, the following Standards and Interpretations are in issue but not yet effective (and in some cases had not yet been adopted by the EU):

The Directors do not anticipate that the adoption of these Standards and Interpretations will have a material impact on the Group's financial statements in the period of initial application except for IFRIC 20 which may impact on the measurement of stripping cost assets. It is currently not practicable to provide a reasonable estimate of the effect of IFRIC 20 until a detailed review has been completed.

3. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared on a historical cost basis, except for certain financial instruments and share based payments. Historical cost is generally based on the fair value of the consideration given in exchange for the assets acquired. The principal accounting policies adopted are set out below in this note.

3.1 Going concern

As at the date of this report, the Group has cash balances of $3,769,000 and undrawn loan facilities of $2,300,000. On 31 July 2012, the Group is contracted to repay the $10,00,000 bridging loan facility provided by Richmond, of which $7,700,000 has been drawn at the date of this report. The Group's available funds are insufficient to meet the repayment of this bridging loan facility failing due on 31 July 2012. The Group believes that it requires minimum further funding of $16,700,000 (after expenses) to repay this bridging loan facility and for working capital purposes until the Marropino Mine commences generating positive cash flows, anticipated in Quarter 1-2013, and for the Group's initial activities in the Katanga province of the DRC. Further, the Group is seeking minimum additional funding of $4,500,000 (after expenses) to commence activities at the Group's Morrua and Mutala concessions (in order to meet the minimum production requirements specified in the concession agreements).

Accordingly, if the Group is unable to obtain at least $21,200,000 of additional funding (after expenses) there is (1) a material risk that the Group will have insufficient funds to complete the production ramp-up at Marropino, (2) a material risk that the Company will breach the terms of its existing loans, (3) a material risk that the Company will have insufficient time to seek alternative sources of funding on terms and conditions acceptable to the Company and if such capital was unable to be secured, the Company and Group may become insolvent, and (4) a material risk that the Group will lose title to its Morrua, Mutala and Katanga province concessions.

The Directors are exploring two options to provide up to $35,000,000 (before issue expenses) of funding through either a loan facility from Richmond or through an equity placing. This figure represents the minimum funding of $21,200,000 referred to above, a further $11,800,000 to accelerate the development of Morrua and Mutala and an estimated $2,000,000 of expenses. The terms under which the funding may be available under either of these options have not been finalised. Further details on the proposed funding options are included in the section of the Directors' report entitled 'Events subsequent to the balance sheet date'. The Directors, having consulted with the Company's financial advisors believe that funding of at least the minimum figure of $21,200,000 (after expenses) will be available under one, or both of these options on terms that are acceptable to the Company. There can however be no certainty that funding will be available under either of these options, or if available, whether the terms will be acceptable to the Company. The Directors acknowledge that there therefore is a material uncertainty over the Company's ability to raise the necessary funding in the timeframe required.

The reliability of the Group's cash forecasts which form the basis of the identified minimum funding requirement of $21,200,000 is further materially dependant on the ability of the new process plant at Marropino to produce the forecast volumes of Ta2O5 contained in concentrate at the budgeted cost and to complete the ramp-up process in the anticipated timeframe. The new process plant was commissioned on 4 May 2012 when run-of-mine ore processing commenced. This start-up phase identified certain issues involving flow control in the water recirculation and ore pumping, mainly related to motor capacities which affected the pressure balances in the plant and in particular affected the performance of a critical cyclone which needed replacing. These types of issue are to be expected during the start-up process of such a plant and, while relatively simple matters to resolve, they have limited the throughput of ore such that production until 19 June 2012 from the new plant was negligible. While these start-up issues have been resolved, the Group has limited historical information to support the forecast production volumes or forecast expenditure. Further, the Marropino mine has never produced a profit or positive cash flows in the period it has been operated by the Group. Accordingly, while all reasonable diligence has been undertaken in the preparation of the forecast, there can be no guarantee that cash flows will be in accordance with the forecast or that the Group's funding requirement will not be materially higher than the minimum figure of $21,200,000. While the Company has historically been successful in raising funds from the issue of new equity and/or loan financing to support its operations, there can be no guarantee that this support will be available in the future on terms that are acceptable to the Company if the Company identifies further funding requirements arising from operations at Marropino.

