In late April 2009 Noventa began the process to place its Marropino tantalum mine in Mozambique on care and maintenance to preserve cash. The company said 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. Among these, Noventa’s morganite joint venture partners experienced a marked decrease in demand and were unable to honour their commitments.
The banks providing the pre shipment finance facility gave notice in April 2009 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 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 also reduced the frequency with which ships allowed to carry tantalum concentrate call at the port of Walvis Bay. In addition, a significant decrease in demand for capacitor grade powder meant that Noventa’s customer was not in a position to improve the payment terms on which it purchases concentrate, to compensate for any of this.
Further pressure was placed on the project due to delays in the delivery of grid power and it has been necessary to produce power using aging diesel generators.
Noventa says it is very disappointing that the above factors resulted in the company needing to take this course of action, especially at a time when the plant was performing ahead of expectations with average availability exceeding 80% during the first quarter of 2009.
Plant, equipment and all other company assets at Marropino are being secured and subject to appropriate care and maintenance procedures to facilitate as efficient a restart of operations as possible, once confidence has returned to the market in general, and specifically for tantalum and morganite.