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EQUITY RESEARCH


                                                                                                                                 Luisa Moreno, Ph.D, Analyst
                                                                                                                                 lmoreno@jacobsecurities.com
                                                                                                                                 +1 (416)866-8380




 July 19, 2011


  Tantalum and Niobium Primer                                                                                               Stock Rating: SPECULATIVE BUY
                                                                                                                            Risk Rating: High


  Two Critical Metals




Jacob Securities Inc. (“Jacob Securities”) does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm
may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

For analyst certification and other important disclosures, refer to the Disclosure Section, at the end of this report
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                                                                                       Contents


Investment Summary .............................................................................................................................................................. 3
General Properties .................................................................................................................................................................. 4
Mineralogy and Occurrences .................................................................................................................................................. 4
Resources and Reserves.......................................................................................................................................................... 8
Mining and Processing ............................................................................................................................................................ 9
World Supply ......................................................................................................................................................................... 11
World Demand ...................................................................................................................................................................... 16
International Trade ............................................................................................................................................................... 23
Prices ..................................................................................................................................................................................... 24
Recycling and Substitution .................................................................................................................................................... 26
Profiled Companies ............................................................................................................................................................... 27
Acronyms .............................................................................................................................................................................. 35




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                                Investment Summary


                                Two Critical Metals

                                  There is currently a growing supply gap of tantalum products. This situation has
                                   been caused by the fact that the largest tantalum mines in Australia, Canada and
There is a growing
                                   Africa were forced to close in 2008–2009 due to the global economic slowdown and
supply-demand gap for              depressed tantalum prices. There are currently a few mines and projects under
tantalum.                          development, and those that are able to start first and have a production cost
                                   advantage will have a better chance to secure contracts with the top three
                                   processors and develop a sustainable tantalum mine business.

                                  The European Union (EU) has recently declared niobium and tantalum as critical
                                   metals. Brazil, the world’s ultimate producer of niobium, has recently engaged in a
                                   joint venture (JV) with Korean and Japanese companies with the aim to gain access
Niobium and tantalum
                                   to new processing technologies and expand niobium applications and production. A
have been declared                 drastic difference from the current rare earth situation between China and the rest of
critical elements by the           world. The EU has identified niobium as a critical material given its unique
EU.                                characteristics and significance for the EU manufacturers and economy. The largest
                                   end-use market for niobium is HSLA (high strength, low alloy) Steel. Niobium
                                   demand is expected to grow at 5–7% per year going forward, driven by the growth in
                                   the emerging economies and their anticipated consumption of steel.

                                  It has been estimated that in 2009 about 50% of the tantalum supply was from the
                                   DRC and Rwanda, two zones affected by brutal guerrilla wars and genocide. Conflict
                                   minerals from these areas are often used to support these wars. The “Conflict
A significant                      Minerals Law” in the U.S. aims at restricting the trade of conflict minerals, and many
percentage of tantalum             technology companies, like Apple Inc. (NASDAQ:AAPL), Motorola Solutions Inc.
supply is from African
                                   (NYSE:MSI) and AVX Corp., are taking initiatives to comply with the law. The
conflict areas.
                                   restrictions regarding conflict minerals are likely to improve tantalum trading
                                   conditions and keep prices at sustainable levels for conflict-free tantalum miners.

                                  There are only a few listed companies that offer a clear exposure to tantalum and
Noventa Ltd.,Commerce
                                   niobium, which includes: Noventa Ltd. (AIM:NVTA;TSX:NTA), Commerce Resources
Resources Corp.,                   Corp. (TSXV:CCE), Pacific Wildcat Resources Corp. (TSXV:PAW) and Gippsland
Pacific Wildcat                    Ltd. (ASX:GIP). Noventa is a pure-play tantalum company, currently mining and
Resources Corp. and                producing tantalum concentrate at Marropino in Mozambique. Pacific Wildcat is
Gippsland Ltd. are
                                   exploring niobium in Kenya’s Mrima Hill deposit and evaluating the dormant Muiane
profiled in this report.
                                   tantalum mine in Mozambique. Commerce Resources is exploring the Upper Fir
                                   property in British Columbia for tantalum and niobium. Gippsland Ltd. is the owner of
                                   the tantalum project Abu Dabbab in Egypt; the company plans to start production in
                                   2013. Some of the rare earths companies, like Avalon Rare Metals Inc. (TSX:AVL)
                                   and Quest Rare Minerals Ltd. (TSXV:QRM;OTC:QMNME), also have significant
                                   amounts of tantalum and niobium minerals in their deposits, and lithium company
                                   Galaxy Resources Ltd. (ASX:GXY) produces tantalum concentrate as a by-product.

                                  Tantalum and niobium will likely keep their status of critical materials for the world’s
                                   largest economies (e.g. U.S., Japan, EU and China) because of their essential
                                   applications in the major growing sectors of their economies, such as the
                                   electronics, energy, construction and manufacturing sectors.



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                               General Properties

                               Tantalum is a transition metal with atomic number 73 and atomic weight 181. The
                               element is usually found together with niobium with an atomic number 41 and atomic
                               weight 93 (Exhibit 1). The two elements are part of the Group 5 in the periodic table,
                               along with vanadium (V) and dubnium (Db). Tantalum is a grey blue, ductile metal with a
                               high melting point and high resistance to chemical attack at temperatures below 1 C.
                               It is, however, dissolvable in hydrofluoric acid or in acidic solutions containing fluoride
                               ion, sulphur trioxide and potassium hydroxide. Tantalum is easy to machine and is highly
                               conductive of heat and electricity. Niobium is a lustrous gray, ductile metal, and has
                               similar physical and chemical properties to tantalum, which makes them sometimes
                               difficult to distinguish.

                               Exhibit 1: Selected Tantalum and Niobium Properties

                                                 Properties                                   Niobium (Nb)        Tanatalum (Ta)

                                                 Atomic Number                                    41                   73

                                                 Atomic Weight                                  92.90638             180.9479

                                                 Density at 293K (g/cm3)                         8.581                16.677

                                                 Melting Point °C                                2468                 2996

                                                 Boiling point °C                                4930                 5425

                                                 Vickers hardness MPa                            1320                  873

                                                 Electrical resistivity (nano ohm-metres)      152 at 0°C          131 at 20°C


                               Source: BGS




Tantalum and niobium           Tantalum and niobium have unique mechanical, electrical and chemical properties,
have unique and
indispensable                  which make them indispensable in many industrial applications. In addition to the
properties.                    properties listed above, they also have nearly zero electric resistance at low
                               temperatures, high corrosion resistance, shape memory properties and high capacitance
                               (i.e. ability to store electric change).

                               Mineralogy and Occurrences


                               Mineralogy

                               Tantalum is a fairly widely distributed element but relatively rare, with an average crustal
                               abundance of 1.7 mg/kg (0.000017%); niobium crustal abundance is 20 mg/kg.
                               Tantalum and niobium are hosted in a variety of minerals, some of which are listed in
                               Exhibit 2. Tantalum and niobium are almost exclusively found in complex oxide and
                               hydroxide minerals. Silicates of these elements exist but they are relatively rare, one
                               such example is the eudialyte mineral (Na4(Ca,Ce)2(Fe++,Mn,Y)ZrSi8O22(OH,Cl)2).
                               Tantalum and niobium also substitute ions in common oxide groups, such as the
                               titanium minerals, rutile and ilmenite. The oxides comprise the majority of the
                               economically important minerals. The most common tantalum and niobium minerals are
                               the columbite-tantalite (also known as coltan) group minerals. When tantalum outweighs
                               niobium the mineral is called tantalite, when niobium outweighs tantalum the mineral is
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                               called columbite. When tantalum and niobium are equally weighted it may be referred to
                               as coltan. Wodginite is also an important source of tantalum and pyrochlore is of
                               particular importance to niobium.

Niobium usually                Tantalum and niobium deposits are often associated with igneous rocks (e.g.
outweighs tantalum in          pegmatites, granites, syenites and carbonatites). Carbonatites and alkaline igneous
carbonatites and
syenites, whereas in
                               rocks (e.g. alkali granites and syenites) are usually enriched in a variety of elements,
pegmatites and granites        including rare earths (REE), zirconium and niobium, but usually have low tantalum
tantalum reaches               content. The main niobium-bearing minerals in these deposits usually include perovskite
higher concentrations.
                               and pyrochlore.

                               Pegmatites and granites enriched with lithium minerals, caesium, as well as tantalum
                               and niobium, are the main sources of tantalum in the world and usually contain lower
                               levels of niobium. Columbite-tantaline and wodginite are usually the main tantalum-
                               bearing minerals in these deposits.

                               Exhibit 2: Selected Tantalum and Niobium Minerals

                                Mineral name                      Mineral group         Formula                           Nb2O5 (%)      Ta2O5 (%)

                                Columbite                         Columbite-tantalite   (Fe,Mn)(Nb,Ta)2O6                   78.72          n.a.

                                Tantalite                         Columbite-tantalite   (Fe,Mn)(Nb,Ta)2O6                   n.a.           86.17

                                Pyrochlore                        Pyrochlore            (Na,Ca)2Nb 2O6(O,OH,F)              75.12          n.a.

                                Microlite                         Pyrochlore            (Na,Ca)2Nb 2O6(O,OH,F)              n.a.           83.53

                                Tapiolite                         Tapiolite             (Fe,Mn)(Ta,Nb)2O6                   1.33           83.96

                                Ixiolite                          Ixiolite              (Ta,Nb,Sn,Mn,Fe)4O8                 8.30           68.96

                                Wodginite                         Wodginite             (Ta,Nb,Sn,Mn,Fe)O2                  8.37           69.58

                                Loparite                          Perovskite            (Ce,La,Na,Ca,Sr)(Ti,Nb)O3           16.15          n.a.

                                Lueshite                          Perovskite            NaNbO3                              81.09          n.a.

                                Euxenite                          Euxenite              (Y,Ca,Ce,U,Th)(Nb,Ti,Ta)2O6         47.43          22.53

                                Struverite                        Rutile                (Ti,Ta,Fe)O2                        11.32          37.65

                                Iimenorutile                      Rutile                Fe x (Nb,Ta)2x 4Ti1-x O2             27            n.a.
                               Source: BGS




                               Occurrences

                               Africa: In Mozambique, the Alto Ligonha Province contains various zones of pegmatite
                               mineralization that have been mined since 1926. Noventa Ltd. is currently mining
                               tantalum at the Marropino mine and has plans to mine and explore various other sites in
                               the province, including Morrua, Mutala and Ginama. The Marropino pegmatite is the
                               classic example of zoned lithium rare-metal pegmatite rich in lithium, cesium and
                               tantalum (known as LCT family). Also in Mozambique, Pacific Wildcat Resources Corp.
                               is currently evaluating the dormant Muiane mine; the company is also exploring the
                               Mrima niobium deposit in Kenya. In Central Africa, tantalum-mineralized pegmatites are
                               associated with the Mesoproterozoic Kibaran belt and can be found in Burundi, Rwanda,

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                                Uganda and the Democratic Republic of Congo (DRC). In these countries, columbite-
                                tantalite minerals are found in weathered pegmatites and secondary placer deposits.

                                Tantalum-mineralized granites and pegmatites can also be found in North African
                                countries, including the Kenticha pegmatite in Ethiopia and the Majahayan pegmatite in
                                Somalia. In Egypt, the tantalum mineralization of the Abu Dabbab and Nuweibi deposit is
                                found in stock-like granite instead of pegmatite; the project is being developed by
                                Gippsland Ltd. and is near production.

                                The Lueshe deposit in the DRC is a carbonatite deposit and has been mined for
                                niobium. In Malawi, the Kanyika niobium and tantalum project is run by Globe Metals
                                and Mining. The large Pilanesberg alkaline complex in South Africa contains eudialyte-
                                rich syenites with zirconium, niobium and rare earth. Niobium and tantalum deposits of
                                the Alkaline to peralkaline type have also been found in Morocco, Nigeria and Namibia.

