tantalum & niobium primer: jacob securities (july 2011)

July 19, 2011

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.

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EQUITY RESEARCH

Luisa Moreno, Ph.D, Analyst [email protected] +1 (416)866-8380

Stock Rating: SPECULATIVE BUY

Risk Rating: High

Tantalum and Niobium Primer

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Jacob Securities Inc., 199 Bay Street, Suite 2901, Toronto, ON M5L 1G1 +1-416-866-8300 www.jacobsecurities.com

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BC TANTALUM & NIOBIUM PRIMER – TWO CRITICAL METALS July 19th, 2011

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 Africa were forced to close in 2008–2009 due to the global economic slowdown and depressed tantalum prices. There are currently a few mines and projects under 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 to new processing technologies and expand niobium applications and production. A drastic difference from the current rare earth situation between China and the rest of world. The EU has identified niobium as a critical material given its unique 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 Minerals Law” in the U.S. aims at restricting the trade of conflict minerals, and many technology companies, like Apple Inc. (NASDAQ:AAPL), Motorola Solutions Inc. (NYSE:MSI) and AVX Corp., are taking initiatives to comply with the law. The 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

niobium, which includes: Noventa Ltd. (AIM:NVTA;TSX:NTA), Commerce Resources Corp. (TSXV:CCE), Pacific Wildcat Resources Corp. (TSXV:PAW) and Gippsland Ltd. (ASX:GIP). Noventa is a pure-play tantalum company, currently mining and producing tantalum concentrate at Marropino in Mozambique. Pacific Wildcat is exploring niobium in Kenya’s Mrima Hill deposit and evaluating the dormant Muiane 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.

There is a growing supply-demand gap for tantalum. Niobium and tantalum have been declared critical elements by the EU. A significant percentage of tantalum supply is from African conflict areas. Noventa Ltd.,Commerce Resources Corp., Pacific Wildcat Resources Corp. and Gippsland Ltd. are profiled in this report.

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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.

Tantalum and niobium have unique mechanical, electrical and chemical properties,

which make them indispensable in many industrial applications. In addition to the

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

Exhibit 1: Selected Tantalum and Niobium Properties

Source: BGS

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

Tantalum and niobium have unique and indispensable properties.

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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.

Tantalum and niobium deposits are often associated with igneous rocks (e.g.

pegmatites, granites, syenites and carbonatites). Carbonatites and alkaline igneous

rocks (e.g. alkali granites and syenites) are usually enriched in a variety of elements,

including rare earths (REE), zirconium and niobium, but usually have low tantalum

content. The main niobium-bearing minerals in these deposits usually include perovskite

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.

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,

Exhibit 2: Selected Tantalum and Niobium Minerals

Source: BGS

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)2Nb2O6(O,OH,F) 75.12 n.a.

Microlite Pyrochlore (Na,Ca)2Nb2O6(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 Fex (Nb,Ta)2x4Ti1-x O2 27 n.a.

Niobium usually outweighs tantalum in carbonatites and syenites, whereas in pegmatites and granites tantalum reaches higher concentrations.

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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

producer of tantalum. The Greenbushes and Wodgina mines, from which most of the

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-

spondumene-type pegmatite and is mined for tantalum, niobium and lithium. Brazil is

currently the largest producer of niobium. The Araxá mine is the largest producing

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.

Australia has one of the highest tantalum reserves in the world. Brazil is the largest producer of niobium and has the largest reserves.

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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).

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

Source: USGS

CountryReserves

(tonnes)

Reserves

(%)

Contained Nb2O5

(tonnes)

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

Exhibit 3: Tantalum Resources and Reserves

Source:BGS; JSI

CountryResources

( tonnes Ta2O5)

Resources

( % )

Reserves

( 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

Australia and Brazil have about 70% of the global tantalum reserves. Niobium reserves are almost exclusively located in two countries, Brazil and Canada.

