JOHANNESBURG (miningweekly.com) – London-listed Noventa on Monday said it was unable to secure a waiver on a potentially defaulted $42-million medium-term loan after preliminary forecasts warned of significant production shortfalls for the year.

The Mozambique-focused group said its expected monthly production levels would be insufficient to meet the financial covenant tests under a November loan facility agreement with its largest shareholder Richmond Partners Master.

Tantalum pentoxide production slipped significantly from 5 360 lbs in November, to 1 601 lbs and 1 642 lbs in December and January respectively, under continuing difficult market and operating conditions.

The company cited unreliable electricity supply, adverse weather conditions, new customs regulations delaying the import of goods and equipment, the relatively low recovery rates at a new plant, frequent shutdowns of new and old processing plants at Marropino and the relatively low grade of ore available for processing, as contributing to the lower output.

Further, despite progressing the remedial work necessary to improve production from the much-delayed embattled Marropino process plant, it remained behind schedule.

Noventa, which was currently reviewing the updated mining plan and revised production forecast, was denied a request for extension from its lenders, sending the company into an “event of default” after failing to produce a valid and accurate certificate of compliance on February 10.

The group commented that Richmond had not yet confirmed the default, but Noventa could face insolvency if it failed to obtain additional sources of finance or renegotiate terms with its lender.

The group voluntarily halted drawdowns from the secured loan until the revised mining plan, with the forecast lower ore grades incorporated, was fully reviewed. It was expected the plan would be available on Wednesday.

“… the group has sufficient funds available to continue operations until at least February 28, by which time the independent board feels it will be in a position to definitively determine whether or not the reduction in estimated production levels based on the decreased ore grade is accurate,” the company said in a statement.