                                Asia: In China, 73% of tantalum and niobium mines are found in three provinces: 26% in
                                Jiangxi, 24% in Inner Mongolia and 23% in Guangdong. Some of the Chinese columbite
                                mines are characteristically small with low grades. The columbite deposits in China are
                                usually associated with rare earth elements (REE). For instance, the world’s largest rare
                                earth deposit, Bayan Obo, is also rich in niobium, and some of the REE deposits in the
                                country also contain small amounts of tantalum. In Malaysia and South-western
                                Thailand, tantalum has been produced from weathered tin-mineralized granites and
                                pegmatite and secondary placer deposits. The Khaldzan-Buregtey zirconium-niobium-
                                REE peralkaline granite-related deposit is located in western Mongolia, the main niobium
                                mineral is pyrochloride.

                                Australia has one of the largest tantalum resources, and for many years was the largest
Australia has one of the
highest tantalum
                                producer of tantalum. The Greenbushes and Wodgina mines, from which most of the
reserves in the world.          tantalum was produced, are owned by Global Advanced Metal (formerly Talison
                                Minerals Pty Ltd.), and they ceased production in 2008 due to poor global economic
                                conditions and depressed tantalum prices. The mines are expected to resume
                                production in 2011. The Greenbushes deposit contains large resources of tantalum and
                                lithium associated with tin mineralization; the pegmatite has been exploited by both
                                open-pit and underground mines. At the Wodgina pegmatite district, the main tantalum
                                minerals include manganese-rich tantalite and wodginite.

                                Brazil: The Volta Grande mine in Nazareno, Minas Gerais, is characterized by albite-
Brazil is the largest           spondumene-type pegmatite and is mined for tantalum, niobium and lithium. Brazil is
producer of niobium
and has the largest
                                currently the largest producer of niobium. The Araxá mine is the largest producing
reserves.                       niobium mine in the world and is owned by Companhia Brasileira de Metalurgia e
                                Mineração (CBMM).The second-largest niobium mine is at Catalão and is owned by
                                Anglo American Plc. Another carbonatite-hosted niobium deposit is the Morro dos Seis
                                Lagos deposit. Niobium and tantalum are also extracted from the albite-rich peralkaline
                                granite tin deposit at the Pitinga mine, in the Amazon state.

                                Canada: The Tanco pegmatite in Manitoba hosts a high variety of tantalum minerals that
                                are generally fine grain, making processing a challenge. The deposit also contains
                                caesium and lithium and is owned by Cabot Corporation.

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                            In the Northwest Territories, the Thor Lake igneous complex comprises syenites and
                            peralkaline granites with various hydrothermally mineralized zones. The deposit is
                            currently being explored for rare earths by Avalon Rare Metals Inc., but is also rich in
                            yttrium and zirconium, as well as tantalum and niobium, which are found mainly in
                            columbite-tantalite minerals. The Oka carbonatite complex in Quebec includes three
                            separate tantalum niobium deposits containing pervskite and pyrochlore group minerals.
                            The Niobec mine in Quebec is the largest niobium mine outside of Brazil and is owned
                            by IAMGOLD Corporation. Niobec is also the only known underground niobium mine in
                            the world. The mine lies in the southern region of the Saint-Honoré carbonatite complex;
                            the main mineral is pyrochlore. Nearby, the Crevier syenite carbonatite deposit with
                            tantalum and niobium mineralization is currently being explored. The Strange Lake
                            peralkaline granite deposit in Quebec is currently being evaluated by Quest Rare
                            Minerals Ltd. for rare earths; the deposit is also rich in tantalum and niobium.

                            Commonwealth of Independent States: The Tomtor deposit in Siberia, Russia, is a
                            carbonatite-hosted niobium deposit, and the Lovozero syenite massif is rich in eudialyte,
                            loparite and apatite with small percentages of niobium and tantalum.

                            Europe: The Sokli carbonatite complex in Finland is rich in phosphate and niobium
                            minerals (e.g. pyrochlore) and is owned by Yara International ASA.

                            Greenland: The Kvanefjeld deposit in Southwest Greenland is a multi-element deposit
                            containing niobium-tantalum-REE and is associated with the llimaussaq intrusive
                            complex. Greenland Minerals and Energy Ltd. is currently exploring the deposit. The
                            Motzfeld deposit owned by Ram Resources is also a multi-element deposit that has
                            been targeted mainly for niobium, tantalum and REE.

                            Saudi Arabia: The Ghurayyah alkaline granite deposit contains tantalum, niobium and
                            rare earths. The columbite-tantalite and pyrochlore are the main tantalum and niobium
                            minerals. Tertiary Minerals Plc is currently exploring the deposit.

                            The United States: According to the United States Geological Survey (USGS), all of the
                            tantalum and niobium resources in United States are considered uneconomic at 2010
                            prices. However, the country has a few niobium and tantalum occurrences. For instance,
                            in Alaska, the Ray Mountain REE deposit, now being explored by Ucore Rare Metals, is
                            reported as having minor amounts of tantalum and niobium. In Nebraska, Quantum Rare
                            earths Developments Corp. is currently exploring the Elk Creek carbonatite, located
                            south of Lincoln; according to the USGS, this deposit has the potential to be one of the
                            largest global resources of niobium and REE.

                            It should be noted that the tantalum and niobium occurrences discussed above include
                            both economic and non-economic occurrences. In the following section, we present the
                            tantalum and niobium resources and reserves per country. It is important to note that
                            resources refer to the estimated ore occurrences and reserves are the portion of
                            resources that can be economically mined.




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                                Resources and Reserves


                                Major resources of tantalum are located in Brazil, Australia, China and Russia. Brazil
                                and Australia have combined about 70% of the global tantalum reserves (Exhibit 3).

                                Exhibit 3: Tantalum Resources and Reserves
Australia and Brazil
have about 70% of the                                            Resources                 Resources              Reserves             Reserves
global tantalum                  Country
                                                              ( tonnes Ta2O5)                 (%)                ( tonnes Ta)            ( %)
reserves.
                                 Brazil                              129 274                 40.8                  87 360                 57.2

                                 Australia                           65 771                  20.7                  40 560                 26.5

                                 China and Southeast Aisa            33 112                  10.4                    7 800                 5.1

                                 Russia and Middle East              31 298                  10.0                    ------               ------

                                 Central Africa                      28 576                   9.0                    3 120                 2.0

                                 Other Africa                        21 318                   6.7                  12 480                  8.2

                                 North America                        5 443                   1.7                    1 500*                1.0

                                 Europe                               2 268                   0.7                    ------               ------

                                 Total                               317 060                  100                  152 820                100
                                 *Deemed uneconomic at 2010 prices


                                Source:BGS; JSI




                                Contrary to tantalum, most of the niobium reserves are located in only a few countries.
                                Brazil holds the largest niobium reserves (93%), followed by Canada (Exhibit 4). Other
                                unquantified niobium resources and reserves may be found in Egypt, Malawi and
                                Greenland.

                                Exhibit 4: Niobium Reserves
Niobium reserves are
almost exclusively
                                                                              Reserves                 Reserves                 Contained Nb2O5
located in two                   Country
countries, Brazil and                                                          (tonnes)                   (%)                      (tonnes)
Canada.
                                 Brazil                                   452 200 000                    93.35                     11 142 740

                                 Canada                                       32 086 000                 6.62                       179 682

                                 United States                                 150 000*                  0.03                         ------

                                 Total                                    484 436 000                    100                       11 322 422


                                Source: USGS




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                                Mining and Processing


                                Mining

                                Tantalum and niobium are mined using conventional open-pit and underground mining
                                techniques. Surface mining (open pit) is used to extract near-surface deposits (<100
                                metres) and is generally cheaper and safer. This method involves removing large
                                tonnages of waste to access the ore, digging or blasting the ore with explosives, and
                                transporting the ore by truck or conveyor belt for processing or stockpiling. If the
                                mineralization is found deep in the ground, it may not be economical to remove the
                                unmineralized material (waste) to access the ore; as such, underground mining is
                                preferred.

                                In underground mining, various techniques may be used, depending on the type of rock.
                                In large ore bodies, mechanized systems can be applied, but in the case of narrow
                                veins, labour-intensive drilling and blasting techniques are usually used. Common less-
                                expensive underground mining techniques are the block-caving method and the room-
                                and-pillar method. In the block-caving method, very large ore bodies are drilled and
                                blasted in such a way that several thousand tonnes of broken ore may be extracted per
                                day. In the room-and-pillar method, mined material is extracted across a horizontal plane
                                opening multiple spaces or "rooms" underground while leaving "pillars" of untouched
                                material to support the roof overburden. Waste material is sometimes used to fill worked
                                places, which secures the roof and safely disposes of the waste. This technique has
                                been used at the Tanco pegmatite deposit in Canada.

                                Hard-rock deposits may be mined using standard surface, underground or both
                                methods. For example, the Wodgina tantalum open-pit mine in Australia is mined using
                                drilling and blasting techniques.
Extraction from placer          Extraction from placer deposits usually requires less costly mining techniques. In dry-
deposits usually does
not involve drilling and        mining applications, shovels, scrapers and bulldozers are used to remove and transport
blasting and requires           the often unconsolidated ore to the processing plant. This method usually does not
less costly mining
techniques.                     require drilling and blasting, with the exception of occasional areas that may have
                                cemented sand. The weathered Araxá carbonatite deposit in Brazil is mined using
                                economic open-pit methods.

                                Tantalum and niobium are also extracted as by-products. It has been suggested that
                                about 14% of the total tantalum is extracted as a by-product, and only 2% for niobium.
                                Tantalum-bearing tin slags are a common source of tantalum.

                                Processing Methods

                                Tantalum and niobium minerals, such as columbite-tantalite, are first crushed and milled,
                                and then the ground down ore undergoes several conditioning treatments to produce a
                                slurry substance. During tantalum production, the ore slurry is usually concentrated to
                                about 30% tantalum oxide using mainly gravity and magnetic technique, depending on
                                the type of ore.


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                                In niobium concentrate production process, the ore slurry is further concentrated to
                                about 54% using gravity separation, froth flotation, magnetic and electrostatic
                                separation, and acid leaching may also be used depending on the characteristics of ore.

                                Once the concentration process is complete, the concentrate is usually sent to a refinery
                                plant where tantalum and niobium are separated using either an acid or solvent
                                extraction process (Exhibit 5). Niobium companies that convert niobium oxide into ferro-
                                niobium may do so using the aluminothermy reduction process or an electric arc
                                furnace.

                                Exhibit 5: Chemical Processing of Tantalum and Niobium Concentrates




                                Source: BGS



                                Artisanal Mining
There are positive and
negative implications           Artisanal and small scale mining (ASSM) have increased significantly in recent years,
that result from                particularly in developing countries. There are positive and negative results from these
artisanal and small
scale mining activities         activities. ASSM has been associated with socioeconomic development in some rural
in developing countries.        areas, resulting in poverty alleviation, reducing rural migration and increasing national
                                income. However, mining activities are often performed under poor environmental
The United States has           conditions with severe and negative implications for the local environment and health of
introduced a legislation        the workers (Exhibit 6). Additionally, in some situations, the revenue from ASSM has
designed to restrict the
importation and trade of        been used to support brutal wars. For instance, in the DRC, minerals trade has been a
conflict minerals in            significant source of revenue for armed rebel groups that have committed horrible
Central Africa, in
particular in the DRC.
                                human rights violations against locals. This situation has led the U.S. to introduce the
                                “conflict minerals” law on May 20, 2010, which requires U.S. and foreign companies
                                operating in the United States to report the use of conflict minerals (which includes
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    .
                                tantalum) from the DRC and neighbouring countries. The idea is to restrict, to the extent
                                possible, the use of conflict minerals across the supply chain from processors to
                                manufactures at different technology levels (including electronic component producers
                                and cellphone manufactures). Restricting the diffusion of conflict minerals should lead to
                                better trading conditions and pricing of the underlying metals, allowing conflict-free
                                metals to be traded at fair and sustainable market prices.

