Tertiary lifts share suspension and provides update on Ghurayyah licence progress

Tantalum is used in capacitors in the electronics industry and niobium in stainless steel alloys.

The company says that, on the recommendation of the Saudi Deputy Ministry for Mineral Resources (DMMR), it has applied, together with its two Saudi joint venture partners, for a new 47km2, 5-year renewable exploration licence covering the Ghurayyah deposit and the surrounding area. This application is in the joint names of: Tertiary (Middle East) Ltd (a wholly-owned subsidiary (50p.c.); AH Algosaibi Bros Co (25p.c.); Al Nahla Trading & Contracting Co (25p.c.). The Mining Code provides that the holder of an exploration licence is entitled to apply for a mining licence over any commercially exploitable deposit.

Tertiary says this application is being processed by the DMMR but the licence has not yet been issued. The application covers both tantalum and niobium, the main metals of economic interest at Ghurayyah, and associated non-radioactive minerals. It does not include uranium as the Saudi Government does not wish to licence that material for production at the present time. Tertiary's previous economic evaluations of the deposit have considered revenues from tantalum, niobium and zircon only.

The existing joint venture agreement between Tertiary and its Saudi partners has also been amended by a Deed of Variation that will strengthen their relationship and speed up the remaining US$5m funding of the current feasibility studies at Ghurayyah. The two Saudi joint venture partners will accelerate their future earn-in contributions to the project and, together with Tertiary, form a local (Saudi) joint venture operating vehicle.

Tertiary chairman, Mr Patrick Cheetham, commented today: "Work on the project feasibility studies outside Saudi Arabia has continued steadily throughout the six months suspension period and we hope to issue a progress report shortly. Whilst the suspension has been a period of unwelcome uncertainty for shareholders, I am pleased that our licence application is being progressed and that we have advanced the relationship with our Saudi joint venture partners."

Commenting on tantalum/niobium markets and prices, Mr Cheetham says that in the company's previous economic valuations of Ghurayyah, tantalum and niobium revenues have been approximately equal. However, niobium is currently the main metal of value as its trading price has increased more than three-fold in the past six months. Tantalum prices are also starting to increase after a period of consolidation.

Interim statement hints at additional niobium interest

Meanwhile, in the company's interim statement for the half year to March 2007, Mr Cheetham reports that Tertiary is "continuing with other business as normal". In particular, he says that Tertiary has commenced negotiations which could lead to the acquisition of an interest in a second major niobium project. Other project acquisitions are under consideration, and joint venture discussions are underway with parties seeking to acquire an interest in certain of the company's Scandinavian exploration assets, he adds.

Mr Cheetham also comments that although the company believes the new Ghurayyah exploration licence will be issued in due course, the terms and conditions it may contain in respect of processing radioactive minerals are, as yet, unclear. The Tertiary Board therefore considers it prudent to make a provision against the full carrying value of the Ghurayyah project until such time as a new exploration licence is issued on terms and conditions acceptable to the company, at which point the provision can be reversed.

This provision was responsible for most of the loss of £615,435 at the interim stage. Net cash at the end of the period amounted to £614,000.

Background

The Ghurayyah deposit is located in north west Saudi Arabia near the city of Tabuk, some 50km from the Red Sea coast and about 15km from a major highway. It contains an Inferred Mineral Resource of nearly 400 million tonnes grading 245g/t (0.024%) tantalum pentoxide (Ta2O5), 2,840g/t (0.28%) niobium pentoxide (Nb2O5) and 8,915g/t (0.89%) zirconium oxide (ZrO2), as well as 1,270g/t (0.13%) yttrium oxide (Y2O3). The deposit is amenable to low-cost open pit mining.

A detailed economic and technical scoping study suggests the deposit has commercial potential as a future supply source of tantalum, niobium and other non-radioactive raw materials. At a mining rate of 1.5 million tonnes/year would have a life of over 200 years. A preliminary feasibility study is in progress.

Suspension
Tertiary's original exploration licence at Ghurayyah was granted in January 2002 under the then current mining code (the Old Code) for an initial five years, renewable for a further period of up to four years. It covered tantalum, niobium, rare-earths, uranium and associated minerals.

The Old Code was replaced in January 2005 with a updated Mining Code (the New Code) which recognises, and includes transitional provisions relating to, any licences grant under the Old Code.

In December 2006 Tertiary applied for a renewal of its exploration licence under the terms of its issue under the Old Code and the transitional provisions of the New Code. It also applied for a new Mining Licence under the New Code.

The decision voluntarily to suspend Tertiary's shares in January this year was made immediately following notification from DMMR that the applications for a renewal of its Exploration Licence and for a Mining Lease over the Ghurayyah deposit had been rejected due to claimed non-compliance with the technicalities of the conditions of application and renewal.

Tertiary believed, and continues to believe, that it has fulfilled its obligations under the terms of its Exploration Licence and was entitled to a renewal under its terms of issue and that the licence also grants the company the right to obtain a Mining Lease. However, following discussions with its Saudi investment partners, Tertiary elected to seek a mutually acceptable solution with DMMR to retain its interest in Ghurayyah. Consequently, and acting on recommendations from DMMR, Tertiary and its investment partners submitted the joint application referred to above in February 2007 with supplementary submissions being made since then.