24th Sep 2007 07:02
Noventa Limited24 September 2007 NOVENTA LIMITED (AIM:NVTA) Unaudited interim results for the six month period ended 30 June 2007 Highlights • Admission to AIM in March 2007 with placing raising US$15m before expenses • Operational enhancements to the Marropino tantalum mine in Mozambique to be completed in October 2007 • Full production capacity expected in the first quarter of 2008 • Strong and growing demand for tantalum Noventa Limited ("Noventa" or "the Company"), the AIM quoted tantalum mining andexploration company, announces the interim financial results of the Company forthe six month period ended 30 June 2007. During the period there were some unanticipated delays in production at theMarropino mine that meant tantalum was not available for sale resulting incashflow being lower than targeted. Extensive consultation with leading experts has confirmed the original designparameters of the mine are sound and the Board has now undertaken modificationsand enhancements to the plant which should result in Noventa delivering saleableproduct in October 2007. Chairman Clinton Wood commented, "Our first six months as a listed company havepresented the management team with some very significant challenges which allindications suggest will be successfully dealt with. Our independent expertsadvise us strongly that the enhancements currently being finalized to the plantwill deliver the desired outputs and we look forward to reaching our targetedcapacity within the next reporting period". For further information please contact: Clinton WoodNoventa Limited+27 (0)82 880 3392 / +27 (0)11 252 1900www.noventa.net Jane Stacey/Arabella HobbsConduit PR+44 (0)207 429 6606 / +44 (0)792 292 3306 Chairman's Statement 24 September 2007Dear Shareholder, Following the successful listing of Noventa on AIM in March 2007, variousoperational and processing issues led to delays to the planned production rampup. As a result management conducted an extensive review of the ore body andprocessing facilities. Expert opinions were sought to confirm the initial designparameters and an infill drilling programme was completed. As a result of thisaction, experts have confirmed that the initial design parameters are valid.Some operational and processing changes have been recommended. A number of thesechanges have already been made and yielded improvements whilst further changeshave required a shut down of the plant which is currently in progress.Re-commissioning of the plant is scheduled for completion by mid October 2007and the Directors believe that the plant will reach targeted capacity in thefirst quarter of 2008, eight months behind the original schedule. Although thisramp up and optimisation delay is frustrating, it is encouraging to havereceived independent verification of all of the initial design parameters. Marropino operations In May 2007 the Directors of Noventa announced that difficulties were beingexperienced in production ramp-up at Marropino. These difficulties related tothe variability and quality of the run of mine ore processed (i.e. lower gradeand higher percent oversize), poor efficiencies within the processing plant(i.e. recovery rates) and generally low plant availability. In addressing theoperational difficulties, the Company has: •Undertaken, with the support of various internationally recognised experts, a detailed review of the design and operation of the existing processing plant; •Undertaken a drilling programme of the Marropino ore body to confirm its mineral characteristics; •Implemented a rigorous and extensive sampling programme in the mine pit and the processing plant; •Enhanced the operational skills base at the mine by recruiting persons with the appropriate specialist skills and experience to operate the plant; •Purchased additional equipment to assist the operation in producing a consistent saleable product to service the off-take agreements; and •Extended the workplace training and skills development programs which have resulted in a significant improvement in plant availability and we now anticipate reaching our target availability in December 2007. Management has implemented a "shut down programme" to carry out modificationsand enhancements to the processing plant, at which time a comprehensivemaintenance programme will also be undertaken on the plant. Subsequent to the end of the reporting period, the Company entered into acontract with a Western Australian company, Nagrom, to purchase some of theirspecialised tantalum beneficiation equipment. It is being relocated toMozambique where it will be operated by Nagrom staff on contract. Nagrom hasover 25 years of experience processing material in Australia that has verysimilar characteristics to the tantalum ore mined in Mozambique. Prior toentering into this contract a sample of our material was processed at theirfacility, with exceptionally encouraging results. This additional standaloneplant is expected to ensure that a high quality product is consistentlyproduced. Further to the detailed review carried out on the processing plant, managementare confident that by the end of