                                Exhibit 6: Artisanal Miners




                                Source:Google


Estimates indicate that         The DRC has large resources of columbine-tantalite minerals in many areas of the
the DRC has made in
excess of $1.0 billion          country. It has been estimated that more than 50% of the world tantalum supply comes
dollars from sales of           from Africa and a significant percentage of that is said to be from the DRC. It has been
conflict minerals.
                                estimated that in 2009, the DRC made more than US$1.0 billion through the sales of
                                conflict minerals. It will likely be almost impossible to completely stop the spread and use
                                of conflict minerals in the world, but the current law in the United States has certainly
                                created an awareness of the problems associated with conflict minerals and it will likely
                                reduce the use of these minerals significantly. There are many non-governmental
                                organizations working on this problem and several technology companies are refusing to
                                use conflict minerals-bearing components in their products. The global economic growth
                                (although slow), combined with the introduction of the conflict free mineral law in the
                                United States, and other industrial countries, has contributed to higher tantalum prices,
                                which should make possible the return to the market place of large tantalum producers
                                such as Global Advanced Metals (previously Talison Minerals Pty Ltd.) and other
                                companies.


                                World Supply


                                Sources
Currently only 60% of
tantalum supply is
derived from direct             Tantalum supply is derived from various sources: about 60% is obtained from primary
mining.                         sources (i.e. direct mining of tantalum ores), 10% from secondary concentrates, 10%
                                from tin slags and 20% from scrap, synthetic concentrates and recycling (Exhibit 7).




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                               Exhibit 7: Historical Tantalum Sources

                                                                    Scrap, Synthetic
                                                                     Concentrates
                                                                     and Recycling
                                                                         20%




                                                                                                                 Primary
                                                                  Tin Slag
                                                                                                               Concentrates
                                                                    10%
                                                                                                                   60%




                                                                   Secondary
                                                                  Concentrates
                                                                      10%




                               Source:TCI



                               Niobium supply is derived mainly from primary sources (Exhibit 8), with the mineral
Niobium supply is              pyrochlore accounting for more than 95% of the total primary production. Less than 15%
derived mainly from            is derived from tin slags and recycling.
mining.

                               Exhibit 8: Niobium Sources



                                                                                       Recycling
                                                                                       10% -15%




                                                                                                       Primary and
                                                                                                       Secondary
                                                                                                      concentrates
                                                                                                        85% - 90%




                               Source:TCI; USGS



                               The Defense National Stockpile Center (DNSC), a division of The United States Defense
                               Logistics Agency (USDLA), used to be a significant source of tantalum and niobium.
                               However, in 2008, the DNSC announced that the stockpile of these metals has been
                               depleted and were no longer offered for sale.

                               Production

                               Tantalum Production

                               In the last two years, Brazil and Mozambique were the largest producers of tantalum
                               (Exhibit 9). The largest operating tantalum mine in Brazil is the Mibra mine at Nazareno
                               in Minas Gerais with a capacity of 300,000 pounds of Ta2O5 per year. In Mozambique,
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                                the Marropino mine has the capacity to produce 600,000 tonnes of Ta2O5 and is
Brazil and Mozambique
                                currently producing close to 200,000 tonnes of Ta2O5 per year. Australia used to be the
are currently the largest
producers of tantalum.          world’s largest producer of tantalum and in 2 2 contributed to about 6 % or the total
                                world production; however, its contribution to total production was only 10% in 2010. The
                                two largest mines in Australia, the Wodgina and Greenbushes mines, were placed under
                                care and maintenance in December 2008, due to poor economic conditions and
                                depressed tantalum prices aggravated by increased volume of cheap conflict tantalum in
                                the market.

                                Exhibit 9: Tantalum Mine Production per Country

                                                                      Ta Mine Production (tonnes)
                                                                            2009                 2010

                                               Australia                      81                   80
Australia used to be the
largest tantalum
                                               Brazil                        180                  180
producer.
                                               Canada                         25                   25

                                               Mozambique                    113                  110

                                               Rwanda                        104                  100

                                               Other countries *             297                  310

                                               Total                         800                  805
                                               * includes Burundi, Ethiopia, Uganda, Congo (Kinshasa),
                                               Zimbabwe and tantalum contained in tin slags

                                Source:BGS ; USGS; JSI




                                Other tantalum-producing mines are the Keticha mine in Ethiopia, the Lovozero mine in
                                Russia, the Yichun mine in China and the Pitinga tin mine in Brazil. Additional tantalum
                                production is also available in Southeast Asia, in particular in Malaysia and Thailand,
                                from where tantalum is produced from tin-slags, and in Canada and Central Africa from
                                small alluvial and soft rock deposits. Estimates indicate that Rwanda and the DRC
                                accounted for 40–50% of the global tantalum production in 2009, with a significant
                                portion from conflict areas. The volume of conflict minerals are, however, usually hard to
                                track and quantify.

                                In the late 90s, the technology sector increased at a rapid rate, driving global tantalum
The 2008 recession and
the depressed tantalum          production up. Tantalum production peaked in 2001, likely associated with the dot-com
prices caused many              bubble and the expectation of continuing growth in the technology sector. During that
mines around the globe
to suspend production.
                                period, many companies built inventories of tantalum. However, with the slowdown in the
                                technology sector, tantalum production decreased in the subsequent years (Exhibit 10).
                                The 2008 recession and the low tantalum prices caused by the oversupply of tantalum in
                                the market led many mines in Australia, Canada and Africa to suspend production,
                                leading to a more than 50% decrease in mine production.
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                               Exhibit 10: Tantalum Concentrate Mine Production

                                                                2,500




                                   Ta Mine Production, tonnes
                                                                2,000


                                                                1,500


                                                                1,000


                                                                 500


                                                                   0
                                                                                2000   2001   2002         2003     2004   2005   2006   2007   2008   2009   2010


                               Source:BGS; JSI



                               Niobium Production

                               Brazil is the world’s largest producer of niobium (92%), followed by Canada (Exhibit 11).
                               Brazil has two of the largest niobium deposits in the world, the Araxá and the Catalão
                               deposits. The Araxá mine is operated by CBMM (Companhia Brasileira de Metalurgia e
                               Mineração) and it has enough reserves to supply current global demand for 500 years;
                               however, decreasing grades are increasing operating costs at the mine. The Catalão
                               mine is operated by Anglo American Brazil (a subsidiary of Anglo American plc) and has
CBMM, Anglo American           about 18 million tonnes of niobium oxide. The third-largest deposit is the Niobec deposit
Brazil and IAMGOLD             in Quebec with 18,000 tonnes, and is owned by IAMGOLD Corp. The main niobium
together supply about
85% of niobium to the          mineral in these deposits is pyrochlore. CBMM, Anglo American Brazil and IAMGOLD
market.                        together supply about 85% of niobium to the market, most of it being in the form of ferro-
                               niobium with 60% niobium oxide content, for use in the production of high-strength, low-
                               alloy steel (HSLA).

                               Exhibit 11: Niobium Producers
Brazil is the largest
producer of niobium.                                                          Canada               Other
                                                                                7%                  1%




                                                                                          Brazil
                                                                                          92%




                               Souce: USGS




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                               The niobium production, profile which shows a steady increase in the last six years
                               (Exhibit 12), is dramatically different from that of tantalum. Niobium production increased
                               from about 20,000 tonnes in 2000 to more than 80,000 tonnes in 2010, driven by
                               increased demand for HSLA steel used in the manufacture of vehicles, and in
                               construction of buildings, ships and refinery equipment. The increase in steel
                               consumption has been linked to the economic growth in the emerging markets, in
                               particular the BRIC countries (i.e. Brazil, China, India and Russia).

                               Exhibit 12: Niobium Concentrate Mine Production

                                                                90,000
                                                                80,000
                                   Nb Mine Production. tonnes




Niobium production has
increased fourfold over                                         70,000
the past ten years.                                             60,000
                                                                50,000
                                                                40,000
                                                                30,000
                                                                20,000
                                                                10,000
                                                                    -
                                                                            2000    2001   2002    2003   2004   2005    2006     2007   2008   2009   2010


                               Source: BGS; JSI



                               Projects Under Development

                               Tantalum supply has been constrained in recent years as a result of production halts at
                               the world’s largest tantalum producing mines in Australia, Canada and Mozambique. As
                               mentioned above, poor economic conditions in 2008 and the growing supply of cheap
                               conflict tantalum in the market caused significant decrease in tantalum prices, granting
                               many tantalum mines around the globe uneconomic and causing over a 50% decrease
                               in production of conflict-free tantalum in 2009. Since the introduction of the conflict-free
The growing constraint         minerals law in the U.S., there have been major constraints in the diffusion of conflict
in tantalum supply has
led to an increase in          tantalum; however, as previous mines struggle to re-start production there’s likely a
exploration projects.          supply-demand gap forming in the market; at least in the short term. This growing
                               constraint in tantalum supply has led to an increase in exploration projects.

                               Exhibit 13 presents a list of some of the current tantalum projects. Noventa’s mine
                               Marropino is currently producing at a rate of about 200,000 lb/year and expects to
                               increase production to 600,000 pounds by the end of this year. The company has two
                               other tantalum projects in Morrua and Mutala with short-term production potential.

                               Global Advanced Metals (GAM), plans to re-start the Wodgina mine in Australia this
GAM plans to re-start
production at the              year, with an initial production of 700,000 pounds per year. In Egypt, Gippsland Ltd. is
Wodgina mine this year.        developing the Abu Dabbab mine scheduled for production in 2013, with a production
                               target of 650,000 pounds per year. In Malawi, Globe Metals and Mining is developing the
                               Kanyika project and plans to bring it to production in 2013. The plan is to produce 200
                               tonnes of ferro-niobium and 400,000 tonnes of tantalum pentoxide per year.
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                                Other projects under development include Commerce Resources Upper Fir deposit with
                                large niobium and tantalum resources, and the Motzfeldt deposit in Greenland that has
                                the potential of becoming an extremely large niobium-tantalum deposit with about 500
                                million tonnes of resources. This project is 51%-owned by Ram Resources.

                                Exhibit 13: Selected Projects

                                                                                                                                            Resouces*,
                                   Project/Mine           Company                  Deposit              Production           Status                          % Ta 2O5     % Nb2O5
                                                                                                                                           Million Tonnes

                                     Wodgina,          Global Advanced                               700,000 lbs Ta2O5
                                                                               Li-albite granite                           Feasibility          n.a           0.027         n.a
                                     Australia        Metals (frm Talison)                               p.a., 2011

                                    Marropino,                                 Zoned LCT-type         600,000 lbs p.a
                                                            Noventa                                                       In Production         8.1           0.022         n.a
                                   Mozambique                                    pegmatite             Ta2O5, 2011

                                     Morrua,                                   Zoned LCT-type          250,000 lbsp.a
                                                            Noventa                                                        Feasibility          7.8           0.049         n.a
                                   Mozambique                                    pegmatite              Ta2O5,2012

                                   Abu Dabbab,                                                        650,000 lbs p.a.
                                                          Gippsland            Li-albite granite                           Feasibility          44.5          0.025         n.a
                                      Egypt                                                            Ta2O5, 2013

                                                                                                     200 tonnes Fe-Nb,
                                                       Globe Metals and      Carbonatite-nephelite
                                  Kanyika, Malawi                                                    400,000 lbs Ta2O5,    Feasibility          21            0.018         0.41
                                                            Mining                 syenite
                                                                                                            2013

                                                          Commerce           Carbonatite-nephelite
                                 Upper Fir, Canada                                                          n.a.          Conceptional          36.4          0.019         0.17
                                                          Resources                syenite

                                                                             Carbonatite-nephelite
                                   Anita, Canada     Les Mineraux Crevier                                   n.a.          Conceptional         23.75          0.019        0.186
                                                                                   syenite

                                     Motzfeldt,                              Alkaline-peralkaline
                                                       Ram Resources                                        n.a.          Conceptional          500         0.011-0.013   0.13-0.15
                                     Greenland                                      granite

                                                                             Carbonatite-nephelite
                                  Crevier, Canada          MDN Inc.                                         n.a.          Conceptional          25.4          0.023         0.2
                                                                                   syenite

                                                                             Carbonatite-nephelite
                                 Mrima Hill, Kenya      Pacific Wildcat                                     n.a.          Conceptional         105.3           n.a.         0.65
                                                                                   syenite

                                 *Include all categories of resources


                                Source: BGS; JSI


                                World Demand


                                Tantalum demand has increased steadily in the last 10 years, driven by developments
                                and growth in the technology sector. According to Paumanok Publications Inc., a leading
                                market research firm in the electronic components sector, demand for tantalum
                                concentrate increased from 2.97 million pounds in 1995 to about 6.22 million pounds in
Estimates indicate that         2008, at an average growth rate of 6% per year. However, we think there was likely a
tantalum demand has
grown by 6% between             slowdown in tantalum demand during the 2001–2002 downturn and that the preceding
1995 and 2002, but had          years’ demand may have grown by double digits (10–12% in some years) driven by the
a one-year decline of
31% in 2009 due to the          steady growth of the electronics industry and increasing applications for tantalum in the
recent global economic          super-alloys sector. The recent global economic slowdown caused a significant
slowdown.                       decrease in demand for industrial metals. Tantalum demand estimates for 2009 indicate
                                a one-year decline of 31%, which equates to 4.3 million tonnes for that year.

