| FEB 4, 2002
TERTIARY
WINS EXPLORATION RIGHTS IN SAUDI ARABIA TO WORLD'S LARGEST KNOWN
TANTALUM DEPOSIT
· Saudi Asset
Overlooked By Lack Of Information Access And Market Conditions
· Advances In Mineral Processing The Key To Early Exploitation
· Deposit Shows Remarkable Grade Consistency And Continuity
· Company Encouraged By New Mining Code And Availability Of Soft
Loans
AIM-listed Tertiary Minerals plc has been awarded a five-year exclusive
exploration licence over the world's largest known tantalum deposit*
at Ghurayyah in the north west of Saudi Arabia. The licence from
the Saudi Government is renewable for up to nine years and gives
Tertiary the right to acquire a 50-year mining lease over the 47
square kilometre area.
Forming a plug in the earth's surface some 900m in diameter - equivalent
in area to 100 soccer pitches - the Ghurayyah (Goor-eye-ah) deposit
is a granite intrusion which shows remarkable continuity and consistency
of tantalum grade. According to calculations by SRK Consulting on
behalf of Tertiary, the deposit contains a bulk tonnage, open-pittable
inferred resource, to a depth of approximately 250m, of 385 million
tonnes grading 245g/t tantalum pentoxide (Ta2O5), 2,840g/t niobium
pentoxide and 8,915g/t zirconium oxide. The inferred resource remains
open below 250m.
This is equivalent to 208 million pounds (94,000t) of tantalum pentoxide
(worth in excess of US$15bn at a price of US$75/lb of Ta205) and
is greater than the published combined reserves/resources at the
Greenbushes and Wodgina mines in Western Australia which jointly
account for around 30p.c. of world tantalum minerals output at present.
Although explored on behalf of the Saudi Government by Watts, Griffis
and McOuat (WGM) in 1978 and the US Geological Survey (USGS) in
1999, Ghurayyah has been overlooked by most exploration companies.
This is largely because of difficulty in gaining access to information
and the fact that the WGM work in particular was undertaken at a
time when the global demand for tantalum was a fraction of what
it is today and prices were significantly lower.
Since then the market for tantalum has been transformed by the explosive
growth in demand from the electronics industry (accounting for over
50p.c. of annual consumption) for use in mobile phones, laptop computers
and other portable devices.
(*Laznika. P 1999. Quantitive Relationships Among Giant Deposits
of Metals. Economic Geology Volume 94, number 4)
Tertiary's chairman Mr Patrick Cheetham says Ghurayyah represents
a great opportunity for the company. "The challenge for the company
is to unlock the inherent value tied up in Ghurayyah. Traditionally
the world's largest mining companies are built on the back of single
large deposits that sustain profitable production over several decades.
Ghurayyah has that potential and advances in mineral processing
provide the key."
Whilst Saudi Arabia is recognised for holding one quarter of the
world's oil reserves, the country's mineral endowment is less well
known. However, the government has recently proclaimed the mineral
sector as a development priority and has set ambitious growth targets.
A new Mining Code conforming to best international practice is awaiting
Royal assent.
AMBITIOUS GROWTH TARGETS FOR MINING SECTOR
Although modern gold mining operations have been developed under
State control, Saudi Arabia has only recently encouraged the involvement
of international mining companies. Apart from the drafting of the
new Mining Code, a number of other legislative changes have been
made during the past two years with the objective of increasing
foreign investor interest in Saudi Arabia, including its mining
sector. In April 2000, a new Foreign Investment Law was issued under
which:
· Foreign investors can own 100p.c. of a business with no local
partner required
· Foreign investors can benefit from incentives previously available
only to local companies such as soft project development loans
· Profits tax reduced from 45p.c. to 30p.c. and losses can be carried
forward indefinitely.
Government has also established the Geological Survey of Saudi Arabia
in order to help accessing of geological information in the country,
and this has enabled Tertiary to carry out a detailed assessment
of Ghurayyah (extending over almost twelve months) during the licence
application process. The licence was awarded against strong local
competition.
DEPOSIT AMENABLE TO LOW-COST OPEN PIT MINING
Ghurayyah is located at the confluence of two wadi (dry river bed)
systems 85km south-west of the regional city of Tabuk and 55km from
the Red Sea. There is excellent access by sealed roads and local
tracks. Around 10 million tonnes of the estimated resource outcrops
above wadi level, offering the possibility of a zero waste stripping
ratio for the first few years of mining. Thereafter, waste strip
ratios would be very low.
Metallurgical testwork on behalf of WGM in 1978 defined at least
one possible flowsheet which achieved overall recoveries of 77p.c.
of tantalum and 80p.c. of niobium into separate marketable products.
The test laboratory also indicated that higher recoveries should
be possible with process refinement and flowsheet optimisation.
Since this work was undertaken, significant advances have been made
in the recovery of fine-grained tantalum and niobium minerals.
Tertiary has proposed a three-phase work programme over the term
of the licence and an initial commitment of £3.3m, with the bulk
of the expenditure after the second year. The early part of the
Ghurayyah programme will focus on testwork to provide a detailed
understanding of mineralisation and determine the lowest cost production
route to marketable products. Work will also include economic scoping
studies. During this period Tertiary will give priority to establishing
the industry relationships necessary to ensure successful development
of the project with the objective of positioning the company to
meet forecast future demand increases for tantalum. The market for
tantalum powder in capacitors has grown at an annual rate of 18p.c.
since 1993 and at 34p.c. in 2000.
The company regards development of Ghurayyah as a medium term objective
that will complement its much smaller Rosendal project in Finland
(1.3 million tonnes grading 289g/t tantalum pentoxide) which could
be brought into production within two years. A recent independent
scoping study shows Rosendal to be an economically attractive development
proposition with payback of just over two years and an internal
rate of return of 33p.c. This is based on a stand alone 150,000tpa
open pit mining project yielding an annual average of 66,000lbs
of tantalum pentoxide and 84,000t of feldspar concentrates.
Patrick Cheetham has a track record of discovering deposits which
subsequently became producing mines for three Australian public
companies in which he has previously been involved. He has a controlling
interest in Tertiary which he formed in 1996 and floated on AIM
in November 1999. Tertiary has 22.8 million ordinary shares in issue
and is capitalised at around £3.8 million.
Pic Editors: Photos available on: www.mining-investor.com
Further Information:
Patrick Cheetham,Tertiary Minerals plc.
Tel: 07767-458751(mobile)
John Greenhalgh/Ron Marshman, City of London PR Ltd.
Tel: 020-7628-5518; 070500-39678
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