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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 deposits usually requires less costly mining techniques. In dry-

mining applications, shovels, scrapers and bulldozers are used to remove and transport

the often unconsolidated ore to the processing plant. This method usually does not

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.

Extraction from placer deposits usually does not involve drilling and blasting and requires less costly mining techniques.

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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.

Artisanal Mining

Artisanal and small scale mining (ASSM) have increased significantly in recent years,

particularly in developing countries. There are positive and negative results from these

activities. ASSM has been associated with socioeconomic development in some rural

areas, resulting in poverty alleviation, reducing rural migration and increasing national

income. However, mining activities are often performed under poor environmental

conditions with severe and negative implications for the local environment and health of

the workers (Exhibit 6). Additionally, in some situations, the revenue from ASSM has

been used to support brutal wars. For instance, in the DRC, minerals trade has been a

significant source of revenue for armed rebel groups that have committed horrible

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

Exhibit 5: Chemical Processing of Tantalum and Niobium Concentrates

Source: BGS

There are positive and negative implications that result from artisanal and small scale mining activities in developing countries. The United States has introduced a legislation designed to restrict the importation and trade of conflict minerals in Central Africa, in particular in the DRC.

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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.

The DRC has large resources of columbine-tantalite minerals in many areas of the

country. It has been estimated that more than 50% of the world tantalum supply comes

from Africa and a significant percentage of that is said to be from the DRC. It has been

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

Tantalum supply is derived from various sources: about 60% is obtained from primary

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).

Exhibit 6: Artisanal Miners

Source:Google

Estimates indicate that the DRC has made in excess of $1.0 billion dollars from sales of conflict minerals. Currently only 60% of tantalum supply is derived from direct

mining.

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Niobium supply is derived mainly from primary sources (Exhibit 8), with the mineral

pyrochlore accounting for more than 95% of the total primary production. Less than 15%

is derived from tin slags and recycling.

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,

Exhibit 8: Niobium Sources

Source:TCI; USGS

Primary and Secondary

concentrates

85% - 90%

Recycling 10% -15%

Exhibit 7: Historical Tantalum Sources

Source:TCI

Primary Concentrates

60%

Secondary Concentrates

10%

Tin Slag10%

Scrap, Synthetic Concentrates and Recycling

20%

Niobium supply is derived mainly from mining.

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the Marropino mine has the capacity to produce 600,000 tonnes of Ta2O5 and is

currently producing close to 200,000 tonnes of Ta2O5 per year. Australia used to be the

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.

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

production up. Tantalum production peaked in 2001, likely associated with the dot-com

bubble and the expectation of continuing growth in the technology sector. During that

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.

Exhibit 9: Tantalum Mine Production per Country

Source:BGS ; USGS; JSI

2009 2010

Australia 81 80

Brazil 180 180

Canada 25 25

Mozambique 113 110

Rwanda 104 100

Other countries* 297 310

Total 800 805

Ta Mine Production (tonnes)

* includes Burundi, Ethiopia, Uganda, Congo (Kinshasa),

Zimbabwe and tantalum contained in tin slags

Brazil and Mozambique are currently the largest producers of tantalum. Australia used to be the largest tantalum producer. The 2008 recession and the depressed tantalum prices caused many mines around the globe to suspend production.

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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

about 18 million tonnes of niobium oxide. The third-largest deposit is the Niobec deposit

in Quebec with 18,000 tonnes, and is owned by IAMGOLD Corp. The main niobium

mineral in these deposits is pyrochlore. CBMM, Anglo American Brazil and IAMGOLD

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

Souce: USGS

Brazil92%

Canada7%

Other1%

Exhibit 10: Tantalum Concentrate Mine Production

Source:BGS; JSI

0

500

1,000

1,500

2,000

2,500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Ta M

ine

Pro

du

ctio

n, t

on

ne

s

CBMM, Anglo American Brazil and IAMGOLD together supply about 85% of niobium to the

market.