                                Tantalum products are used in a variety of industries, such as medical, construction and
Tantalum demand
expected to grow by 9%          electronics. We believe that as the global economy improves, demand for tantalum,
in the next 4 years.            niobium and other industrial metals will rise. Paumanok Publications Inc. estimates that
                                demand for tantalum will grow 9% per year in the next four years as the markets
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    .
                                recover. Exhibit 14 shows our production and demand forecast for tantalum under three
                                scenarios: low growth (6% CAGR), medium growth (9% CAGR) and high growth (12%
                                CAGR).

                                Exhibit 14: Tantalum Supply and Demand Forecast




                                    10,000,000
                                                                                                                              Other Sources
                                     8,000,000                                                                                Malawi
                                                                                                                              Egypt
                                     6,000,000                                                                                Australia
                                                                                                                              Mozambique
                                     4,000,000
                                                                                                                              Current Sources
                                                                                                                              Demand 6% CAGR
                                     2,000,000
                                                                                                                              Demand 9% CAGR
                                                                                                                              Demand 12% CAGR
                                              -
                                                     2009     2010    2011       2012      2013      2014        2015




                                Source: JSI



                                Our analysis indicates that there should be sufficient supply of tantalum in the market,
                                assuming a growth rate below 9% and assuming all the projects currently under
                                development will not be delayed or cancelled. We believe there is currently a shortfall of
                                tantalum in the market, caused by the 2008–2009 shutdowns of the largest tantalum
                                mines in Australia, Canada and Mozambique, and due to increased restriction in trade of
                                conflict tantalum. As tantalum production increases, however, prices are likely to fall and
High-cost tantalum
producers may be kept           the lowest-cost producers will be better positioned to maintain operations. In fact, some
out of the market and           of the high-cost producers may be squeezed and/or kept out of the market and new
new “low-cost”
producers may be able
                                “low-cost” producers may be able to enter the market by offering competitive prices.
to enter the market by          Tantalum production volume estimates from the DRC vary depending on the year and
offering competitive            the source. Our estimates indicate that in 2010 less than 30% of the total primary
prices.
                                production was obtained from conflict areas. We believe this number is likely to fall
                                further as old and new mines come into production. Also, given the increasing efforts to
                                curb “blood” minerals and the potential for new production in the near term, we do not
                                expect conflict-tantalum to cause major price and production disruptions going forward.

                                Niobium is mostly sold as ferro-niobium alloy. Estimated global annual consumption of
Niobium is mostly sold
as ferro-niobium alloy.         ferro-niobium was nearly 180 million pounds in 2010.

                                According to Niobec, annual niobium demand has grown at a rate of 10% between 2002
                                and 2009, driven by the growing need for high-grade steel, especially from the emerging
                                economies of China and India. For example, it is estimated that China has doubled its
                                niobium imports in the last four years and now accounts for 30% of the global
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  .
                              consumption. As demand and production of crude steel rises, demand for niobium is
                              also expected to rise but at a higher rate as demand for niobium in other sectors
                              increase.

                              As mentioned above, the economic growth in emerging nations is driving the demand for
The economic growth           high-grade steel products, and securing niobium supplies has become an important
in developing                 issue for the leading steel producers, such as Korean company Posco and Nippon Steel
economies is expected
to drive up demand for        Corp. in Japan. This situation has prompted a consortium of Korean and Japanese
steel and niobium.            companies to invest an aggregate amount of about US$2.0 billion for a 15% stake in the
                              Brazilian company CBMM, the world’s largest niobium producer.

                              According to various niobium resource companies, the niobium market is expected to
                              continue to grow at a rate of 5–7% per year driven mainly by higher demand for high-
Niobium market is
expected to grow at a         grade steel use in the automotive and construction industries, which are expected to
rate of 5–7% per year.        expand as the global economy recovers.

                              Although it has been estimated that Brazil likely has sufficient niobium resources to
                              supply the current world demand for centuries, given the economic importance of
                              niobium for the leading economies, we believe that users of niobium will likely pursue
                              partnerships with other niobium producers around the world in the attempt to diversify
                              supplier and country risks. As such, if demand for niobium continues to grow, we are
                              likely to see new niobium producers entering the market in the next five years, especially
                              those with potential for low production costs.

                              Uses and Application

                              The three largest consumers of tantalum raw materials are H.C. Starck GmbH in
                              Germany, Cabot Corporation in the United States and Ningxia Non-Ferrous Metals
                              Import and Export Corporation in China (Exhibit 15). These three companies account for
                              about 85% of the global consumption of tantalum concentrate. Tantalum raw material is
                              processed to create various products, such as powders for the capacitor manufactures.
                              The capacitors are then sold to the circuit board assemblers, who then supply them to
                              high-tech companies such as Dell Inc., Airbus S.A.S., Sony Corp., etc.




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    .
                                Exhibit 15: Tantalum Supply Chain


                                   Concentrate Suppliers            Concentrate Processors                Tantalum Users                        End Users



                                  Sources:                         Refine tantalum into              Capacitors                        Manufactures Using
                                   Miners                         tantalum powder and                                                 tantalum capacitors
Three companies                    Scrap/Recycling                metal                              25% of the market
account for about 85%              Synthetics/slags
of the global                                                       Three companies
consumption of                       Leading Miners                 represent 85% of the
tantalum concentrate.                 - Paranapanema                 market
                                      - Fluminense
                                      - Kenticha
                                      - Noventa

                                     Care and
                                      Maintenance                                                    Alloys
                                      - GAM (Wodgina)
                                      - TANCO                                                         17% of the market               Aviation Industry

                                   High Influence:
                                    - DRC Coltan Trade




                                              Miners                    3 Major Processors           25% Used by Capacitor Producers       Multiple End Users


                                Source: PWC; JSI




                                The largest producer of niobium, CBMM, mines and processes niobium to produce a
                                variety of products, including ferro-niobium, nickel niobium and niobium metal.

                                Exhibit 16: Niobium Supply Chain


                                                       Miners and Processors                 Niobium Users                    End Users



                                                   Mining and Processing            Ferro-Niobium Users

                                                    Three companies                 89% of the market
                                                     supply 85% of the
                                                     market

In the last 6 years, 89%
of the global niobium
production was used to
produce ferro-niobium.




                                                          3 Major Integrated
                                                          Miners & Processors        89% Used for Ferro-Niobium            Multiple End Users



                                Source: JSI



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    .
                                CBMM sells its products to steel companies and major specialty alloy producers such as
                                Cabot, H.C. GmbH and Treibacher AG, which in turn sell their products to the
                                automotive, manufacturing and construction industries (Exhibit 16).

                                Tantalum is utilized in a variety of forms and is commonly sold as tantalum pentoxide
                                (Ta2O5), which is the initial form for the production of other tantalum compounds, such as
                                tantalum chloride (TaCl5), tantalum carbide (TaC) and lithium tantalite (LiTaO3).
                                Niobium pentoxide is usually the starting point for niobium compounds. Common
                                niobium compounds include niobium chloride (NbCl5), niobium carbide (NbC) and
                                lithium niobate (LiNbO3).

                                Tantalum and niobium are extensively used in the production of alloys, metal carbides,
                                powders and chemical compounds; they have a wide variety of applications in all major
                                industries. Exhibits 17 and 18 show examples of applications for tantalum and niobium
                                products by industry.

                                Exhibit 17: Tantalum Uses by Industry

                                   Industry             Usage                                       Tantalum product

                                   Automotive           Vehicle bodies                              Tantalum powder

                                   Ceramics and         Ceramic capacitors, glass coatings and
                                                                                                    Tantalum oxide and yttrium tantalate
                                   surface coatings     camera lenses
                                                        Chemical processing equipment and oil
                                   Chemicals                                                        Tantalum metal
                                                        &gas pipelines
                                                        Cathode protection systems for large
Tantalum and niobium                                    steel structures such as oil platforms and Tantalum metal (sheets, rods, plates and
                                   Construction
have a wide variety of                                  corrosion resistant fasteners (e.g.        wires)
critical applications in                                screws, nuts and bolts)
all major industries.
                                   Engineering          Cutting tools                               Tantalum carbide

                                                        Capacitors, surface acoustic wave filters
                                                                                                    Lithium tantalate, tantalum powder, tantalum
                                   Electronics          for sensor and touchscreen technologies,
                                                                                                    ingots and tantalum nitride
                                                        hard disk drives and LED lights
                                                        Pacemakers, hearing aids and prosthetic
                                   Medicine                                                         Tantalum metal
                                                        devices such as hip joints
                                                        Furnace parts, supperalloys for jet
                                   Metallurgical                                                    Tantalum metal and tantalum ingots
                                                        engines and rocket engine nozzles
                                                        Missile parts, ignition systems, night
                                   Physics              vision goggles and GPS (Global              Tantalum ingots and tantalum oxide
                                                        Positioning systems)

                                Source: BSG




    Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com                         Page 20
<TITLE>OCTOBOCTER


   JSI
                                                                                                          SE
                                               BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS                 JACOB SECURITIES INC.
                                                                                      July 19th, 2011             EQUITY RESEARCH
    .
                                Exhibit 18: Niobium Uses by Industry

                                    Industry             Usage                                        Niobium product

                                    Automotive           Vehicle bodies                               HSLA ferro-niobium (60% Nb)

                                    Ceramics and         Ceramic capacitors, glass coatings and
                                                                                                      Niobium Oxide
                                    surface coatings     camera lenses
                                                         Chemical processing equipment and oil        HSLA ferro-niobium (60% Nb), niobium
                                    Chemicals
                                                         &gas pipelines                               metal and niobium-1% zirconium alloy
                                                         Architectural Steel and cathode protection   HSLA ferro-niobium (60% Nb), niobium
                                    Construction
                                                         systems for large steel structures           metal

                                    Engineering          Cutting tools, railway tracks and ship hulls Niobium carbide

                                                         Capacitors, street lighting systems and
                                                                                                      Niobium powder, niobium oxide and lithium
                                    Electronics          surface acoustic wave filters for sensor
                                                                                                      niobate
                                                         and touch screen technologies
                                                         Superconducting magnetic coils in MRI
                                    Medicine             scanners and magneto-encephalography niobium nitride
                                                         (brain activity mapping)
                                                         Super alloys for jet engines and turbine Vaccum-grade ferro-niobium and nickel-
                                    Metallurgical
                                                         blades                                   niobium

                                    Physics              Particle physics research                    Niobium-titanium alloy and niobium-tin alloy


                                Source: BSG



                                Alloys

                                Tantalum alloys are usually used in applications where resistance to corrosion is
Tantalum and niobium
alloys are commonly             required, such as in the manufacturing of chemical processing equipment. Further,
used in applications            tantalum-ruthenium alloy is used in military applications for their oxidation resistance and
where resistance to
corrosion is required.          shape memory properties, i.e. if deformed they can return to the original shape when
                                heated. Tantalum alloys are also used in invasive medical applications such as
Tantalum alloys are
                                prosthetics and pacemakers given their biocompatibility with human tissue.
used in prosthetics and
pacemakers.                     Niobium alloys are also used for corrosion-resistance applications and medical devices.
                                For example, niobium-titanium and niobium-tin alloys are used in the production of
                                superconducting magnets for MRIs (Magnetic Resonance Imaging) used as cancer
Niobium is most often           diagnostic tool. Niobium is, however, most commonly used in the production of ferro-
used in the production
                                niobium, a vital component in the production of high-strength, low alloy steel for the
of ferro-niobium, a vital
component in the                manufacturing of vehicles, railway tracks, pipelines, etc. Ferro-niobium increases steel
production of high-             strength but it can also offer cathode protection to large steel structures like oil platforms.
strength, low alloy steel
used in the                     The vacuum-grade ferro and nickel niobium are used in high-temperature, high-stress
manufacturing and               applications, such as aircraft and aerospace turbines. Other metals alloyed to niobium
construction industries.
                                include zirconium, titanium and tin.