As a result of the above factors, the Directors acknowledge that material uncertainties exists which may cast significant doubt on the Company and the Group's ability to continue as a going concern and, therefore, to realise its assets and discharge its liabilities in the normal course of the business. Nevertheless after making enquiries, and considering both the uncertainties described above and the status of the ramp-up process at Marropino and discussions regarding additional funding, the Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing the annual report and accounts.  

As a consequence of these material uncertainties the auditors have issued an audit report that is not modified but includes an emphasis of matter paragraph on going concern.

3.2 Basis of consolidation

The Consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with the IFRS compliant policies applied by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

3.3 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods provided in the normal course of business, net of discounts, value added tax and other sales-related taxes.

All of the Group's revenue derives from the sale of goods. Revenue is recognised when all the following conditions are satisfied:

- the Group has transferred to the buyer the significant risks and rewards of ownership of the goods, being principally the right to process the material and derive profits or losses therefrom and the risk of loss through damage to the material;

- the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

- the amount of revenue can be measured reliably;

- it is probable that the economic benefits associated with the transaction will flow to the entity; and

- the costs incurred or to be incurred in respect of the transaction can be measured reliably.

With respect to Ta2O5 concentrate sales, the above policy results in the recognition of revenue when the Ta2O5 concentrate crosses ship rails on destination to the final customers as the Group's offtake agreements establish delivery on either a Cost and freight ('CFR') or Cost, insurance and freight ('CIF') basis as defined under International Commercial Terms 2010 ('INCOTERMS 2010'). Both of these delivery terms transfer the risks and rewards of ownership of the product to the buyer when the product is loaded onto a maritime vessel on destination to the customer. The amount of revenue initially recognised is based on an independent third party pre-shipment assay which establishes the weight and concentration of the Ta2O5 concentrate shipped. The Group's customers are entitled to perform a post shipment assay when the product arrives at its destination. Generally the final amount payable to the Group is determined based on an average of the pre and post shipment assay results. Historically the variances between the pre and post shipment assays are not significant and the Group records adjustments to the amount of revenue recognised in the period when the post shipment assay becomes available. In the event that variances are significant and the post shipment assay is available before the Group publishes its financial statements, the adjustment to revenue is treated as an adjusting post balance sheet event and recorded in the period during which the Group shipped the product to its customer, being the period in which revenue was initially recognised.

Under the Group's exclusive sale and distribution agreement for morganite, which was terminated during the 2010 financial year (note 5), morganite sales revenue was recognised when morganite inventory was sold to the Group's distribution, selling and marketing partner. The point of sale generally occurred after the delivery date to the partner, once the partner had located buyers for the inventory. During 2011 and to the date of this report, the Group has not made sales of morganite.

3.4 Cost of sales

Cost of sales represents the direct and indirect mining, processing, royalty (production tax) and distribution costs incurred in the production and distribution of saleable Ta2O5 concentrate (e.g. diesel, explosives, salaries and wages, spares, consumables, packing, shipping, insurance, production tax, etc.).

3.5 Operating loss

Operating loss is stated before investment revenues, finance costs and taxation.

3.6 Foreign currency

The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group company are expressed in United States Dollars, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity in the translation reserve.

3.7 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. The Group has incurred relevant borrowing costs on the CPS dividend during 2011 for the construction of the new processing plant at Marropino which is a qualifying asset as defined under IAS 23, Borrowing costs.

All other borrowing costs are recognised in Consolidated statement of comprehensive loss in the period in which they are incurred.

3.8 Share-based payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 24.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to accumulated losses.

3.9 Noventa Employee Benefit Trust

Transactions of the Noventa Employee Benefit Trust ("Noventa EBT") are treated as being those of the Company and are consolidated with the Company and Group. Where loan advances to the Noventa EBT by the Company and Group are deemed not to be recoverable, the loan receivable balance is impaired to the Statement of comprehensive loss under the policy described below for impairment of financial assets in note 3.16.1.2.