the first quarter in 2008 the above mentionedaction plan will result in the processing plant achieving its targetedproduction levels. The Company intends, as part of its existing off-take agreement, to ship itsfirst consignment of product in mid October 2007. Morrua developments In July 2007 Noventa appointed a main contractor to undertake the execution ofthe Morrua tantalum project, which is located just 30km from Marropino. Various options for the financing of Morrua are being evaluated and a finaldecision in this regard is due to be made by the end of this year. Drilling and Exploration Initial indications from the drilling programme at Marropino which covers 1,076metres are that the mineralogy of the ore body is substantially as expected andconfirms the high variability as regards grade and oversize. Full results aredue by the end of October and shareholders will be notified shortly thereafter. A further 750 metres of drilling was commissioned at Morrua to improve the datalevel in areas of inferred resource and confirm the open pit boundaries for mineplanning. This drilling was also used to provide core samples for test work togenerate the work duty specifications required for crusher and mill selection.The drilling campaign is complete and results are anticipated by the end ofOctober 2007. Initial visual inspection of the core has confirmed the pitoutlines in the south-west pit and suggested some additional resource requiringminor modifications to the pit outline in the south-eastern pit. The Company is also actively engaged in the exploration and evaluation of theother Mozambican properties that are held. At Mutala, further pitting, trenchingand sampling are underway ahead of the imminent arrival of the drill rig. Thiswork will materially assist in the firming up of the currently known oreresource and allow for the fast tracking of the development of this property.Evaluation work is also in the planning stages for both the Ginama and Gileprojects where a similar programme to Mutala is envisaged. These activities, together with the ongoing evaluation of new property shouldresult in a continuing pipeline of projects which will ensure Noventa's longterm engagement in the tantalum business. Tantalum market We continue to experience strong demand for Noventa's tantalum and are receivingan increased number of unsolicited requests for product from knowledgeableindustry participants. These parties wish to secure significant quantities ofour uncommitted future production. Morganite Negotiations with our partners are progressing well. In-depth planning for thelong term profitable development of the market for the rare gemstone, morganite,is underway. It is anticipated that formal agreements will be signed in the nearfuture. During the tantalum drilling program at Marropino, morganite was foundin one of the core samples, confirming the occurrence of morganite at a depth of67 metres below surface. Board of directors I am pleased to announce that I have accepted appointment as Executive Chairmanof Noventa. Over the past three years I have spent a significant amount of timewith the management team and the major shareholders developing the long termstrategy for the Company. Our goal is for Noventa to become one of the world'slargest, lowest cost industrial scale suppliers of tantalum concentrate. Thefoundations to achieve this are now in place. Pursuant to me taking on a full time role at Noventa, I have resigned from TheHighland Star Group and ceased to be the nominated representative on the boardof directors of the major shareholder. Alastair Hunter, the other nominatedrepresentative of the major shareholder, tendered his resignation from Noventa.On behalf of the Board of Directors I would like to thank Alastair for histireless and valuable contribution to the development of the business from itsinception, over 6 years ago. I am delighted to welcome Ron Emerson as a new member of the board, who togetherwith Peregrine Moncreiffe will be representing the interests of the majorshareholder. Ron is a non-executive director of an oil and gas explorationcompany and an insurance company, where he chairs both audit committees. He isalso an Associate Fellow of Said Business School, University of Oxford, where heworks with organisations in the areas of leadership and strategic change. Hespent five years with Standard Chartered Bank where he was global head ofwholesale banking and has been a senior advisor to the Bank of England. Ron'swealth of experience will assist with Noventa's continued development. The outlook for the tantalum industry remains positive and continues to improve.I look forward to working with the team in building a meaningful sustainablebusiness for all stakeholders. Financial results In these, our maiden interim results for the six month period ended 2007, wereport a loss of US$6.9 million arising primarily from the delay in havingmaterial available for sale (US$5.0 million) and the costs associated with thedue diligence evaluation of a large acquisition opportunity (US$1.2 million)that was not successful. Operating and overhead costs were in line