                                Carbides

                                Tantalum and niobium carbides are extremely hard, refractory ceramics that are used in
                                high-stress, high-temperature applications, such as in the production of high-speed
                                cutting and boring tools, teeth for excavator buckets and drill bits for the mining industry.

    Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com                         Page 21
<TITLE>OCTOBOCTER


   JSI
                                                                                                         SE
                                              BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS                JACOB SECURITIES INC.
                                                                                     July 19th, 2011            EQUITY RESEARCH
    .
                                These carbines are also used as refractory coatings in cutting tools, nuclear reactors
                                and furnaces.

                                Powders

Tantalum powders are            High-purity tantalum powder is mainly used in the production of capacitors because of
used in the
manufacturing of
                                the tantalum’s high capacitance coefficient. Although the amount of tantalum in each
capacitors, which               capacitor is small, this is a major tantalum application accounting for more than 20% of
account for more than           the total tantalum market. Billions of capacitors are used in cellphones, computers and in
20% of the total
tantalum market.                many other applications. For example, cellphones with camera and video functions have
                                22–23 tantalum capacitors, and last year 417 million new cellphones were produced.
                                Niobium powders are also used to produce capacitors, but they are usually larger in size
                                and less efficient.

                                Chemicals

Tantalum nitrite is used        Tantalum and niobium chemicals have been increasingly used in electronics, medical
in LEDs and solar               applications, optics and in spluttered film in integrated circuitry. Tantalum and niobium in
panels, and niobium
nitrite is a key
                                the oxide form are usually used in the manufacture of specialty glass and ceramics for
component of                    capacitors. Lithium tantalite and lithium niobate have unique optical, piezo- and pyro-
superconducting                 electric properties and are extensively used in electronic applications. Tantalum nitrite is
magnets for MRIs.
                                used in light emitting diodes (LED), solar cells and transistors, and niobium nitrite is a
                                key component of superconducting magnets for MRIs.

                                Exhibits 19 and 20 compare the end-uses of tantalum and niobium in 2004 and 2010,
                                according to Tantalum-Niobium International Study Centre (TIC).

                                Capacitor-grade tantalum still accounts for most of the production; however, contrary to
                                what some believe, the amount is far below 50%. The study suggests that between 2004
                                and 2010, there has been a significant increase in usage of tantalum for the production
                                of ingots, metal products and metallurgical grade powder.

                                Approximately 89% of the global niobium production is used to produce ferro-niobium,
                                and according to TIC, this situation has been about the same for the last six years
                                despite the significant increase in niobium production and demand. The remaining 11%
                                is used to produce niobium alloys, metals, high-purity ferro-niobium and niobium
                                chemicals and carbides. Based on the TIC study, production of niobium metal products
                                and high-purity ferro-niobium has decreased relative to all the other products.




    Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com                  Page 22
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)
Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)

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Rare Metals Report on Tantalum & Niobium by Jacob Securities (July 19, 2011)