3.10 Employee benefits

3.10.1 Short term employee benefits

Short-term employee benefits include salaries and wages, short-term compensated absences and bonus payments. The Group recognises a liability and corresponding expense for short-term employee benefits when an employee has rendered services that entitle him / her to the benefit.

3.10.2 Post-employment benefits

The Group does not contribute to any defined retirement plan for its employees, either defined contribution or defined benefit. Social security payments to state schemes, which arise in Mozambique and South Africa, are charged to the Consolidated statement of comprehensive loss as they are incurred.

3.11 Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

3.11.1 Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit / (loss) as reported in the Consolidated statement of comprehensive loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

3.11.2 Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Consolidated statement of comprehensive loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

3.12 Intangible assets

Acquired intangible assets, such as Mining Concessions and qualifying exploration and evaluation expenditure, are recognised at cost, less accumulated amortisation and impairment losses. Where applicable, in accordance with IFRS 6, Exploration for and Evaluation of Mineral Resources, all costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a project are written off as incurred. Exploration and evaluation costs arising following the acquisition of a right to explore a specific area or evaluate a mineral resource are capitalised, pending determination of the technical feasibility and commercial viability of the project, or upon termination of such right. This expenditure includes:

- geological studies;

- exploratory drilling;

- trenching and sampling;

- costs associated with evaluating the technical feasibility and commercial viability of exploiting the mineral resource; and

- an appropriate allocation of administrative and other general overheads directly attributable to those mineral resources.

If the Group subsequently determines that the mineral resource is not technically feasible or commercially viable, the expenditure is written off to the Consolidated statement of comprehensive loss in the period in which this assessment is made.

3.13 Property, plant and equipment

Property, plant and equipment are recognised at cost less accumulated depreciation and impairment losses. Mining asset costs previously categorised as deferred exploration and evaluation costs in intangible assets, are transferred into property, plant and equipment once technical feasibility and commercial viability have been determined. On commencement of commercial production the costs of mining assets will be amortised over the estimated life of the ore proven and probable reserves on a unit of production basis.

The Group recognises in the carrying amount of an item in property, plant and equipment, the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the Consolidated statement of comprehensive loss as an expense when incurred.

Depreciation is charged to the Consolidated statement of comprehensive loss on a straight-line basis in order to write off the cost of property, plant and equipment, less estimated residual value over the estimated useful economic lives of each component of property, plant and equipment. The Group considers this to be a reasonable approximation to depreciation of the assets over the proven and probable reserves on a unit of production basis. Where components of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

The estimated useful lives are as follows:

Assets in the course of construction are not depreciated.

Gains or losses on disposal are determined by comparing the proceeds with the carrying amount of the asset. The net amount is included in the Consolidated statement of comprehensive loss for the period.

3.14 Impairment of tangible and intangible assets

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. As at the date of this report the Group has one significant cash generating unit being the Marropino / Mutala cash generating unit comprising the Marropino and Mutala mining concessions with their associated mining and processing equipment.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Consolidated statement of comprehensive loss because the Group does not record any assets at a revalued amount.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the Consolidated statement of comprehensive loss.

3.15 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct costs and an appropriate share of overheads that have been incurred in bringing the inventories to their present location and condition (based on normal operating capacity). Cost is calculated on a weighted average cost method. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and disposal, or value in use.

Finished product consists of saleable Ta2O5 concentrate.

Work-in-progress is Ta2O5 concentrate that is awaiting final aggregation or that is "locked up" within the final processing plant.

Spare parts and consumables represents items used within the production process on a recurring basis, such as diesel, explosives, pump impellers and other spare parts.

3.16 Financial instruments

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

3.16.1 Financial Assets

All financial assets are recognised and derecognised on a trade date where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

Financial assets are classified into the following specified categories: financial assets 'at fair value through profit or loss' (FVTPL), 'held-to-maturity' investments, 'available-for-sale' (AFS) financial assets and 'loans and receivables'. The classification depends on the nature and purpose of the financial asset and is determined at the time of initial recognition. The Company and Group currently only have financial assets in the category of loans and receivables.