withexpectations for the reporting period. Cash on hand at 30 June 2007 was US$12.7million and the Company has no debt. Cash on hand as at 31 August 2007 wasUS$8.7m A review of the accounts, budgets and forward plans, leads the directors tobelieve that, subject to the management successfully addressing the operationaldifficulties at the Marropino mine, the Company has sufficient resources andrelationships to continue in operation for the foreseeable future and areasonable expectation that targeted production levels will be reached. Outlook During this financial year the Company anticipates delivering 100,000 pounds oftantalum concentrate, which is thirty percent of our original plan. Underdeliveries will be rolled over to 2008 when the Company expects to have 490,000pounds available for sale. A very significant portion of this material issubject to contract. Our relationships with the processors of our materialremain strong and are likely to remain so based on the long term outlook for thetantalum market and the forecast production of Noventa. They are regularlyupdated on our progress and have shown their continuing support for the Company. Our first six months as a listed company have presented the management team withsome very significant challenges which all indications suggest will besuccessfully dealt with. The independent expert advice is very encouraging, thatthe enhancements made to the plant will deliver the desired outputs and we lookforward to reaching our nameplate capacity within the next reporting period. Clinton Wood Chairman Consolidated income statement for the six months ended 30 June 2007 Six months Six months Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 US$000 US$000 US$000 Revenue 580 - 33Cost of sales (726) - - ---------- --------- ---------Gross (loss) / profit (146) - 33 Administrative expenses (3,720) (913) (3,649)Other operating expenses (3,896) (2,266) (5,023)Profit on disposal ofproperty, plant and equipment 5 - 23 ---------- --------- ---------Operating loss (7,757) (3,179) (8,616) Finance income 291 3 225Finance expense (508) (798) (6,857) ---------- --------- ---------Loss before taxation (7,974) (3,974) (15,248) Taxation 1,077 670 1,584 ---------- --------- ---------Loss for the period (6,897) (3,304) (13,664) ---------- --------- --------- US cents US cents US centsBasic and diluted loss pershare (23) (16) (66) ---------- --------- --------- Consolidated balance sheet at 30 June 30 June 2007 30 June 2006 31 December 2006 US$000 US$000 US$000 Non-current assetsProperty, plant and equipment 9,159 8,113 8,470Intangible assets 1,966 2,298 2,122Deferred tax asset 5,477 3,486 4,400 ---------- --------- --------- 16,602 13,897 14,992 ---------- --------- --------- Current assetsInventory 525 588 645Trade and other receivables 1,048 397 2,725Cash and cash equivalents 12,687 201 7,303 ---------- --------- --------- 14,260 1,186 10,673 ---------- --------- --------- ---------- --------- ---------Total assets 30,862 15,083 25,665 ---------- --------- --------- EquityShare capital 26 16 16Share premium 33,098 - -Merger reserve 8,858 8,858 8,858Share incentive reserve 226 - -Translation reserve 13 23 12Retained losses (13,479) (20,733) (6,582) ---------- --------- ---------Total equity 28,742 (11,836) 2,304 ---------- --------- --------- Non-current liabilitiesProvisions 227 164 220 ---------- --------- --------- 227 164 220 ---------- --------- ---------Current liabilitiesOther interest-bearing loansand borrowings - 25,936 21,332Trade and other payables 1,893 819 1,809 ---------- --------- --------- 1,893 26,755 23,141 ---------- --------- --------- ---------- --------- ---------Total liabilities 2,120 26,919 23,361 ---------- --------- --------- ---------- --------- ---------Total equity and liabilities 30,862 15,083 25,665 ---------- --------- --------- Consolidated cash flow statement Six months Six months Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 US$000 US$000 US$000Cash flows from operating activitiesLoss for the year (6,897) (3,304) (13,664)Adjustments for:Depreciation 557 579 1,240(Profit) on disposal ofproperty, plant and equipment (5) - (23)Amortisation 156 131 307Employee share incentiveexpense 226 - -Foreign exchange loss 1 115 136Finance expense 500 679 6,713Finance income (291) (3) (225)Taxation (1,077) (670) (1,584) ---------- --------- ---------Operating loss before changesin working capital andprovisions (6.830) (2,473) (7,100) (Increase) / decrease intrade and other receivables 1,677 (194) (2,522)Increase in inventory 120 (190) (247)Increase in trade and otherpayables 84 310 6,710Increase in provisions 7 4 60 ---------- --------- ---------Net cash outflow fromoperating activities (4,942) (2,543) (3,099) ---------- --------- --------- Cash flows from investing activitiesInterest received 291 3 225Proceeds from sale ofproperty, plant and equipment 6 - 243Acquisition of property,plant and equipment (1,247) (4,199) (5,437)Acquisition of intangiblelicence rights - (53) (53) ---------- --------- ---------Net cash outflow frominvesting activities (950) (4,249) (5,022) ---------- --------- --------- Cash