  • 1. EQUITY RESEARCH Luisa Moreno, Ph.D, Analyst lmoreno@jacobsecurities.com +1 (416)866-8380 July 19, 2011 Tantalum and Niobium Primer Stock Rating: SPECULATIVE BUY Risk Rating: High Two Critical Metals Jacob Securities Inc. (“Jacob Securities”) does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For analyst certification and other important disclosures, refer to the Disclosure Section, at the end of this report
  • 2. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . Contents Investment Summary .............................................................................................................................................................. 3 General Properties .................................................................................................................................................................. 4 Mineralogy and Occurrences .................................................................................................................................................. 4 Resources and Reserves.......................................................................................................................................................... 8 Mining and Processing ............................................................................................................................................................ 9 World Supply ......................................................................................................................................................................... 11 World Demand ...................................................................................................................................................................... 16 International Trade ............................................................................................................................................................... 23 Prices ..................................................................................................................................................................................... 24 Recycling and Substitution .................................................................................................................................................... 26 Profiled Companies ............................................................................................................................................................... 27 Acronyms .............................................................................................................................................................................. 35 Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 2
  • 3. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . Investment Summary Two Critical Metals  There is currently a growing supply gap of tantalum products. This situation has been caused by the fact that the largest tantalum mines in Australia, Canada and There is a growing Africa were forced to close in 2008–2009 due to the global economic slowdown and supply-demand gap for depressed tantalum prices. There are currently a few mines and projects under tantalum. development, and those that are able to start first and have a production cost advantage will have a better chance to secure contracts with the top three processors and develop a sustainable tantalum mine business.  The European Union (EU) has recently declared niobium and tantalum as critical metals. Brazil, the world’s ultimate producer of niobium, has recently engaged in a joint venture (JV) with Korean and Japanese companies with the aim to gain access Niobium and tantalum to new processing technologies and expand niobium applications and production. A have been declared drastic difference from the current rare earth situation between China and the rest of critical elements by the world. The EU has identified niobium as a critical material given its unique EU. characteristics and significance for the EU manufacturers and economy. The largest end-use market for niobium is HSLA (high strength, low alloy) Steel. Niobium demand is expected to grow at 5–7% per year going forward, driven by the growth in the emerging economies and their anticipated consumption of steel.  It has been estimated that in 2009 about 50% of the tantalum supply was from the DRC and Rwanda, two zones affected by brutal guerrilla wars and genocide. Conflict minerals from these areas are often used to support these wars. The “Conflict A significant Minerals Law” in the U.S. aims at restricting the trade of conflict minerals, and many percentage of tantalum technology companies, like Apple Inc. (NASDAQ:AAPL), Motorola Solutions Inc. supply is from African (NYSE:MSI) and AVX Corp., are taking initiatives to comply with the law. The conflict areas. restrictions regarding conflict minerals are likely to improve tantalum trading conditions and keep prices at sustainable levels for conflict-free tantalum miners.  There are only a few listed companies that offer a clear exposure to tantalum and Noventa Ltd.,Commerce niobium, which includes: Noventa Ltd. (AIM:NVTA;TSX:NTA), Commerce Resources Resources Corp., Corp. (TSXV:CCE), Pacific Wildcat Resources Corp. (TSXV:PAW) and Gippsland Pacific Wildcat Ltd. (ASX:GIP). Noventa is a pure-play tantalum company, currently mining and Resources Corp. and producing tantalum concentrate at Marropino in Mozambique. Pacific Wildcat is Gippsland Ltd. are exploring niobium in Kenya’s Mrima Hill deposit and evaluating the dormant Muiane profiled in this report. tantalum mine in Mozambique. Commerce Resources is exploring the Upper Fir property in British Columbia for tantalum and niobium. Gippsland Ltd. is the owner of the tantalum project Abu Dabbab in Egypt; the company plans to start production in 2013. Some of the rare earths companies, like Avalon Rare Metals Inc. (TSX:AVL) and Quest Rare Minerals Ltd. (TSXV:QRM;OTC:QMNME), also have significant amounts of tantalum and niobium minerals in their deposits, and lithium company Galaxy Resources Ltd. (ASX:GXY) produces tantalum concentrate as a by-product.  Tantalum and niobium will likely keep their status of critical materials for the world’s largest economies (e.g. U.S., Japan, EU and China) because of their essential applications in the major growing sectors of their economies, such as the electronics, energy, construction and manufacturing sectors. Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 3
  • 4. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . General Properties Tantalum is a transition metal with atomic number 73 and atomic weight 181. The element is usually found together with niobium with an atomic number 41 and atomic weight 93 (Exhibit 1). The two elements are part of the Group 5 in the periodic table, along with vanadium (V) and dubnium (Db). Tantalum is a grey blue, ductile metal with a high melting point and high resistance to chemical attack at temperatures below 1 C. It is, however, dissolvable in hydrofluoric acid or in acidic solutions containing fluoride ion, sulphur trioxide and potassium hydroxide. Tantalum is easy to machine and is highly conductive of heat and electricity. Niobium is a lustrous gray, ductile metal, and has similar physical and chemical properties to tantalum, which makes them sometimes difficult to distinguish. Exhibit 1: Selected Tantalum and Niobium Properties Properties Niobium (Nb) Tanatalum (Ta) Atomic Number 41 73 Atomic Weight 92.90638 180.9479 Density at 293K (g/cm3) 8.581 16.677 Melting Point °C 2468 2996 Boiling point °C 4930 5425 Vickers hardness MPa 1320 873 Electrical resistivity (nano ohm-metres) 152 at 0°C 131 at 20°C Source: BGS Tantalum and niobium Tantalum and niobium have unique mechanical, electrical and chemical properties, have unique and indispensable which make them indispensable in many industrial applications. In addition to the properties. properties listed above, they also have nearly zero electric resistance at low temperatures, high corrosion resistance, shape memory properties and high capacitance (i.e. ability to store electric change). Mineralogy and Occurrences Mineralogy Tantalum is a fairly widely distributed element but relatively rare, with an average crustal abundance of 1.7 mg/kg (0.000017%); niobium crustal abundance is 20 mg/kg. Tantalum and niobium are hosted in a variety of minerals, some of which are listed in Exhibit 2. Tantalum and niobium are almost exclusively found in complex oxide and hydroxide minerals. Silicates of these elements exist but they are relatively rare, one such example is the eudialyte mineral (Na4(Ca,Ce)2(Fe++,Mn,Y)ZrSi8O22(OH,Cl)2). Tantalum and niobium also substitute ions in common oxide groups, such as the titanium minerals, rutile and ilmenite. The oxides comprise the majority of the economically important minerals. The most common tantalum and niobium minerals are the columbite-tantalite (also known as coltan) group minerals. When tantalum outweighs niobium the mineral is called tantalite, when niobium outweighs tantalum the mineral is Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 4
  • 5. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . called columbite. When tantalum and niobium are equally weighted it may be referred to as coltan. Wodginite is also an important source of tantalum and pyrochlore is of particular importance to niobium. Niobium usually Tantalum and niobium deposits are often associated with igneous rocks (e.g. outweighs tantalum in pegmatites, granites, syenites and carbonatites). Carbonatites and alkaline igneous carbonatites and syenites, whereas in rocks (e.g. alkali granites and syenites) are usually enriched in a variety of elements, pegmatites and granites including rare earths (REE), zirconium and niobium, but usually have low tantalum tantalum reaches content. The main niobium-bearing minerals in these deposits usually include perovskite higher concentrations. and pyrochlore. Pegmatites and granites enriched with lithium minerals, caesium, as well as tantalum and niobium, are the main sources of tantalum in the world and usually contain lower levels of niobium. Columbite-tantaline and wodginite are usually the main tantalum- bearing minerals in these deposits. Exhibit 2: Selected Tantalum and Niobium Minerals Mineral name Mineral group Formula Nb2O5 (%) Ta2O5 (%) Columbite Columbite-tantalite (Fe,Mn)(Nb,Ta)2O6 78.72 n.a. Tantalite Columbite-tantalite (Fe,Mn)(Nb,Ta)2O6 n.a. 86.17 Pyrochlore Pyrochlore (Na,Ca)2Nb 2O6(O,OH,F) 75.12 n.a. Microlite Pyrochlore (Na,Ca)2Nb 2O6(O,OH,F) n.a. 83.53 Tapiolite Tapiolite (Fe,Mn)(Ta,Nb)2O6 1.33 83.96 Ixiolite Ixiolite (Ta,Nb,Sn,Mn,Fe)4O8 8.30 68.96 Wodginite Wodginite (Ta,Nb,Sn,Mn,Fe)O2 8.37 69.58 Loparite Perovskite (Ce,La,Na,Ca,Sr)(Ti,Nb)O3 16.15 n.a. Lueshite Perovskite NaNbO3 81.09 n.a. Euxenite Euxenite (Y,Ca,Ce,U,Th)(Nb,Ti,Ta)2O6 47.43 22.53 Struverite Rutile (Ti,Ta,Fe)O2 11.32 37.65 Iimenorutile Rutile Fe x (Nb,Ta)2x 4Ti1-x O2 27 n.a. Source: BGS Occurrences Africa: In Mozambique, the Alto Ligonha Province contains various zones of pegmatite mineralization that have been mined since 1926. Noventa Ltd. is currently mining tantalum at the Marropino mine and has plans to mine and explore various other sites in the province, including Morrua, Mutala and Ginama. The Marropino pegmatite is the classic example of zoned lithium rare-metal pegmatite rich in lithium, cesium and tantalum (known as LCT family). Also in Mozambique, Pacific Wildcat Resources Corp. is currently evaluating the dormant Muiane mine; the company is also exploring the Mrima niobium deposit in Kenya. In Central Africa, tantalum-mineralized pegmatites are associated with the Mesoproterozoic Kibaran belt and can be found in Burundi, Rwanda, Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 5
  • 6. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . Uganda and the Democratic Republic of Congo (DRC). In these countries, columbite- tantalite minerals are found in weathered pegmatites and secondary placer deposits. Tantalum-mineralized granites and pegmatites can also be found in North African countries, including the Kenticha pegmatite in Ethiopia and the Majahayan pegmatite in Somalia. In Egypt, the tantalum mineralization of the Abu Dabbab and Nuweibi deposit is found in stock-like granite instead of pegmatite; the project is being developed by Gippsland Ltd. and is near production. The Lueshe deposit in the DRC is a carbonatite deposit and has been mined for niobium. In Malawi, the Kanyika niobium and tantalum project is run by Globe Metals and Mining. The large Pilanesberg alkaline complex in South Africa contains eudialyte- rich syenites with zirconium, niobium and rare earth. Niobium and tantalum deposits of the Alkaline to peralkaline type have also been found in Morocco, Nigeria and Namibia. Asia: In China, 73% of tantalum and niobium mines are found in three provinces: 26% in Jiangxi, 24% in Inner Mongolia and 23% in Guangdong. Some of the Chinese columbite mines are characteristically small with low grades. The columbite deposits in China are usually associated with rare earth elements (REE). For instance, the world’s largest rare earth deposit, Bayan Obo, is also rich in niobium, and some of the REE deposits in the country also contain small amounts of tantalum. In Malaysia and South-western Thailand, tantalum has been produced from weathered tin-mineralized granites and pegmatite and secondary placer deposits. The Khaldzan-Buregtey zirconium-niobium- REE peralkaline granite-related deposit is located in western Mongolia, the main niobium mineral is pyrochloride. Australia has one of the largest tantalum resources, and for many years was the largest Australia has one of the highest tantalum producer of tantalum. The Greenbushes and Wodgina mines, from which most of the reserves in the world. tantalum was produced, are owned by Global Advanced Metal (formerly Talison Minerals Pty Ltd.), and they ceased production in 2008 due to poor global economic conditions and depressed tantalum prices. The mines are expected to resume production in 2011. The Greenbushes deposit contains large resources of tantalum and lithium associated with tin mineralization; the pegmatite has been exploited by both open-pit and underground mines. At the Wodgina pegmatite district, the main tantalum minerals include manganese-rich tantalite and wodginite. Brazil: The Volta Grande mine in Nazareno, Minas Gerais, is characterized by albite- Brazil is the largest spondumene-type pegmatite and is mined for tantalum, niobium and lithium. Brazil is producer of niobium and has the largest currently the largest producer of niobium. The Araxá mine is the largest producing reserves. niobium mine in the world and is owned by Companhia Brasileira de Metalurgia e Mineração (CBMM).The second-largest niobium mine is at Catalão and is owned by Anglo American Plc. Another carbonatite-hosted niobium deposit is the Morro dos Seis Lagos deposit. Niobium and tantalum are also extracted from the albite-rich peralkaline granite tin deposit at the Pitinga mine, in the Amazon state. Canada: The Tanco pegmatite in Manitoba hosts a high variety of tantalum minerals that are generally fine grain, making processing a challenge. The deposit also contains caesium and lithium and is owned by Cabot Corporation. Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 6
  • 7. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . In the Northwest Territories, the Thor Lake igneous complex comprises syenites and peralkaline granites with various hydrothermally mineralized zones. The deposit is currently being explored for rare earths by Avalon Rare Metals Inc., but is also rich in yttrium and zirconium, as well as tantalum and niobium, which are found mainly in columbite-tantalite minerals. The Oka carbonatite complex in Quebec includes three separate tantalum niobium deposits containing pervskite and pyrochlore group minerals. The Niobec mine in Quebec is the largest niobium mine outside of Brazil and is owned by IAMGOLD Corporation. Niobec is also the only known underground niobium mine in the world. The mine lies in the southern region of the Saint-Honoré carbonatite complex; the main mineral is pyrochlore. Nearby, the Crevier syenite carbonatite deposit with tantalum and niobium mineralization is currently being explored. The Strange Lake peralkaline granite deposit in Quebec is currently being evaluated by Quest Rare Minerals Ltd. for rare earths; the deposit is also rich in tantalum and niobium. Commonwealth of Independent States: The Tomtor deposit in Siberia, Russia, is a carbonatite-hosted niobium deposit, and the Lovozero syenite massif is rich in eudialyte, loparite and apatite with small percentages of niobium and tantalum. Europe: The Sokli carbonatite complex in Finland is rich in phosphate and niobium minerals (e.g. pyrochlore) and is owned by Yara International ASA. Greenland: The Kvanefjeld deposit in Southwest Greenland is a multi-element deposit containing niobium-tantalum-REE and is associated with the llimaussaq intrusive complex. Greenland Minerals and Energy Ltd. is currently exploring the deposit. The Motzfeld deposit owned by Ram Resources is also a multi-element deposit that has been targeted mainly for niobium, tantalum and REE. Saudi Arabia: The Ghurayyah alkaline granite deposit contains tantalum, niobium and rare earths. The columbite-tantalite and pyrochlore are the main tantalum and niobium minerals. Tertiary Minerals Plc is currently exploring the deposit. The United States: According to the United States Geological Survey (USGS), all of the tantalum and niobium resources in United States are considered uneconomic at 2010 prices. However, the country has a few niobium and tantalum occurrences. For instance, in Alaska, the Ray Mountain REE deposit, now being explored by Ucore Rare Metals, is reported as having minor amounts of tantalum and niobium. In Nebraska, Quantum Rare earths Developments Corp. is currently exploring the Elk Creek carbonatite, located south of Lincoln; according to the USGS, this deposit has the potential to be one of the largest global resources of niobium and REE. It should be noted that the tantalum and niobium occurrences discussed above include both economic and non-economic occurrences. In the following section, we present the tantalum and niobium resources and reserves per country. It is important to note that resources refer to the estimated ore occurrences and reserves are the portion of resources that can be economically mined. Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 7