3.16.1.1 Loans and receivables

Trade receivables, loans, bank balances, cash in hand and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

3.16.1.1.1 Trade receivables

Trade receivables are non-interest bearing and are stated at their nominal amount that is usually the original invoiced amount less provisions made for bad and doubtful receivables. Estimated irrecoverable amounts are based on the ageing of the receivable balances and historical experience. Individual trade receivables are written off when management deems them not to be collectible.

3.16.1.1.2 Cash and cash equivalents

Cash and cash equivalents consist of cash at bank and in hand, short-term deposits, and other short-term investments that are highly liquid and can be readily converted into cash.

3.16.1.2 Impairment of financial assets

Financial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For loans and receivables carried at amortised cost, the amount of the impairment is the differences between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.

The carrying amount of the financial asset is reduced through the use of an allowance account. When a financial asset is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in the Consolidated statement of comprehensive loss.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the Consolidated statement of comprehensive loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

3.16.1.3 Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

3.16.2 Financial liabilities and equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

3.16.2.1 Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs and adjustments required to comply with applicable accounting standards for compound instruments (refer to note 3.16.2.4).

3.16.2.2 Compound instruments

The component parts of compound instruments (such as convertible redeemable preference shares, convertible loan notes or warrants issued with Ordinary Shares where the warrants do not meet the definition of equity instruments) issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair value of the liability component is estimated. For convertible redeemable preference shares and convertible loan notes, this amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instrument's maturity date. For derivative warrants, the fair value of the warrants is measured at each reporting date, or exercise date, with changes in fair value credited or charged to the Consolidated statement of comprehensive loss within finance costs. The equity component is determined by deducting the amount of the liability component on initial measurement from the fair value of the compound instrument as a whole. This is recognised and included in equity and is not subsequently re-measured.

3.16.2.3 Financial liabilities

Financial liabilities are classified as either financial liabilities 'at FVTPL' or 'other financial liabilities'.

3.16.2.3.1 Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.

A financial liability is classified as held for trading if:

- it has been incurred principally for the purpose of repurchasing it in the near term; or

- on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

- it is a derivative that is not designated and effective as a hedging instrument.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in the Consolidated statement of comprehensive loss. The Group and Company issued certain warrants which fall within the category of FVTPL (refer to note 3.16.2.4).

3.16.2.3.2 Other financial liabilities

Other financial liabilities are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

3.16.2.3.3 Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.

3.16.2.4 Derivative financial instruments

Derivative financial instruments are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. The resultant gain or loss is recognised in the Consolidated statement of comprehensive loss. Other than warrants, the Group does not have any derivative instruments.

For derivative warrants, all of which were issued as part of the Company's fundraisings, the Company and Group estimates the fair value of the instruments on initial recognition using a Black-Scholes pricing model. This fair value is 'carved out' of the proceeds received from the issue of Ordinary Shares and recorded within current liabilities. The pricing model is updated at each reporting date, or exercise date, with changes in fair value recorded in the Consolidated statement of comprehensive loss in finance costs. Upon exercise, or termination, the fair value of the warrants is recorded to the share premium account.

3.16.2.5 Embedded derivatives

Derivative embedded in other financial instruments or other host contracts are treated as separate derivatives where their risks and characteristics are not closely related to those of the host contract and the host contracts are not measured at FVTPL. Where the embedded derivative is closely related to the host contract it is initially recorded at fair value with the fair value included in the carrying value of the host contract and is not subsequently re-measured. The Group has not identified any embedded derivatives which are not closely related to the host contract.

3.17 Leases

Leases that transfer substantially all the risks and reward of ownership are classified as finance leases. All other leases are classified as operating leases. The Group currently does not have any finance leases.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.

3.18 Provisions

The Group recognises a provision when it has a present legal or constructive obligation as a result of a past event, and it is probable that the Group will be required to settle the obligation and the amount concerned can be estimated reliably. Provisions are measured based on the best estimate of the expenditure required to settle the present obligation at the reporting date. Where the effect of the time value of money is material, the amount of the provision is discounted to present value using a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The increase in the amount of the provision as a result of the passage of time is recorded in the Consolidated statement of comprehensive loss for the year.

