More interest in Arabian Shield Minerals This article from Miningweb and the associated News Release may be of interest to some. It reinforces my belief in the potential value of mineral resources in the area. To bring them to development is another story and will require much patience.
P10
______________________________________________________________________LONDON - The way Tertiary Minerals [LSE:TYM] came to have the exclusive exploration rights to the world's biggest known deposit of tantalum - with an inferred resource claimed to be worth $15 billion - is like a geological detective story. When AIM-listed Tertiary announced this week it had won these rights, its share price jumped by 60 percent. The story began when Patrick Cheetham, the young entrepreneurial geologist who founded Tertiary and is its executive chairman, was researching tantalum, a metal for which demand is booming because it is essential in some electronic components used in such things as laptop computers, mobile phones and other portable devices. He was struck by the way some of Saudi Arabia's geology made tantalum occurrences likely, so he did some deeper research in a specialist library in London. He found not only references to a tantalum deposit, at Ghurayyah, 85 km south-west of the regional city of Tabuk, but also lots of interesting data about the deposit. This was enough to send him off to Saudi Arabia to investigate further. Every explorer needs good luck and it was Cheetham's good fortune to arrive in Saudi Arabia shortly after regulations had been changed so that minerals data were easily available. For years previously anyone wanting this type of information was tied up in a nightmare of red tape. His good luck continued to run and Cheetham found lots of unpublished data about Ghurayyah accumulated by the US Geological Survey when working on behalf of the Saudi government in 1999. Tertiary called in SRK Consulting for an independent assessment of Ghurayyah and the consultants estimated there is an inferred resource equivalent to 208 million pounds (94,000 tons) of tantalum pentoxide. Tantalum is not traded but mainly sold on a producer-to-consumer basis. Nevertheless, the present price appears to be $75/ a pound, from which it can be calculated the deposit is worth more than $15 billion. Cheetham had to persevere for another year before finally Tertiary heard this week it had been awarded by the Saudi government a five-year exploration licence, renewable for up to nine years, and the right to acquire a 50-year mining lease over the 47 square kilometre area. Tertiary will now start a £3.5m exploration programme. When all this was announced, Tertiary's share price bounded up from 18p to 32p in very active two-way trade, valuing the company at £7.3 million. Since that first flush, it has eased back to stand at 28p today, partly because investors who bought the shares at about 16p seem to have been taking some profit. Cheetham also points out: "There is always some investor scepticism when a small company is involved in a very big project." However, Cheetham, 41, has a reassuring track record. A graduate of London's Royal School of Mines, he has discovered three deposits that subsequently became producing mines for three Australian public companies, including the Nimbus silver-zinc deposit east of Kalgoorlie. On the basis of that discovery, Archaen Gold, a company he had formed, was taken over for A$50 million cash two years after listing, more than four times the original listing price. He returned to the UK in 1996 and founded Tertiary with the objective of exploiting the new exploration opportunities that had arisen in Sweden as that country opened its doors to foreign explorers as a result of its membership of the European Community. Tertiary was listed on AIM in November 1999. Since then it has had some encouraging results from its Rosendal tantalum project in Finland as well as its Logarden zinc-lead-copper prospect in Sweden and is giving high priority to the Gallujavri platinum group metals target in northern Norway. Cheetham does not expect there will be any problems raising the cash for the Ghurayyah exploration programme, particularly as most of the expenditure will take place after the first two years. To start with, Tertiary can expect to collect £1.5 million from holders of warrants that expire in November and are well in-the-money as they can be exchanged for shares at between 8p and 12p.
______________________________________________________________________
Here is the News release:
______________________________________________________________________
RELEASED ON BEHALF OF: TERTIARY MINERALS PLC
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.
Photos available on: www.mining-investor.com