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Move to Care and Maintenance

24th Apr 2009 11:14

RNS Number : 1216R
Noventa Limited
24 April 2009
 

NOVENTA LIMITED

("Noventa" or the "Company")

MOVE TO CARE AND MAINTENANCE

Shareholders are advised that the Company has commenced negotiations with all stakeholders with a view to placing the Marropino mine on Care & Maintenance to preserve cash resources. Discussions with potential strategic partners will continue, with a view to production recommencing on the introduction of the necessary funding to allow construction of the hard rock circuit at Marropino.

Operations at Marropino have been impacted by a number of factors directly linked to the global financial and economic crisis including:

The Company's morganite joint venture partners have experienced a marked decrease in demand and have not been able to honour their commitments;
The banks providing the pre shipment finance facility gave notice in April that the facility is no longer available. This is despite Noventa complying with all covenants;
The broad based decrease in the provision of credit by the banking sector has resulted in an inability to replace the pre shipment facility or to secure short term loans on acceptable terms, despite the Company's balance sheet being ungeared;
The decrease in global trade has reduced the frequency with which ships allowed to carry tantalum concentrate call at the port of Walvis Bay. This together with the withdrawal of the pre shipment facility has placed excessive strain on the working capital funding requirements;
A significant decrease in demand for capacitor grade powder has meant that our customer is not in a position to improve the payment terms on which they purchase concentrate, to compensate for the above.

Further pressure has been placed on the finances due to delays in the delivery of grid power and in the reimbursement of value added tax. In the intervening period it has been necessary to produce power using aging diesel generators.

It is very disappointing that the above factors have resulted in the Company needing to take this course of action, especially at a time when the plant has been performing ahead of expectations with average availability exceeding 80% for the past three months. 

Whilst the Board believes there is a realistic prospect of obtaining the necessary financial support within an acceptable timeframe, and the company will be pursuing the present search for investment capital without deviation from that purpose, the Board considers it prudent under prevailing economic circumstances for the Company to take this significant step while sufficient funding remains in place for Care & Maintenance to be undertaken. Plant, equipment and all other company assets at Marropino will be secured and subject to appropriate Care & Maintenance procedures in order to facilitate as efficient a re-start of operations as possible, once confidence has returned to the market in general - and specifically for Tantalum and Morganite. Implications for the Company's employees are considerable, and this whole matter will be handled with the utmost diligence.

The annual financial statements for 2008 are due to be published at the end of June. All stakeholders will be kept informed with respect to any progress on these issues.

For further information please contact:

Clinton Wood

Noventa Limited

+27 (0) 82 880 3392 / +27 (0) 11 823 1400

www.noventa.net

Gerard Kisbey-Green

Investec Investment Banking

+44 (0) 20 7597 5167

Fiona Hyland / Ed Portman

Conduit PR

+44 (0) 20 7429 6614/ +44 (0) 07776005847 

This information is provided by RNS
The company news service from the London Stock Exchange
 
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