Brazil is the largest producer of niobium.

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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).

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

minerals law in the U.S., there have been major constraints in the diffusion of conflict

tantalum; however, as previous mines struggle to re-start production there’s likely a

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

year, with an initial production of 700,000 pounds per year. In Egypt, Gippsland Ltd. is

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.

Exhibit 12: Niobium Concentrate Mine Production

Source: BGS; JSI

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Nb

Min

e P

rod

uct

ion

. to

nn

es

Niobium production has increased fourfold over the past ten years.

The growing constraint in tantalum supply has led to an increase in exploration projects. GAM plans to re-start production at the Wodgina mine this 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.

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

2008, at an average growth rate of 6% per year. However, we think there was likely a

slowdown in tantalum demand during the 2001–2002 downturn and that the preceding

years’ demand may have grown by double digits (10–12% in some years) driven by the

steady growth of the electronics industry and increasing applications for tantalum in the

super-alloys sector. The recent global economic slowdown caused a significant

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

electronics. We believe that as the global economy improves, demand for tantalum,

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

Exhibit 13: Selected Projects

Source: BGS; JSI

Project/Mine Company Deposit Production StatusResouces*,

Million Tonnes% Ta2O5 % Nb2O5

Wodgina,

Australia

Global Advanced

Metals (frm Talison)Li-albite granite

700,000 lbs Ta2O5

p.a., 2011Feasibility n.a 0.027 n.a

Marropino,

MozambiqueNoventa

Zoned LCT-type

pegmatite

600,000 lbs p.a

Ta2O5, 2011In Production 8.1 0.022 n.a

Morrua,

MozambiqueNoventa

Zoned LCT-type

pegmatite

250,000 lbsp.a

Ta2O5,2012Feasibility 7.8 0.049 n.a

Abu Dabbab,

EgyptGippsland Li-albite granite

650,000 lbs p.a.

Ta2O5, 2013Feasibility 44.5 0.025 n.a

Kanyika, MalawiGlobe Metals and

Mining

Carbonatite-nephelite

syenite

200 tonnes Fe-Nb,

400,000 lbs Ta2O5,

2013

Feasibility 21 0.018 0.41

Upper Fir, CanadaCommerce

Resources

Carbonatite-nephelite

syeniten.a. Conceptional 36.4 0.019 0.17

Anita, Canada Les Mineraux CrevierCarbonatite-nephelite


Motzfeldt,

GreenlandRam Resources

Alkaline-peralkaline

graniten.a. Conceptional 500 0.011-0.013 0.13-0.15

Crevier, Canada MDN Inc.Carbonatite-nephelite


Mrima Hill, Kenya Pacific WildcatCarbonatite-nephelite

syeniten.a. Conceptional 105.3 n.a. 0.65

*Include all categories of resources

Estimates indicate that tantalum demand has grown by 6% between 1995 and 2002, but had a one-year decline of 31% in 2009 due to the recent global economic slowdown. Tantalum demand expected to grow by 9% in the next 4 years.

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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).

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

the lowest-cost producers will be better positioned to maintain operations. In fact, some

of the high-cost producers may be squeezed and/or kept out of the market and new

“low-cost” producers may be able to enter the market by offering competitive prices.

Tantalum production volume estimates from the DRC vary depending on the year and

the source. Our estimates indicate that in 2010 less than 30% of the total primary

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

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

Exhibit 14: Tantalum Supply and Demand Forecast

Source: JSI

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

2009 2010 2011 2012 2013 2014 2015

Other Sources

Malawi

Egypt

Australia

Mozambique

Current Sources

Demand 6% CAGR

Demand 9% CAGR

Demand 12% CAGR

High-cost tantalum producers may be kept out of the market and new “low-cost” producers may be able to enter the market by offering competitive prices. Niobium is mostly sold as ferro-niobium alloy.

