Tantalum

[sumisu]

Hot on the Tin-Tantalum Trail

By Andrew Burger

28 Jul 2008 at 04:34 PM GMT-04:00

http://www.resourceinvestor.com/pebble.asp?relid=44799

Focused on tin-tantalum-niobium exploration, Gippsland Ltd. and Shamika Resources are among a small group of juniors that stand to gain from changing supply-demand conditions in the global markets.

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Tin, tantalum and niobium exploration and resource development is heating up as increasing consumption and tightening supply drives up raw-material and refined-product prices.

Tin his been on a “massive bull run” since end 2005, when prices were hovering around $6,000 per tonne. It’s since shot up to $25,000 per tonne, increasing 53% this year, notes Sandeep Joon, a research analyst with SMC Comtrade Ltd. Demand rose nearly 19% in 2006 and is forecast to increase another 3% or more over 2007 levels this year. Meanwhile supply has been decreasing with the closing of tin mines in Indonesia, which along with China, Peru, Bolivia and Brazil account for over 90% of worldwide production. “The key reason behind the bull run is the uneven production from Indonesia and erratic exports from China,” Joon wrote.

The situation is much the same for tantalum. The world’s leading tantalum miner, Perth’s Talison Minerals, has reportedly notified its biggest customers- capacitor manufacturers in Japan, the U.S., and Europe- that contract prices may need to rise as much as 80% in order for it to continue extracting tantalum oxide from its Wodgina mine profitably.

Several exploration companies on the tin-tantalum trail stand to benefit from the changing market landscape. Among them are Gippsland Ltd. (GIP), which recently completed a drilling and resource expansion and upgrade program at its Abu Dabbab project in Egypt. As is true for a range of metals, the Democratic Republic of Congo is a country frequently mentioned as a potentially large producer. Having secured exploration permits for 720 mining blocks from the new government of President Joseph Kabile and with another 300 applications in progress, Shamika Resources is planning an IPO on the Toronto TSX Venture Exchange this fall.

Gippsland Upgrades Tantalum Resourcep

Gippsland on July 14 announced that tantalum and tin assays of samples from its recently completed in-fill diamond-drill sections at its site in Abu Dabbab site in Egypt have led to an 11% overall resource increase, from 40-44.5 million tonnes, and a resource upgrade: 32.5 million tonnes are now in the Measured and Indicated categories according to JORC standards. Overall tantalum pentoxide grade has rose from 243-250 grams/tonne (g/t).

The resource expansion and upgrade help pave Gippsland’s way forward. Company mining engineers are using the resulting new resource model to complete pit optimization studies while the ore reserve increase will strengthen the project and company’s financial model, offering project finance banks a heightened level of confidence and hence potentially easier and lower cost access to capital for Gippsland.

"The drilling programme has been an outstanding success despite delays caused by the industry-wide problem of assay laboratory backlogs,” commented Gippsland executive chairman Jack Telford in a media release. “It has produced an 11% resource increase with 73% of the resource now categorized as Measured and Indicated while the global tantalum pentoxide grade has increased from 243g/t to 250g/t. These results further underpin the robustness of the Abu Dabbab project whilst reinforcing Gippsland's position in becoming a major supplier to the global tantalum industry."

Revised Valuation & Target Price

“Tin is looking attractive for long term for investors due to its strong fundamentals .The demand is strong, while the supply is decreasing,” writes SMC Comtrade’s Joon. “Supplies from Indonesia have been declining since the government cracked down on illegal miners in Bangka Belitung, while China has curbed exports by imposing export taxes on the metal, and Congo, Africa's largest Tin producer, has banned the export of the metal from a big producing area of the country that is controlled by rebels.”

Taking stock of recent developments, Fox Davies Capital mining research analysts Andy Rose and Andy Davidson have reiterated their ‘Buy’ recommendation and revised their valuation and share price targets for Gippsland.

Rose and Davidson have set a 27-pence (~$0.54) per share target for Gippsland’s shares. The stock’s been trading between 4.5 and 5.0 p (~$0.09 and $0.10) recently. “We have assumed that the additional tonnage will result in a small extension to mine life. Additionally, we have increased the grades of ore treated to reflect the higher grades in the revised ore resources and have marginally improved recoveries,” they wrote in a July flash research note.

A New Producer Taking Shape in the DRC?

From its two main offices in Montreal and Goma in northern DRC, Shamika Resources has amassed a large and promising portfolio of permits for 720 mining blocks in the DRC’s resource-rich Kibara mineral belt with another 300 applications pending.

Potentially rich in cassiterite, tantalite and columbite, management is focusing on exploration and development of tin, tantalum, niobium and tungsten.

Shamika’s geologist-in-charge of its nascent Kalimbi Hill prospect within the Nyabibwe property in South Kivu estimates that one, 700 x 3,000 x 200-meter vein there contains 1 million tonnes of tin ore.

Certified sample assays conducted by SGS Lakefield Research Ltd. Showed tin oxide percentages in three ore samples showed 66.6%, 77.6% and 72.6%, respectively, which translates to tin percentages, respectively, of 52.5%, 61.1%, and 57.2%.

Management plans to develop the Kalimbi project and “has conducted its own due diligence in order to confirm that the deposits are there, that they are big, that they can be expanded and that the company has the capability of developing them.”

Located in western North Kivu Province, Walikale is in another current focus for Shamika management. Located in an area of important crossroads in the eastern DRC and the core of the Kibara mineral belt, cassiterite deposits there are well-known, have high iron content and hence have been dubbed ‘Main Rouge.’ Tin oxide content is approximately 60% -- with 45-55% pure tin –- and the area is also known to host high-quality deposits of columbo-tantalite, typically in more remote, rainforest areas, according to Shamika’s website.

Shamika is now looking to raise capital. Besides working towards an IPO on the TSX Venture Exchange, management is negotiating a $C3-million private placement.