Where the Group provides for rehabilitation of mining sites and the Group anticipates the expenditure at the commencement of exploration, the provision is recorded with a corresponding increase in the carrying value of property, plant and equipment.

4. Critical accounting judgEments and key sources of estimation uncertainty

In the application of the Group's accounting policies which are described in note 3, 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 on-going 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.

4.1 Critical judgments in applying the Group's accounting policies

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 the financial statements.

4.1.1 Impairment of the carrying value of property, plant and equipment

The Group completed an impairment review of the carrying value of its property, plant and equipment as at 31 December 2011 recording an impairment of $31,359,000 against assets with a carrying value pre impairment of $38,571,000. The impairment review was required under IAS 36, Impairment of assets, due, inter alia, to increases in the budgeted capital cost of the new process plant at Marropino and increases in budgeted operating expenditure at Marropino.

The impairment review was completed on the Marropino process plant and supporting infrastructure cash generating unit ('CGU'), which includes all of the Group's Property, plant and equipment assets as at 31 December 2011, on a fair value less costs of disposal basis. Fair value was determined on a discounted post tax cash flow basis assuming that a buyer would operate the assets in the CGU to process the Marropino and Mutala ore bodies. Cash flows have been discounted at the Company's estimated Weighted Average Cost of Capital of 19.9% which is considered to be the rate which approximates market rates for the risks specific to this CGU. The impairment is materially sensitive to the discount rate and the timing of cash flows, with significant positive cash flows (prior to the impact of discounting) anticipated from 2014 onwards and in particular over the period of processing ore from the Mutala concession. A 1% increase in the discount rate would increase the impairment charge by approximately $1,200,000. The impairment calculation is further materially sensitive to the assumptions regarding future Ta2O5 concentrate sales prices for volumes not committed by the Group under its existing off-take agreements in 2016 and beyond. The market for this product in this timeframe is illiquid and therefore the sales price estimate used in the impairment calculations, which is approximately 10% above current spot rates, takes into consideration a third party estimate of future prices after the application of what the Directors consider to be an appropriate downward risk adjustment.

There is a risk that the Mutala concession may be revoked by the Mozambique government at any time due to the Group not having complied, as at 31 December 2011 and the date of this report, with certain production requirements from Mutala. The Group does not consider it likely that the Mutala concession will be revoked given the current activities being implemented at Mutala. However, if it was revoked the remaining discounted cash flows relating solely to the Marropino ore body would be negligible and, although the Group believes it should be possible to generate significant funds by selling the facilities in place at Marropino on a piecemeal basis, there are significant uncertainties over the level of funds that could be generated in this way. Accordingly, were the Mutala license to be revoked, the results of any impairment review could differ significantly from the impairment recorded to date. The other significant uncertainty which could have a material impact on the impairment recorded to date is the extent to which the Marropino ramp-up process completes as expected (see note 3.1).

The impairment review excludes any net cash inflows which might be generated from the Morrua concession as, although the Group has early stage plans for the use of certain Marropino assets in the processing of the Morrua ore body, there are significant uncertainties in respect of the Group's ability to develop the Morrua concession as this is dependent on both the completion of a bankable pre-feasibility study and the availability of financing of up to $60,000,000. The scale of these uncertainties also increases the risk that the government of Mozambique revokes the Morrua licence due to the lack of compliance with minimum production levels as described in 4.1.2 below.

If the Group is able to realise better than forecast budgeted results and is able to bring the Morrua concession into production, part of the impairment against the carrying value of property, plant and may be reversed in future periods.