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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

high-grade steel products, and securing niobium supplies has become an important

issue for the leading steel producers, such as Korean company Posco and Nippon Steel

Corp. in Japan. This situation has prompted a consortium of Korean and Japanese

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-

grade steel use in the automotive and construction industries, which are expected to

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.

The economic growth in developing economies is expected to drive up demand for steel and niobium. Niobium market is expected to grow at a rate of 5–7% per year.

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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

Source: JSI

Mining and Processing

Three companies

supply 85% of the

market

Miners and Processors

Ferro-Niobium Users

89% of the market

Niobium Users End Users

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

Exhibit 15: Tantalum Supply Chain

Source: PWC; JSI

Sources:

Miners

Scrap/Recycling

Synthetics/slags

Leading Miners

- Paranapanema

- Fluminense

- Kenticha

- Noventa

Care and

Maintenance

- GAM (Wodgina)

- TANCO

High Influence:

- DRC Coltan Trade

Concentrate Suppliers

Refine tantalum into

tantalum powder and

metal

Three companies

represent 85% of the

market

Concentrate Processors

Capacitors

25% of the market

Alloys

17% of the market

Tantalum Users

Manufactures Using

tantalum capacitors

Aviation Industry

End Users

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

Three companies account for about 85% of the global consumption of tantalum concentrate.

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

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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

Source: BSG

Industry Usage Tantalum product

Automotive Vehicle bodies Tantalum powder

Ceramics and

surface coatings

Ceramic capacitors, glass coatings and

camera lensesTantalum oxide and yttrium tantalate

ChemicalsChemical processing equipment and oil

&gas pipelinesTantalum metal

Construction

Cathode protection systems for large

steel structures such as oil platforms and

corrosion resistant fasteners (e.g.

screws, nuts and bolts)

Tantalum metal (sheets, rods, plates and

wires)

Engineering Cutting tools Tantalum carbide

Electronics

Capacitors, surface acoustic wave filters

for sensor and touchscreen technologies,

hard disk drives and LED lights

Lithium tantalate, tantalum powder, tantalum

ingots and tantalum nitride

MedicinePacemakers, hearing aids and prosthetic

devices such as hip jointsTantalum metal

MetallurgicalFurnace parts, supperalloys for jet

engines and rocket engine nozzlesTantalum metal and tantalum ingots

Physics

Missile parts, ignition systems, night

vision goggles and GPS (Global

Positioning systems)

Tantalum ingots and tantalum oxide

Tantalum and niobium have a wide variety of critical applications in

all major industries.

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Alloys

Tantalum alloys are usually used in applications where resistance to corrosion is

required, such as in the manufacturing of chemical processing equipment. Further,

tantalum-ruthenium alloy is used in military applications for their oxidation resistance and

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

prosthetics and pacemakers given their biocompatibility with human tissue.

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

diagnostic tool. Niobium is, however, most commonly used in the production of ferro-

niobium, a vital component in the production of high-strength, low alloy steel for the

manufacturing of vehicles, railway tracks, pipelines, etc. Ferro-niobium increases steel

strength but it can also offer cathode protection to large steel structures like oil platforms.

The vacuum-grade ferro and nickel niobium are used in high-temperature, high-stress

applications, such as aircraft and aerospace turbines. Other metals alloyed to niobium

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.

Exhibit 18: Niobium Uses by Industry

Source: BSG

Industry Usage Niobium product

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

Ceramics and

surface coatings

Ceramic capacitors, glass coatings and

camera lensesNiobium Oxide

ChemicalsChemical processing equipment and oil

&gas pipelines

HSLA ferro-niobium (60% Nb), niobium

metal and niobium-1% zirconium alloy

ConstructionArchitectural Steel and cathode protection

systems for large steel structures

HSLA ferro-niobium (60% Nb), niobium

metal

Engineering Cutting tools, railway tracks and ship hulls Niobium carbide

Electronics

Capacitors, street lighting systems and

surface acoustic wave filters for sensor

and touch screen technologies

Niobium powder, niobium oxide and lithium

niobate

Medicine

Superconducting magnetic coils in MRI

scanners and magneto-encephalography

(brain activity mapping)

