April 8, 2003

TERTIARY IS HANDED POSITIVE SCOPING STUDY FOR WORLD’S LARGEST TANTALUM-NIOBIUM PROJECT

• Ghurayyah Base Case Gives 3-Year Pay-Back On US$101m Capital Cost
• Up To 87.5p.c. Of Project Funding Thought Available Locally
• Further Feasibility Studies Recommended
• Project Start Flagged For 2006

Positive results have been received by AIM-listed Tertiary Minerals from the economic and technical scoping study for development of its 100p.c. owned Ghurayyah tantalum/niobium deposit in Saudi Arabia. The study, carried out by St Barbara Consulting, shows that all the main development options considered for the deposit, on a fully equity funded basis, have a pre-tax internal rate of return (IRR) of over 25p.c. and net present values (NPV) ranging from US$55m to US$285m (at discount rates of 10p.c-20p.c).

Financial modelling was carried out over an initial 20-year mine life with costs estimated to a plus or minus 30p.c. Current prices for niobium products have been used and tantalum product prices factored to the tantalum concentrate prices forecast by Metal Bulletin Research.

For the Base Case flowsheet, average annual revenues of US$106m and operating costs of US$51m are envisaged. This gives a three-year payback on estimated capital costs of US$101m.

It is believed that 87.5p.c. of the project’s capital costs may be available through local funding mostly at low interest rates. Discussions with potential buyers of Ghurayyah products have already begun.

Says Patrick Cheetham, Tertiary’s chairman: “We are very, very pleased. The net result of such funding is that the equity component required could be as little as 12.5p.c. and so providing significant leverage of returns on equity employed.

“This supportive project financing environment gives the Ghurayyah project a competitive advantage over other new tantalum projects currently on the drawing board.

“All process options show very attractive project economics and the Base Case returned the highest NPV and IRR. The study has recommended further feasibility studies leading to a project commitment in 2006 when growth in the tantalum market is expected to have resumed. Tertiary is investigating sources of non-equity funding to progress the work programme”.

Ghurayyah’s base-case flowsheet envisages downstream production of tantalum and niobium salts and ferro-niobium, all currently traded on world markets and for prices readily available.

The Base Case was set on mining 1.52m tonnes of ore per annum over an initial 20 year mine-life and production of tantalum-niobium concentrates containing 600,000lbs per year of tantalum pentoxide and 6.3m lbs per year of niobium pentoxide and separate saleable 10,000 tonnes per year of zircon concentrate.

“The potential of the whole deposit – the Base Case addresses only a small part - would allow a mine life of 250 years and therefore could support substantial expansion at higher production rates if the market is there to support it,” states Tertiary

Production of concentrates would be by flotation and magnetic separation of ore after crushing. Smelting of concentrate to a low-radioactivity iron-niobium-tantalum alloy and production of ferrio-niobium for the steel industry, as well as salts of tantalum and niobium were also taken into account. A similar flowsheet is currently employed at the Pittinga tin-tantalum-niobium mine in Brazil.

However, in the first years of production, Tertiary’s objective would be to process the ore only as far as necessary to establish marketable “raw materials” and to sell to existing processors. “The Base Case might not be followed if intermediate materials can be sold at good contract prices”, says the company.

Flowsheets involving the production of alloy and synthetic concentrate “raw materials” show a lower degree of process risk than the Base Case. Some also have lower capital costs and may prove more attractive to the company if adequate sales contract can be negotiated.

Tertiary points out: “Whilst the Pittinga mine has successfully made and sold such intermediate products in the past, future prices for these materials can only be established by negotiation with processors. The scoping study has established preliminary specifications and target prices for intermediate products based on acceptable rates of return and estimated costs of production.”

EDGE ON COMPETITIVE MATERIALS

The Scoping Study has considered a number of alternative flowsheets where the concentrates are smelted into different alloys and synthetic concentrates including ATR alloy for the steel industry. During smelting the uranium and thorium contained in the concentrates are separated into a relatively inert slag for disposal.

The low levels of uranium and thorium will be a distinct advantage, states Tertiary, as competitor raw materials (tantalite and columbite) have variably higher levels of “natural” radioactivity and acceptable limits of uranium and thorium for import of these materials are becoming increasingly restrictive in the western world.

ATTRACTIVE FINANCING ENVIRONMENT

Commenting on the project financing environment in Saudi Arabia, Mr. Cheetham said that since the change in Foreign Investment Laws it had become very attractive with Government funding available on low interest terms for, typically, 50p.c. of capital costs. In addition, he added, project finance guarantees and low cost debt funding may be available for a further 37.5p.c. of capital costs through the British Aerospace Project Finance Initiative administered by British Offset which already supports the project.

The Scoping Study was carried out by St.Barbara under the direction of Richard Wilkinson, a metallurgist/chemical engineer, who was formerly in charge of mineral processing research at Billiton Research. SRK Consulting was responsible for mine planning and costing and GBM Minerals Engineering Consultants for process plant planning and infrastructure costings.

Ghurayyah, reportedly the largest tantalum deposit in the world, contains an Inferred Minerals Resource of 385m tonnes grading 245g/t tantalum pentoxide, 2,840g/t niobium pentoxide and 8,915g/t zirconium oxide, and shows “remarkable consistency” in content.

Further Information: Patrick Cheetham, Tertiary Minerals:
Tel: 01625-626203; mob: 07767-458751.

Ron Marshman/John Greenhalgh, City of London PR Ltd.
Tel : 020-7628-5518