4.1.2 Impairment of intangible fixed assets

The Group's intangible assets relate principally to the Morrua mining concession in the Zambezia Province of Mozambique. The acquisition costs of the mining concession recorded within intangible fixed assets were impaired during financial year 2008 due to significant uncertainties regarding the extent and timing of any development of the concession. During the current financial year the Group updated the life-of-mine study for Morrua and completed the Environmental Impact Assessment as required by Mozambique mining legislation, incurring expenditure of $56,000. As at 31 December 2011 and the date of this report, the Group is in breach of the requirements of Mozambique mining legislation which establish minimum production levels to be achieved in pre-determined time-frames with respect to the Morrua mining concession. The Group believes there is a significant risk that the Morrua mining concession may be revoked by the Mozambique government unless the Group acts in the immediate future to commence activities at this concession. Due to this risk, all intangible assets related to Morrua are fully impaired as at 31 December 2011. To address this risk with respect to Morrua, the Group plans to (1) complete a programme for further geological, metallurgical and engineering studies at Morrua in Half 2-2012, and (2) commence production from the Morrua stockpiles by trucking ore from Morrua to Marropino for processing through the Marropino process plant. If a viable resource is determined, the Group plans to bring Morrua into full production by the end of 2013, subject to appropriate market conditions and the availability of additional external funding (shareholder investment, loan arrangements or financing offtake).

If the Group is successful in establishing the commercial viability of Morrua, part or all of the impairment of the Morrua intangible fixed assets may be written back.

4.1.3 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. From 2004 to 2009, 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.

In August 2010, $502,000 of the IVA recoverable was approved for payment by the Mozambique Tax Authority and subsequently paid. This represented 87.3% of the total IVA reclaimed to that date by the Group. Accordingly, during 2010 the Group released $1,081,000 of the provision against IVA recoverable assets reflecting the refund of IVA due and the revised assessment of the recoverability of the remaining IVA balances.

As at 31 December 2011, the gross and net IVA recoverable assets are respectively $3,452,000 and $2,588,000 at the US$ to Metical exchange rate of 26.71 at that date. While the Group remains confident that the net IVA asset will be recovered, the timing of recovery remains uncertain due to factors outside of the control of the Group, including (1) the procedures in process / to be undertaken by the Mozambique Tax Authority to validate the Group's IVA claims and the timing of those procedures; and (2) the Mozambique Government's budgeted amounts for annual repayment of IVA and the inclusion of the Group's repayments in those budgeted amounts. The Group is actively seeking recovery of all IVA balances due and anticipates that the amounts will be recovered during 2012 and early 2013. Due to the uncertainty regarding when IVA recoverable assets will be reimbursed by the Mozambique Government, IVA balances of $1,809,000 relating to 2011 have been shown as a non-current asset. The remaining IVA recoverable balance of $779,000 is presented as a current asset.

4.1.4 Convertible Redeemable Preference Shares - initial measurement

On 11 April 2011 the Group issued $11,904,000 (pre issue expenses) of Convertible Redeemable Preference Shares. While the CPS in legal form are part of the Capital Stock of the Company, IAS 32, 'Financial Instruments: Presentation', requires the Group to identify the equity and liability component parts of the instrument and assign a value to each. Identification and valuation of the components requires management to exercise judgment. Further details are provided in note 20.

4.1.5 Convertible Redeemable Preference Shares - redemption

On 1 October 2011 the Group redeemed 1,794,215 CPS by way of the issuance of new Ordinary Shares in the Company at a favourable conversion rate to that initially established when the CPS were issued. The redemption has been accounted for as an alteration to the conversion terms of the CPS resulting in a non-cash charge to the Consolidated statement of comprehensive loss of $5,731,000 representing the fair value of the additional new Ordinary Shares issued to the CPS holders that would not have been issued had the conversion terms not been altered. Further details are provided in note 20.

4.2 Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

4.2.1 Warrants

Certain warrants issued by the Group are classified as derivative financial liabilities as the warrants were 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 Ordinary Shares in the Company for a fixed price at the option of the holder, over the life of the warrants. Further details are provided in note 24.

5. REVENUE

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

5.1 Tantalum concentrate sales 

During 2011 the Group sold Ta2O5 concentrate containing approximately 80,400 lbs of Ta2O5 (2010: approximately 23,000 lbs of Ta2O5).

5.2 Morganite sales

During 2011 the Group did not extract or sell any morganite. During 2010, the Group reached agreement with its previous morganite trading partner 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 was terminated in 2010, 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.