niobium nitride

MetallurgicalSuper alloys for jet engines and turbine

blades

Vaccum-grade ferro-niobium and nickel-

niobium

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

Tantalum and niobium alloys are commonly used in applications where resistance to corrosion is required. Tantalum alloys are used in prosthetics and pacemakers. Niobium is most often used in the production of ferro-niobium, a vital component in the production of high-strength, low alloy steel used in the manufacturing and construction industries.

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These carbines are also used as refractory coatings in cutting tools, nuclear reactors

and furnaces.

Powders

High-purity tantalum powder is mainly used in the production of capacitors because of

the tantalum’s high capacitance coefficient. Although the amount of tantalum in each

capacitor is small, this is a major tantalum application accounting for more than 20% of

the total tantalum market. Billions of capacitors are used in cellphones, computers and in

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 and niobium chemicals have been increasingly used in electronics, medical

applications, optics and in spluttered film in integrated circuitry. Tantalum and niobium in

the oxide form are usually used in the manufacture of specialty glass and ceramics for

capacitors. Lithium tantalite and lithium niobate have unique optical, piezo- and pyro-

electric properties and are extensively used in electronic applications. Tantalum nitrite is

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.

Tantalum powders are used in the manufacturing of capacitors, which account for more than 20% of the total tantalum market. Tantalum nitrite is used in LEDs and solar panels, and niobium nitrite is a key component of superconducting magnets for MRIs.

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International Trade Trading data from tantalum and niobium is usually combined with other elements, such

as vanadium, zirconium molybdenum and titanium. This situation adds to the fact that

tantalum and niobium are sold in different forms and relative contents, making it difficult

to determine the trade data for these elements.

Australia used to be the world’s largest producer of tantalum for many years until 2008

when production was suspended in the Wodgina and Greenbushes mines. Brazil and

Central African countries like Ethiopia, Rwanda and the DRC have recently surpassed

Australia as exporters of tantalum, but this situation may change if and when the

Wodgina mine restarts production.

According to the British Geological Survey (BGS), the main exporters of tantalum ores

and slags to the EU include Japan, China and Kazakhstan. The USGS reported that,

from 2006 to 2009, Australia supplied the U.S. with 66% of all the tantalum concentrate

consumed and Canada supplied 21%. Tantalum metal was supplied by China (27%),

Kazakhstan (27%) and Germany (15%). Tantalum waste and scrap imports were

supplied by China (15%), Portugal (14%) and Germany (12%). Comparable data from

other major importers is not available.

Exhibit 20: Niobium End-Uses in 2004 and 2010

Source: BSG

Ferro-Niobium for HSLA

89.0%

High Purity FeNb4.0%

Niobium Alloys0.9%

Niobium Metals1.4%

Niobium Chemicals and

Carbides4.7%

Other11.0%

2004

Ferro-Niobium for HSLA

88.7%

High Purity FeNb2.7%

Niobium Alloys2.5%

Niobium Metals0.9%

Niobium Chemicals and

Carbides5.2%

Other11.3%

2010

Exhibit 19: Tantalum End-Uses in 2004 and 2010

Source: BSG

Tantalum Carbides

9%Tantalum Ingot

6%

Tantalum Metals

17%Capacitor Grade

Ta Powder42%

Mettallurgical Grade Ta Powder

11%

Tantalum Chemicals

15%

2004Tantalum Carbides

7%Tantalum Ingot

12%

Tantalum Metals

22%

Capacitor Grade Ta Powder

24%

Mettallurgical Grade Ta Powder

17%

Tantalum Chemicals

18%

2010

Trading data for tantalum and niobium are usually combined with other elements. Brazil and Central African countries have recently surpassed Australia as the largest exporters of tantalum.