  • 8. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . Resources and Reserves Major resources of tantalum are located in Brazil, Australia, China and Russia. Brazil and Australia have combined about 70% of the global tantalum reserves (Exhibit 3). Exhibit 3: Tantalum Resources and Reserves Australia and Brazil have about 70% of the Resources Resources Reserves Reserves global tantalum Country ( tonnes Ta2O5) (%) ( tonnes Ta) ( %) reserves. Brazil 129 274 40.8 87 360 57.2 Australia 65 771 20.7 40 560 26.5 China and Southeast Aisa 33 112 10.4 7 800 5.1 Russia and Middle East 31 298 10.0 ------ ------ Central Africa 28 576 9.0 3 120 2.0 Other Africa 21 318 6.7 12 480 8.2 North America 5 443 1.7 1 500* 1.0 Europe 2 268 0.7 ------ ------ Total 317 060 100 152 820 100 *Deemed uneconomic at 2010 prices Source:BGS; JSI Contrary to tantalum, most of the niobium reserves are located in only a few countries. Brazil holds the largest niobium reserves (93%), followed by Canada (Exhibit 4). Other unquantified niobium resources and reserves may be found in Egypt, Malawi and Greenland. Exhibit 4: Niobium Reserves Niobium reserves are almost exclusively Reserves Reserves Contained Nb2O5 located in two Country countries, Brazil and (tonnes) (%) (tonnes) Canada. Brazil 452 200 000 93.35 11 142 740 Canada 32 086 000 6.62 179 682 United States 150 000* 0.03 ------ Total 484 436 000 100 11 322 422 Source: USGS Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 8
  • 9. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . Mining and Processing Mining Tantalum and niobium are mined using conventional open-pit and underground mining techniques. Surface mining (open pit) is used to extract near-surface deposits (<100 metres) and is generally cheaper and safer. This method involves removing large tonnages of waste to access the ore, digging or blasting the ore with explosives, and transporting the ore by truck or conveyor belt for processing or stockpiling. If the mineralization is found deep in the ground, it may not be economical to remove the unmineralized material (waste) to access the ore; as such, underground mining is preferred. In underground mining, various techniques may be used, depending on the type of rock. In large ore bodies, mechanized systems can be applied, but in the case of narrow veins, labour-intensive drilling and blasting techniques are usually used. Common less- expensive underground mining techniques are the block-caving method and the room- and-pillar method. In the block-caving method, very large ore bodies are drilled and blasted in such a way that several thousand tonnes of broken ore may be extracted per day. In the room-and-pillar method, mined material is extracted across a horizontal plane opening multiple spaces or "rooms" underground while leaving "pillars" of untouched material to support the roof overburden. Waste material is sometimes used to fill worked places, which secures the roof and safely disposes of the waste. This technique has been used at the Tanco pegmatite deposit in Canada. Hard-rock deposits may be mined using standard surface, underground or both methods. For example, the Wodgina tantalum open-pit mine in Australia is mined using drilling and blasting techniques. Extraction from placer Extraction from placer deposits usually requires less costly mining techniques. In dry- deposits usually does not involve drilling and mining applications, shovels, scrapers and bulldozers are used to remove and transport blasting and requires the often unconsolidated ore to the processing plant. This method usually does not less costly mining techniques. require drilling and blasting, with the exception of occasional areas that may have cemented sand. The weathered Araxá carbonatite deposit in Brazil is mined using economic open-pit methods. Tantalum and niobium are also extracted as by-products. It has been suggested that about 14% of the total tantalum is extracted as a by-product, and only 2% for niobium. Tantalum-bearing tin slags are a common source of tantalum. Processing Methods Tantalum and niobium minerals, such as columbite-tantalite, are first crushed and milled, and then the ground down ore undergoes several conditioning treatments to produce a slurry substance. During tantalum production, the ore slurry is usually concentrated to about 30% tantalum oxide using mainly gravity and magnetic technique, depending on the type of ore. Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 9
  • 10. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . In niobium concentrate production process, the ore slurry is further concentrated to about 54% using gravity separation, froth flotation, magnetic and electrostatic separation, and acid leaching may also be used depending on the characteristics of ore. Once the concentration process is complete, the concentrate is usually sent to a refinery plant where tantalum and niobium are separated using either an acid or solvent extraction process (Exhibit 5). Niobium companies that convert niobium oxide into ferro- niobium may do so using the aluminothermy reduction process or an electric arc furnace. Exhibit 5: Chemical Processing of Tantalum and Niobium Concentrates Source: BGS Artisanal Mining There are positive and negative implications Artisanal and small scale mining (ASSM) have increased significantly in recent years, that result from particularly in developing countries. There are positive and negative results from these artisanal and small scale mining activities activities. ASSM has been associated with socioeconomic development in some rural in developing countries. areas, resulting in poverty alleviation, reducing rural migration and increasing national income. However, mining activities are often performed under poor environmental The United States has conditions with severe and negative implications for the local environment and health of introduced a legislation the workers (Exhibit 6). Additionally, in some situations, the revenue from ASSM has designed to restrict the importation and trade of been used to support brutal wars. For instance, in the DRC, minerals trade has been a conflict minerals in significant source of revenue for armed rebel groups that have committed horrible Central Africa, in particular in the DRC. human rights violations against locals. This situation has led the U.S. to introduce the “conflict minerals” law on May 20, 2010, which requires U.S. and foreign companies operating in the United States to report the use of conflict minerals (which includes Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 10
  • 11. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . tantalum) from the DRC and neighbouring countries. The idea is to restrict, to the extent possible, the use of conflict minerals across the supply chain from processors to manufactures at different technology levels (including electronic component producers and cellphone manufactures). Restricting the diffusion of conflict minerals should lead to better trading conditions and pricing of the underlying metals, allowing conflict-free metals to be traded at fair and sustainable market prices. Exhibit 6: Artisanal Miners Source:Google Estimates indicate that The DRC has large resources of columbine-tantalite minerals in many areas of the the DRC has made in excess of $1.0 billion country. It has been estimated that more than 50% of the world tantalum supply comes dollars from sales of from Africa and a significant percentage of that is said to be from the DRC. It has been conflict minerals. estimated that in 2009, the DRC made more than US$1.0 billion through the sales of conflict minerals. It will likely be almost impossible to completely stop the spread and use of conflict minerals in the world, but the current law in the United States has certainly created an awareness of the problems associated with conflict minerals and it will likely reduce the use of these minerals significantly. There are many non-governmental organizations working on this problem and several technology companies are refusing to use conflict minerals-bearing components in their products. The global economic growth (although slow), combined with the introduction of the conflict free mineral law in the United States, and other industrial countries, has contributed to higher tantalum prices, which should make possible the return to the market place of large tantalum producers such as Global Advanced Metals (previously Talison Minerals Pty Ltd.) and other companies. World Supply Sources Currently only 60% of tantalum supply is derived from direct Tantalum supply is derived from various sources: about 60% is obtained from primary mining. sources (i.e. direct mining of tantalum ores), 10% from secondary concentrates, 10% from tin slags and 20% from scrap, synthetic concentrates and recycling (Exhibit 7). Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 11
  • 12. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . Exhibit 7: Historical Tantalum Sources Scrap, Synthetic Concentrates and Recycling 20% Primary Tin Slag Concentrates 10% 60% Secondary Concentrates 10% Source:TCI Niobium supply is derived mainly from primary sources (Exhibit 8), with the mineral Niobium supply is pyrochlore accounting for more than 95% of the total primary production. Less than 15% derived mainly from is derived from tin slags and recycling. mining. Exhibit 8: Niobium Sources Recycling 10% -15% Primary and Secondary concentrates 85% - 90% Source:TCI; USGS The Defense National Stockpile Center (DNSC), a division of The United States Defense Logistics Agency (USDLA), used to be a significant source of tantalum and niobium. However, in 2008, the DNSC announced that the stockpile of these metals has been depleted and were no longer offered for sale. Production Tantalum Production In the last two years, Brazil and Mozambique were the largest producers of tantalum (Exhibit 9). The largest operating tantalum mine in Brazil is the Mibra mine at Nazareno in Minas Gerais with a capacity of 300,000 pounds of Ta2O5 per year. In Mozambique, Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 12
  • 13. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . the Marropino mine has the capacity to produce 600,000 tonnes of Ta2O5 and is Brazil and Mozambique currently producing close to 200,000 tonnes of Ta2O5 per year. Australia used to be the are currently the largest producers of tantalum. world’s largest producer of tantalum and in 2 2 contributed to about 6 % or the total world production; however, its contribution to total production was only 10% in 2010. The two largest mines in Australia, the Wodgina and Greenbushes mines, were placed under care and maintenance in December 2008, due to poor economic conditions and depressed tantalum prices aggravated by increased volume of cheap conflict tantalum in the market. Exhibit 9: Tantalum Mine Production per Country Ta Mine Production (tonnes) 2009 2010 Australia 81 80 Australia used to be the largest tantalum Brazil 180 180 producer. Canada 25 25 Mozambique 113 110 Rwanda 104 100 Other countries * 297 310 Total 800 805 * includes Burundi, Ethiopia, Uganda, Congo (Kinshasa), Zimbabwe and tantalum contained in tin slags Source:BGS ; USGS; JSI Other tantalum-producing mines are the Keticha mine in Ethiopia, the Lovozero mine in Russia, the Yichun mine in China and the Pitinga tin mine in Brazil. Additional tantalum production is also available in Southeast Asia, in particular in Malaysia and Thailand, from where tantalum is produced from tin-slags, and in Canada and Central Africa from small alluvial and soft rock deposits. Estimates indicate that Rwanda and the DRC accounted for 40–50% of the global tantalum production in 2009, with a significant portion from conflict areas. The volume of conflict minerals are, however, usually hard to track and quantify. In the late 90s, the technology sector increased at a rapid rate, driving global tantalum The 2008 recession and the depressed tantalum production up. Tantalum production peaked in 2001, likely associated with the dot-com prices caused many bubble and the expectation of continuing growth in the technology sector. During that mines around the globe to suspend production. period, many companies built inventories of tantalum. However, with the slowdown in the technology sector, tantalum production decreased in the subsequent years (Exhibit 10). The 2008 recession and the low tantalum prices caused by the oversupply of tantalum in the market led many mines in Australia, Canada and Africa to suspend production, leading to a more than 50% decrease in mine production. Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 13
  • 14. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . Exhibit 10: Tantalum Concentrate Mine Production 2,500 Ta Mine Production, tonnes 2,000 1,500 1,000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source:BGS; JSI Niobium Production Brazil is the world’s largest producer of niobium (92%), followed by Canada (Exhibit 11). Brazil has two of the largest niobium deposits in the world, the Araxá and the Catalão deposits. The Araxá mine is operated by CBMM (Companhia Brasileira de Metalurgia e Mineração) and it has enough reserves to supply current global demand for 500 years; however, decreasing grades are increasing operating costs at the mine. The Catalão mine is operated by Anglo American Brazil (a subsidiary of Anglo American plc) and has CBMM, Anglo American about 18 million tonnes of niobium oxide. The third-largest deposit is the Niobec deposit Brazil and IAMGOLD in Quebec with 18,000 tonnes, and is owned by IAMGOLD Corp. The main niobium together supply about 85% of niobium to the mineral in these deposits is pyrochlore. CBMM, Anglo American Brazil and IAMGOLD market. together supply about 85% of niobium to the market, most of it being in the form of ferro- niobium with 60% niobium oxide content, for use in the production of high-strength, low- alloy steel (HSLA). Exhibit 11: Niobium Producers Brazil is the largest producer of niobium. Canada Other 7% 1% Brazil 92% Souce: USGS Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 14
  • 15. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . The niobium production, profile which shows a steady increase in the last six years (Exhibit 12), is dramatically different from that of tantalum. Niobium production increased from about 20,000 tonnes in 2000 to more than 80,000 tonnes in 2010, driven by increased demand for HSLA steel used in the manufacture of vehicles, and in construction of buildings, ships and refinery equipment. The increase in steel consumption has been linked to the economic growth in the emerging markets, in particular the BRIC countries (i.e. Brazil, China, India and Russia). Exhibit 12: Niobium Concentrate Mine Production 90,000 80,000 Nb Mine Production. tonnes Niobium production has increased fourfold over 70,000 the past ten years. 60,000 50,000 40,000 30,000 20,000 10,000 - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: BGS; JSI Projects Under Development Tantalum supply has been constrained in recent years as a result of production halts at the world’s largest tantalum producing mines in Australia, Canada and Mozambique. As mentioned above, poor economic conditions in 2008 and the growing supply of cheap conflict tantalum in the market caused significant decrease in tantalum prices, granting many tantalum mines around the globe uneconomic and causing over a 50% decrease in production of conflict-free tantalum in 2009. Since the introduction of the conflict-free The growing constraint minerals law in the U.S., there have been major constraints in the diffusion of conflict in tantalum supply has led to an increase in tantalum; however, as previous mines struggle to re-start production there’s likely a exploration projects. supply-demand gap forming in the market; at least in the short term. This growing constraint in tantalum supply has led to an increase in exploration projects. Exhibit 13 presents a list of some of the current tantalum projects. Noventa’s mine Marropino is currently producing at a rate of about 200,000 lb/year and expects to increase production to 600,000 pounds by the end of this year. The company has two other tantalum projects in Morrua and Mutala with short-term production potential. Global Advanced Metals (GAM), plans to re-start the Wodgina mine in Australia this GAM plans to re-start production at the year, with an initial production of 700,000 pounds per year. In Egypt, Gippsland Ltd. is Wodgina mine this year. developing the Abu Dabbab mine scheduled for production in 2013, with a production target of 650,000 pounds per year. In Malawi, Globe Metals and Mining is developing the Kanyika project and plans to bring it to production in 2013. The plan is to produce 200 tonnes of ferro-niobium and 400,000 tonnes of tantalum pentoxide per year. Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 15