6. SEGMENT INFORMATION

The Directors consider that the primary reporting format is by business segment. The Directors consider there to only be one business segment, being the mining, extraction and production of Ta2O5 concentrate, currently undertaken solely from the Marropino Mine in Mozambique. Morganite production is incidental to this principal activity and arises as a by-product of the Ta2O5 concentrate production. All administrative expenditure is allocated to this sole segment. No geographical analysis of the results by region, other than revenue by destination which is reported below, is provided due to the dominance of the Group's operations in The Republic of Mozambique relative to those in Jersey (Channel Islands) other than for 'Cash and cash equivalents' which are predominantly maintained in Jersey (refer to note 25).

Revenue by destination of the Group's customers was:

In both periods presented, sales to the United States of America were made to one of the Group's customers and sales to Thailand were made to the Group's other customer.

7. LOSS BEFORE TAXATION

8. AUDITORS' REMUNERATION

The analysis of the auditors' remuneration is as follows:

Audit related assurance services in 2011 comprise (1) services provided to the Group in connection with the statutory solvency statements required to be made by the Directors to comply with Jersey Law for the purposes of payment of the quarterly dividend on the Convertible redeemable preference shares; (2) statutory services relating to the 20:1 consolidation of the Company's Ordinary Shares; and (3) the review of the accounting treatment of specific transactions (2010: relate solely to the review of the accounting treatment of specific transactions). Corporate finance services relate to procedures completed by Deloitte LLP in respect of the Company's business plan in May to August 2011.

Fees payable to Deloitte LLP and their associates for non-audit services to the Company are not required to be disclosed because the Group financial statements disclose such fees on a consolidated basis.

9. STAFF

Staff costs exclude non-executive Director's emoluments and fees payable for the service of certain Directors whose services are provided by third party companies and associated share-based payment expense. Information on these fees and expenses are provided in notes 10 and 27.

10. REMUNERATION OF DIRECTORS AND KEY MANAGEMENT

Directors' emoluments reported above include fees payable for the services of non-executive Directors and certain Directors whose services are provided by third party companies and share-based payment expense. Details are provided in note 27.

The highest paid Director in the year was Mr E Kohn TD (2010 - Mr P Lawless), who received aggregate payments and benefits with a cash value amounting to $390,000 (2010 - cash value amounting to $271,000).

11. NET FINANCE EXPENSE

12. TAXATION

The Group´s mining operations are located in Mozambique within the wholly owned Group subsidiary Highland African Mining Company Limitada ('HAMCL'). The statutory tax rate in Mozambique is 32% (2010: 32%). Under the terms of the Group's Mining License Agreement, the Group has a reduced tax rate in Mozambique of 17.5% (2010: 17.5%) for the first ten years of production (i.e. until 2013). The Group's operations in Jersey are subject to Jersey corporate income taxation at the rate of 0% (2010: 0%):

13. LOSS PER SHARE

The weighted average number of Ordinary Shares for 2011 and 2010 excludes 1,743,928 shares held by the Noventa EBT.

The Group has not issued any new Ordinary Shares subsequent to 31 December 2011. Instruments that could be dilutive in future periods if the Group realises a net profit are disclosed in note 23.3.2.

14. INTANGIBLE ASSETS

Details on the Morrua intangible fixed assets including the impairment recorded in the year are provided in note 4.1.2.

During 2011 the Group completed exploration and evaluation activities on two pegmatites on the Marropino Concession - the Marropino Extension pegmatite and the Marropino South pegmatite. Total expenditure of $365,000 was incurred during 2011 principally on drilling and sampling core samples and consultant geologist fees. It was determined that these pegmatites are not economic at the current prices of Ta2O5 concentrate and the related exploration and evaluation expenditure has been impaired. Other expenditure on intangible assets during 2011 relates to the Environmental Impact Assessment for Mutala and further work on one of the Group's exploration licenses. This latter work has determined that this license does not contain economic quantities of Ta2O5 and the Group formally relinquished this license in January 2012.

15. PROPERTY, PLANT AND EQUIPMENT