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Brazil is the largest exporter of niobium and accounts for more than 90% of total niobium

exports; Canada is the second-largest exporter.

Consumption of niobium in China has increased significantly in recent years and is now

estimated at 30% of the global supply. It is estimated that more than 90% of all the

Chinese niobium imports are from Brazil.

Europe imports about 30% of the niobium produced in Brazil and significant amounts of

tantalum for its manufacturing industries. The European Commission recently declared

tantalum and niobium as critical materials based on various factors, which include supply

risk for tantalum, lack of substitutes, no European production (of tantalum and niobium),

and their importance for the European manufacturing industry and economy.

According to the USGS, from 2006 to 2009, niobium imports into the United States were

from Brazil (84%), Canada (9%) and Germany (2%).

Prices Tantalum is not openly traded in a metal exchange. Prices are established confidentially

between the producer and the buyer. Trade journal report prices are based on interviews

with buyers, sellers and traders. The price varies depending on the finished product,

tantalum content and contract size. The average price of tantalum concentrate is

US$130/lb, tantalum oxides and salts US$250/lb and capacity grade tantalum

US$300/lb. Prices are volatile and are also influenced by the supply and demand

conditions at the time of the contract.

Tantalum prices increased significantly in 2001, likely due to the dot-com boom and

fears of supply shortage. As companies built up their inventories, demand and pricing

increased. However, when the dot-com bubble burst, demand for tantalum fell, leading

to a collapse in prices (Exhibit 21). In the preceding years, users were able to access

tantalum inventories, which caused demand for new tantalum to stay low, keeping prices

low (<$50/lb) for many years. The low tantalum prices contributed to the suspension of

many tantalum mines, like the Wodgina mine in Australia.

With the depletion of tantalum inventories, increasing restrictions in trade of tantalum

from conflict areas in Central Africa and delays in the re-opening of previous mines, we

believe there will be a shortage of tantalum supply in the market and prices will likely

stay at current levels in the short term.

As the global economy recovers, we anticipate there will be an increase in demand for

tantalum. In order to supply the market with conflict-free tantalum, we believe that prices

will need to reach a sustaining level, above recent historical prices. We estimate that as

new producers enter the market tantalum prices will likely fall by 30–40%. We expect

long term tantalum concentrate prices to stay between $80 and $90/lb. At this price

level, we believe that previous mines in Australia and Canada may become economic

again.

Brazil is the largest exporter of niobium and accounts for more than 90% of total niobium exports. Consumption of niobium in China has increased significantly and it accounts now for 30% of total niobium supply. Tantalum and niobium are not openly traded in a metal exchange. Prices are established confidentially between the seller and the buyer. The apparent shortage of tantalum supply should keep prices high.

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Niobium is traded in the same fashion as tantalum, through bilateral contracts between

buyers and sellers. Prices of niobium, however, have shown less volatility probably

because the supply of niobium is more stable and less risky (Exhibit 22). Prior to 2007,

ferro-niobium prices were fairly stable between US$12/kg and US$14/kg. From 2007

onward, prices have stayed above US$20/lb, mainly due to higher demand and slow

response from suppliers in fulfilling the market. As of June 2011, ferro-niobium prices

seem to have stabilized at US$44–US$45/kg. In early 2011, CBMM received an

investment of about US$2.0 billion, which should be sufficient to fund any near-term

expansion projects. As the global economy recovers, we expect an increase in demand

for ferro-niobium. We anticipate that niobium prices will stay close to US$40/kg in the

long term as supply gradually meets increasing demand.

Exhibit 22: Historical Prices of Ferro-Niobium (US$/kg)

Source: IBRAM

$0

$5

$10

$15

$20

$25

2001 2002 2003 2004 2005 2006 2007 2008

Exhibit 21: Historical Prices of Tantalum Concentrate (US$/lb, 30%Ta2O5)

Source: Metal Pages; JSI

$0.00

$100.00

$200.00

$300.00

$400.00

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Prior to 2007, ferro-niobium prices were fairly stable. Niobium prices have increased in the recent years likely as a result of demand growing faster than supply.

