30 July 2012

Mozambique: Mining Company in Financial Difficulties

Maputo — The British mining company Noventa, whose Mozambican subsidiary, the Highland Mining Company, runs the Marropino tantalite mine in the central province of Zambezia has run into severe financial difficulties.

According to the online publication "Mining Weekly", Noventa announced last week "that it was facing possible insolvency if it could not extend a current loan facility or secure longer-term additional financing"

The company admitted that "difficult market conditions and limited interest from its investors have dissolved the viability of a 35-million US dollars equity financing option for the completion of its much-delayed Marropino process plant upgrade, in Mozambique".

Noventa had been trying to negotiate terms for a secured loan from a syndicate of lenders, and to extend an existing ten million dollar loan facility from its largest shareholder Richmond Partners Master.

It has also been exploring "alternative funding options to ensure the group meets its bridging loan payment obligations, as well as to ensure sufficient working capital for a number of its projects".

This gloomy prospect is in sharp contrast to an upbeat interview with the general manager of Highland Mining, Delio Darsamo, in Monday's edition of the Maputo daily "Noticias" who claimed that the upgrade is going ahead. He said that 45 million dollars is being invested, and that a new tantalite processing plant could come into operation later this year.

Last year, the company exported 75 tonnes of tantalite, earning a profit of 150,000 pounds sterling (about 235,000 US dollars). Darsamo envisaged attaining profits of 200,000 pounds a year from Marropino in the coming period.

Noventa has two other mining concessions in Zambezia, at Morrua and Mutala, neither of which is currently in production. A statement from the company's Chief Executive Officer, Fernando Fernandez-Torres, accompanying the Noventa audited results for the 2011 financial year, admitted that the company had not fulfilled the minimum production requirement at either Morrua or Mutala.

This means that the Mozambican government can revoke Noventa's title to these two concessions at any time. Noventa has promised to "immediately commence activities on these concessions once the development of Marropino was complete", said Fernandez-Torres.

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