  • 16. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . Other projects under development include Commerce Resources Upper Fir deposit with large niobium and tantalum resources, and the Motzfeldt deposit in Greenland that has the potential of becoming an extremely large niobium-tantalum deposit with about 500 million tonnes of resources. This project is 51%-owned by Ram Resources. Exhibit 13: Selected Projects Resouces*, Project/Mine Company Deposit Production Status % Ta 2O5 % Nb2O5 Million Tonnes Wodgina, Global Advanced 700,000 lbs Ta2O5 Li-albite granite Feasibility n.a 0.027 n.a Australia Metals (frm Talison) p.a., 2011 Marropino, Zoned LCT-type 600,000 lbs p.a Noventa In Production 8.1 0.022 n.a Mozambique pegmatite Ta2O5, 2011 Morrua, Zoned LCT-type 250,000 lbsp.a Noventa Feasibility 7.8 0.049 n.a Mozambique pegmatite Ta2O5,2012 Abu Dabbab, 650,000 lbs p.a. Gippsland Li-albite granite Feasibility 44.5 0.025 n.a Egypt Ta2O5, 2013 200 tonnes Fe-Nb, Globe Metals and Carbonatite-nephelite Kanyika, Malawi 400,000 lbs Ta2O5, Feasibility 21 0.018 0.41 Mining syenite 2013 Commerce Carbonatite-nephelite Upper Fir, Canada n.a. Conceptional 36.4 0.019 0.17 Resources syenite Carbonatite-nephelite Anita, Canada Les Mineraux Crevier n.a. Conceptional 23.75 0.019 0.186 syenite Motzfeldt, Alkaline-peralkaline Ram Resources n.a. Conceptional 500 0.011-0.013 0.13-0.15 Greenland granite Carbonatite-nephelite Crevier, Canada MDN Inc. n.a. Conceptional 25.4 0.023 0.2 syenite Carbonatite-nephelite Mrima Hill, Kenya Pacific Wildcat n.a. Conceptional 105.3 n.a. 0.65 syenite *Include all categories of resources Source: BGS; JSI World Demand Tantalum demand has increased steadily in the last 10 years, driven by developments and growth in the technology sector. According to Paumanok Publications Inc., a leading market research firm in the electronic components sector, demand for tantalum concentrate increased from 2.97 million pounds in 1995 to about 6.22 million pounds in Estimates indicate that 2008, at an average growth rate of 6% per year. However, we think there was likely a tantalum demand has grown by 6% between slowdown in tantalum demand during the 2001–2002 downturn and that the preceding 1995 and 2002, but had years’ demand may have grown by double digits (10–12% in some years) driven by the a one-year decline of 31% in 2009 due to the steady growth of the electronics industry and increasing applications for tantalum in the recent global economic super-alloys sector. The recent global economic slowdown caused a significant slowdown. decrease in demand for industrial metals. Tantalum demand estimates for 2009 indicate a one-year decline of 31%, which equates to 4.3 million tonnes for that year. Tantalum products are used in a variety of industries, such as medical, construction and Tantalum demand expected to grow by 9% electronics. We believe that as the global economy improves, demand for tantalum, in the next 4 years. niobium and other industrial metals will rise. Paumanok Publications Inc. estimates that demand for tantalum will grow 9% per year in the next four years as the markets Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 16
  • 17. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . recover. Exhibit 14 shows our production and demand forecast for tantalum under three scenarios: low growth (6% CAGR), medium growth (9% CAGR) and high growth (12% CAGR). Exhibit 14: Tantalum Supply and Demand Forecast 10,000,000 Other Sources 8,000,000 Malawi Egypt 6,000,000 Australia Mozambique 4,000,000 Current Sources Demand 6% CAGR 2,000,000 Demand 9% CAGR Demand 12% CAGR - 2009 2010 2011 2012 2013 2014 2015 Source: JSI Our analysis indicates that there should be sufficient supply of tantalum in the market, assuming a growth rate below 9% and assuming all the projects currently under development will not be delayed or cancelled. We believe there is currently a shortfall of tantalum in the market, caused by the 2008–2009 shutdowns of the largest tantalum mines in Australia, Canada and Mozambique, and due to increased restriction in trade of conflict tantalum. As tantalum production increases, however, prices are likely to fall and High-cost tantalum producers may be kept the lowest-cost producers will be better positioned to maintain operations. In fact, some out of the market and of the high-cost producers may be squeezed and/or kept out of the market and new new “low-cost” producers may be able “low-cost” producers may be able to enter the market by offering competitive prices. to enter the market by Tantalum production volume estimates from the DRC vary depending on the year and offering competitive the source. Our estimates indicate that in 2010 less than 30% of the total primary prices. production was obtained from conflict areas. We believe this number is likely to fall further as old and new mines come into production. Also, given the increasing efforts to curb “blood” minerals and the potential for new production in the near term, we do not expect conflict-tantalum to cause major price and production disruptions going forward. Niobium is mostly sold as ferro-niobium alloy. Estimated global annual consumption of Niobium is mostly sold as ferro-niobium alloy. ferro-niobium was nearly 180 million pounds in 2010. According to Niobec, annual niobium demand has grown at a rate of 10% between 2002 and 2009, driven by the growing need for high-grade steel, especially from the emerging economies of China and India. For example, it is estimated that China has doubled its niobium imports in the last four years and now accounts for 30% of the global Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 17
  • 18. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . consumption. As demand and production of crude steel rises, demand for niobium is also expected to rise but at a higher rate as demand for niobium in other sectors increase. As mentioned above, the economic growth in emerging nations is driving the demand for The economic growth high-grade steel products, and securing niobium supplies has become an important in developing issue for the leading steel producers, such as Korean company Posco and Nippon Steel economies is expected to drive up demand for Corp. in Japan. This situation has prompted a consortium of Korean and Japanese steel and niobium. companies to invest an aggregate amount of about US$2.0 billion for a 15% stake in the Brazilian company CBMM, the world’s largest niobium producer. According to various niobium resource companies, the niobium market is expected to continue to grow at a rate of 5–7% per year driven mainly by higher demand for high- Niobium market is expected to grow at a grade steel use in the automotive and construction industries, which are expected to rate of 5–7% per year. expand as the global economy recovers. Although it has been estimated that Brazil likely has sufficient niobium resources to supply the current world demand for centuries, given the economic importance of niobium for the leading economies, we believe that users of niobium will likely pursue partnerships with other niobium producers around the world in the attempt to diversify supplier and country risks. As such, if demand for niobium continues to grow, we are likely to see new niobium producers entering the market in the next five years, especially those with potential for low production costs. Uses and Application The three largest consumers of tantalum raw materials are H.C. Starck GmbH in Germany, Cabot Corporation in the United States and Ningxia Non-Ferrous Metals Import and Export Corporation in China (Exhibit 15). These three companies account for about 85% of the global consumption of tantalum concentrate. Tantalum raw material is processed to create various products, such as powders for the capacitor manufactures. The capacitors are then sold to the circuit board assemblers, who then supply them to high-tech companies such as Dell Inc., Airbus S.A.S., Sony Corp., etc. Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 18
  • 19. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . Exhibit 15: Tantalum Supply Chain Concentrate Suppliers Concentrate Processors Tantalum Users End Users Sources: Refine tantalum into Capacitors Manufactures Using  Miners tantalum powder and tantalum capacitors Three companies  Scrap/Recycling metal  25% of the market account for about 85%  Synthetics/slags of the global  Three companies consumption of  Leading Miners represent 85% of the tantalum concentrate. - Paranapanema market - Fluminense - Kenticha - Noventa  Care and Maintenance Alloys - GAM (Wodgina) - TANCO  17% of the market Aviation Industry  High Influence: - DRC Coltan Trade Miners 3 Major Processors 25% Used by Capacitor Producers Multiple End Users Source: PWC; JSI The largest producer of niobium, CBMM, mines and processes niobium to produce a variety of products, including ferro-niobium, nickel niobium and niobium metal. Exhibit 16: Niobium Supply Chain Miners and Processors Niobium Users End Users Mining and Processing Ferro-Niobium Users  Three companies  89% of the market supply 85% of the market In the last 6 years, 89% of the global niobium production was used to produce ferro-niobium. 3 Major Integrated Miners & Processors 89% Used for Ferro-Niobium Multiple End Users Source: JSI Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 19
  • 20. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . CBMM sells its products to steel companies and major specialty alloy producers such as Cabot, H.C. GmbH and Treibacher AG, which in turn sell their products to the automotive, manufacturing and construction industries (Exhibit 16). Tantalum is utilized in a variety of forms and is commonly sold as tantalum pentoxide (Ta2O5), which is the initial form for the production of other tantalum compounds, such as tantalum chloride (TaCl5), tantalum carbide (TaC) and lithium tantalite (LiTaO3). Niobium pentoxide is usually the starting point for niobium compounds. Common niobium compounds include niobium chloride (NbCl5), niobium carbide (NbC) and lithium niobate (LiNbO3). Tantalum and niobium are extensively used in the production of alloys, metal carbides, powders and chemical compounds; they have a wide variety of applications in all major industries. Exhibits 17 and 18 show examples of applications for tantalum and niobium products by industry. Exhibit 17: Tantalum Uses by Industry Industry Usage Tantalum product Automotive Vehicle bodies Tantalum powder Ceramics and Ceramic capacitors, glass coatings and Tantalum oxide and yttrium tantalate surface coatings camera lenses Chemical processing equipment and oil Chemicals Tantalum metal &gas pipelines Cathode protection systems for large Tantalum and niobium steel structures such as oil platforms and Tantalum metal (sheets, rods, plates and Construction have a wide variety of corrosion resistant fasteners (e.g. wires) critical applications in screws, nuts and bolts) all major industries. Engineering Cutting tools Tantalum carbide Capacitors, surface acoustic wave filters Lithium tantalate, tantalum powder, tantalum Electronics for sensor and touchscreen technologies, ingots and tantalum nitride hard disk drives and LED lights Pacemakers, hearing aids and prosthetic Medicine Tantalum metal devices such as hip joints Furnace parts, supperalloys for jet Metallurgical Tantalum metal and tantalum ingots engines and rocket engine nozzles Missile parts, ignition systems, night Physics vision goggles and GPS (Global Tantalum ingots and tantalum oxide Positioning systems) Source: BSG Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 20
  • 21. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . Exhibit 18: Niobium Uses by Industry Industry Usage Niobium product Automotive Vehicle bodies HSLA ferro-niobium (60% Nb) Ceramics and Ceramic capacitors, glass coatings and Niobium Oxide surface coatings camera lenses Chemical processing equipment and oil HSLA ferro-niobium (60% Nb), niobium Chemicals &gas pipelines metal and niobium-1% zirconium alloy Architectural Steel and cathode protection HSLA ferro-niobium (60% Nb), niobium Construction systems for large steel structures metal Engineering Cutting tools, railway tracks and ship hulls Niobium carbide Capacitors, street lighting systems and Niobium powder, niobium oxide and lithium Electronics surface acoustic wave filters for sensor niobate and touch screen technologies Superconducting magnetic coils in MRI Medicine scanners and magneto-encephalography niobium nitride (brain activity mapping) Super alloys for jet engines and turbine Vaccum-grade ferro-niobium and nickel- Metallurgical blades niobium Physics Particle physics research Niobium-titanium alloy and niobium-tin alloy Source: BSG Alloys Tantalum alloys are usually used in applications where resistance to corrosion is Tantalum and niobium alloys are commonly required, such as in the manufacturing of chemical processing equipment. Further, used in applications tantalum-ruthenium alloy is used in military applications for their oxidation resistance and where resistance to corrosion is required. shape memory properties, i.e. if deformed they can return to the original shape when heated. Tantalum alloys are also used in invasive medical applications such as Tantalum alloys are prosthetics and pacemakers given their biocompatibility with human tissue. used in prosthetics and pacemakers. Niobium alloys are also used for corrosion-resistance applications and medical devices. For example, niobium-titanium and niobium-tin alloys are used in the production of superconducting magnets for MRIs (Magnetic Resonance Imaging) used as cancer Niobium is most often diagnostic tool. Niobium is, however, most commonly used in the production of ferro- used in the production niobium, a vital component in the production of high-strength, low alloy steel for the of ferro-niobium, a vital component in the manufacturing of vehicles, railway tracks, pipelines, etc. Ferro-niobium increases steel production of high- strength but it can also offer cathode protection to large steel structures like oil platforms. strength, low alloy steel used in the The vacuum-grade ferro and nickel niobium are used in high-temperature, high-stress manufacturing and applications, such as aircraft and aerospace turbines. Other metals alloyed to niobium construction industries. include zirconium, titanium and tin. Carbides Tantalum and niobium carbides are extremely hard, refractory ceramics that are used in high-stress, high-temperature applications, such as in the production of high-speed cutting and boring tools, teeth for excavator buckets and drill bits for the mining industry. Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 21
  • 22. <TITLE>OCTOBOCTER JSI SE BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS JACOB SECURITIES INC. July 19th, 2011 EQUITY RESEARCH . These carbines are also used as refractory coatings in cutting tools, nuclear reactors and furnaces. Powders Tantalum powders are High-purity tantalum powder is mainly used in the production of capacitors because of used in the manufacturing of the tantalum’s high capacitance coefficient. Although the amount of tantalum in each capacitors, which capacitor is small, this is a major tantalum application accounting for more than 20% of account for more than the total tantalum market. Billions of capacitors are used in cellphones, computers and in 20% of the total tantalum market. many other applications. For example, cellphones with camera and video functions have 22–23 tantalum capacitors, and last year 417 million new cellphones were produced. Niobium powders are also used to produce capacitors, but they are usually larger in size and less efficient. Chemicals Tantalum nitrite is used Tantalum and niobium chemicals have been increasingly used in electronics, medical in LEDs and solar applications, optics and in spluttered film in integrated circuitry. Tantalum and niobium in panels, and niobium nitrite is a key the oxide form are usually used in the manufacture of specialty glass and ceramics for component of capacitors. Lithium tantalite and lithium niobate have unique optical, piezo- and pyro- superconducting electric properties and are extensively used in electronic applications. Tantalum nitrite is magnets for MRIs. used in light emitting diodes (LED), solar cells and transistors, and niobium nitrite is a key component of superconducting magnets for MRIs. Exhibits 19 and 20 compare the end-uses of tantalum and niobium in 2004 and 2010, according to Tantalum-Niobium International Study Centre (TIC). Capacitor-grade tantalum still accounts for most of the production; however, contrary to what some believe, the amount is far below 50%. The study suggests that between 2004 and 2010, there has been a significant increase in usage of tantalum for the production of ingots, metal products and metallurgical grade powder. Approximately 89% of the global niobium production is used to produce ferro-niobium, and according to TIC, this situation has been about the same for the last six years despite the significant increase in niobium production and demand. The remaining 11% is used to produce niobium alloys, metals, high-purity ferro-niobium and niobium chemicals and carbides. Based on the TIC study, production of niobium metal products and high-purity ferro-niobium has decreased relative to all the other products. Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com Page 22