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Recycling and Substitution

It is estimated that about 20% of tantalum supply is from recycling. Tantalum can be

recycled from waste metals and scrap, such as old cell phones and computers.

Recycling from capacitors, however, is difficult and not always effective. Niobium steels

and superalloys are the main recycling sources of niobium.

Tantalum and niobium have a unique combination of properties that makes them hard to

substitute. Possible substitutes are usually more costly or present performance

deficiencies. Tantalum and niobium have similar chemical and physical properties that

can be substituted for each other in some applications, for instance, in corrosion-

resistance applications. Vanadium and molybdenum can be used as substitutes for both

tantalum and niobium in steel and other alloys, when high strength at high temperatures

is required.

There are however some applications from which there is simply no substitutes, such as

the use of porous tantalum alloys in the manufacturing of advanced prosthetic body parts

in which many of the unique properties of tantalum play an important role.

It is estimated that about 20% of tantalum supply is from recycling, this number is less than 15% for niobium. Tantalum and niobium have unique properties that make them hard to substitute. Possible substitutes are usually more costly and/or less efficient.

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SE


Profiled

Profiled Companies

The information contained on the profiled companies’ page was obtained from the respective company’s public documents and do not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. We do not represent that such information is accurate or complete and it should not be relied upon as such. Please see additional disclosures on page 37.

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Noventa Limited engages in the mining, extraction and production

of tantalum concentrate in the Republic of South Africa and the

Republic of Mozambique. It also produces morganite, a by-product

of the tantalum concentrate production. The company’s products

are used in the manufacture of electronic capacitors, turbine

blades, medical applications and industrial cutting tools. It holds

mining concessions and mining licenses in the Alto Ligonha

Pegmatite Belt of Zambezia Province in the Republic of

Mozambique, grouped in the Marropino, Morrua, Mutala, Gile, and

Ginama areas. Noventa Limited serves customers in the United

States and Asia. The company is headquartered in St Helier, the

Channel Islands.

Noventa’s Marropino mine is Mozambique’s only industrial-scale

tantalum mine in operation, and currently the only pure-play

tantalum company in the production stage, listed on major stock

exchanges.

Marropino contains circa 8.1 million tonnes of ore with an

average grade of 223 ppm tantalum, and is currently producing

at an annualized rate of circa 200,000 pounds per year, but is

expected to reach an annualized 500,000 pounds of tantalum

concentrate by Q4 2011, rising to 600,000 in 2012 with a new

plant subject to financing. Marropino’s current tantalum mine life

is expected to be up to 51 months.

Morrua is anticipated to be the next mining concession to be

developed subject to further drilling, geological study,

metallurgical evaluation and test work, as well as the

development of a mining plan. Noventa expects the first

production from Morrua in 2013 with a planned output of about

450,000 pounds per year. By 2013, Noventa could become one

of the top primary producers of tantalum in the world, with a circa

10% market share based on current global output projections.

The Marropino deposit also contains rare earths and small

quantities have been stockpiled. Based on the geology of

Noventa’s other concessions it is possible that they also contain

rare earth elements, which would be another potential source of

revenue for the company.

(Continue on next page)

Ticker AIM:NVTA

Date July 18, 2011

Share Price £0.35

52 Week High £2.50

52 Week Low £0.31

Shares Outstanding 25.77

Market Cap £8.92

Net Debt -£10.80

Cash & Short Term Investments £10.80

Debt £0.00

Total Enterprise Value -£1.88

EV/Resource Contained (t) -£3.69

Price/Volume Chart

Project Details

Name Marropino & Morrua

Location Mozambique

Project Stage In Production

Size of Property 21,000 ha

Type of Ore LCT Pegmatite

NI 43-101 (or equivalent) Yes

Off take agreement Yes

Target Production (year) In Production

Target Production (tonnage) 900,000 lbs Ta2O5

Resource

Measured n/a

Indicated 12.77Mt @ 327 ppm (g/t)