flow from financing activitiesProceeds from new loans - 8,264 16,305Proceeds from the issue ofnew shares 15,643 - -Share issue expenses (4,367)Repayments of borrowings - (1,379) (1,000) ---------- --------- ---------Net cash inflow fromfinancing activities 11,276 6,885 15,305 ---------- --------- --------- Net increase in cash and cashequivalents 5,384 93 7,184Cash and cash equivalents atbeginning of the period 7,303 119 119Exchange differences - (11) - ---------- --------- ---------Cash and cash equivalents atend of the period 12,687 201 7,303 ---------- --------- --------- Consolidated statements of recognised income and expense Six months Six months Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 US$000 US$000 US$000 Foreign exchange translationdifferences 1 27 17 ---------- --------- ---------Income and expense recogniseddirectly in equity 1 27 17 Loss for the period (6,897) (3,304) (13,664) ---------- --------- ---------Total recognised income andexpense for the period (6,896) (3,277) (13,647) ---------- --------- --------- Notes to the Financial Statements 1. Basis of preparation The interim financial statements in this announcement have been prepared andapproved by the Directors in accordance with International Financial ReportingStandards as adopted by the European Union ("Adopted IFRSs"). The interim reporthas been prepared on the basis of recognition and measurement requirements ofadopted IFRSs but do not contain all disclosures required by IFRSs for annualaccounts. On 19 March 2007, Noventa Limited ("Noventa") acquired 100% of the ordinaryshare capital of Highland African Mining Company Limited (former top company)('HAMC"). The consideration paid was the allotment of 20,255,812 shares of£0.0004 each in the capital of Noventa, credited as fully paid. Thisre-organisation was outside the scope of IFRS 3: Business combinations ('IFRS3') and has been accounted for as if it were a reverse acquisition. Theconsolidated accounts have been presented as if Noventa has always existedindependently for the purposes of the comparatives. The financial statements areprepared on a historical cost basis except for derivative financial instrumentswhich are stated at fair value. A review of the accounts, budgets and forward plans, lead the directors tobelieve that, subject to the management successfully addressing the operationaldifficulties at the Marropino mine, the Company has sufficient resources andrelationships to continue in operation for the foreseeable future and areasonable expectation that targeted production levels will be reached. The financial statements for the year ended 31 December 2006 are audited. Theauditor's report dated 20 September 2007 was unqualified but contained areference to the going concern disclosures set out on pages 3, 4 and 15 of thosefinancial statements. The financial statements for the six months ended 30 June2006 were reviewed for inclusion in the AIM admission document. The financialstatements for the six months ended 30 June 2007 are unaudited. 2. Movement in shareholders' equity Share Share premium Merger Retained Share incentive Translation capital Reserve income reserve reserve Total US$000 US$000 US$000 US$000 US$000 US$000 US$000 ------- ------- ------- ------- ------- -------- --------At 1 January2006 15 - 8,858 (17,428) - (4) (8,559)Shares issuedin year 2 - - - - - 2Own shares held (1) - - - - - (1)Retained loss - - - (13,664) - - (13,664)Translationdifference - - - - - 16 16Capitalcontribution - - - 24,510 - - 24,510--------------- ------- ------- ------- ------- ------- -------- --------At 31 December2006 16 - 8,858 (6,582) - 12 2,304Shares issuedon listing 4 11,307 - - - - 11,311Conversion ofloaninstrument 6 21,791 - - - - 21,797Retained loss - - - (6,897) 226 - (6,671)Translationdifference - - - - - 1 1--------------- ------- ------- ------- ------- ------- -------- --------At 30 June 2007 26 33,098 8,858 (13,479) 226 13 28,742--------------- ------- ------- ------- ------- ------- -------- -------- 3. Earnings per share: The earnings per share calculation, both for the reporting period and thecomparatives, assumes that Noventa has always existed independently. The earnings per share for the current period is based on the weighted averagenumber of shares in issue (i.e. 29,533,165 shares) i.e. taking into account thebasis on which the comparative weighted number of shares in issue weredetermined and all new share issues during the reporting period. The comparative earnings per share for 30 June 2006 has been based on a weightedaverage of 20,255,812 shares i.e. being the number of shares issued in terms ofthe share-for-share exchange only. The comparative earnings per share for 31December 2006 has been based on a weighted average of 20,732,526 shares i.e.being the number of shares issued in terms of the share-for-share exchange andthe new issue of shares subscribed for in Noventa in November 2006. There is no difference between the diluted loss per share and the basic loss pershare presented. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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