Ta2O5

Inferred 3.12Mt @ 392 ppm (g/t)

Ta2O5

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Volume Price

Noventa Limited (AIM:NVTA, £0.35; TSX:NTA, C$0.54) Selected

Rare Earth Company Snapshots

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Noventa employs circa 400 people at the mine, drawn mostly from the local community. As

the company is the only significant employer in the area, it plays a crucial role in the

communitavalay. For example, Noventa has built a school and a medical clinic for the

region and the government has provided teachers and doctors to support the company’s

initiative and ultimately the community. Noventa is also collaborating with leading mining

schools in Mozambique to help train the next mining professionals for the company.

Noventa is also actively engaged in the exploration and evaluation of its other Mozambican

properties, Mutala and Ginama, as well as other properties in Mozambique and South

Africa. These activities should result in a continuous pipeline of projects to help support

Noventa’s plans of becoming a leading supplier of tantalum.

Noventa recently announced that because of an unexpected increase in capital

expenditures it will need to raise US$25 million. According to management, a

combination of changes in drastic variation in foreign exchange due to changes in

government currency policies, lower precipitation levels in the region, delays in

negotiating a satisfactory procurement and construction contract, added to the fact

that the then CEO who resigned at the beginning of May 2011 had a pressing family

matter to attend to over a critical period of time, have led to a “perfect storm”

situation for the Company, prompting management to raise significant funds in a

seasonally weak market.

As of June 2, 2011, Noventa had US$17.5 million in cash and if it is able to raise the

US$25 million, it plans to bring Marropino to full production by the end of 2011, as was

previously planned, and at the same time fast-track construction at Morrua to benefit from

the current higher tantalum prices. Noventa has an off-take agreement that commits most

of the production from Marropino (only, and no other assets), at prices circa $62.5/lb after it

has been able to renegotiate a contract with one of the customers for prices 27% to 30%

higher. If the company is successful in raising the necessary funds, management believes

that they will still have a good chance of becoming one of the leading tantalum producers in

the world.

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Pacific Wildcat Resources Corporation engages in the exploration

and development of mineral and metal properties. The company

primarily focuses on tantalum deposits in Mozambique. It

principally holds interests in seven mining leases covering

approximately 450 square kilometres, located on parts of the Alto

Ligonha pegmatite belt, Mozambique. The company is based in

Kelowna, B.C., Canada.

Pacific Wildcat’s main project is the Mrima rare earth and

niobium deposit near Mombasa on the Kenyan coast. It is

located close to essential infrastructure with sealed roads. The

main power source runs adjacent to the deposit, and the

property is less than 100 kilometres from the largest deep

water port in East Africa.

Estimated inferred resources are 105.3 million tonnes at a

grade of 0.65% Nb2O5 which equates to 1,519 million pounds

of contained resources. Based on historical data from the

Anglo American exploration period, the deposit may contain a

high-grade zone of 10–15 million tonnes at 1.2–1.45% Nb2O5

based on a cut-off grade of 1.0% Nb2O5. These estimates

suggest that the Mrima deposit has the potential to become a

world-class resource.

The resource is located within 30 metres of surface and is

contained in weathered carbonatite, which usually requires

low-cost mining techniques.

The deposit also contains rare earth elements and the

company plans to self-fund the rare earth opportunity with the

future excess cash, generated from the niobium business.

Brazil is the world’s largest producer of niobium, supplying

nearly 90% of the market. It is reasonable to assume that

buyers don't want a single source of supply and would

encourage other sources like the Mrima property. Thus, the

Mrima project could become a significant source of niobium.

Pacific Wildcat also owns the Muiane tantalum mine in

Mozambique, which contains 1.4 million tonnes grading 250

ppm of tantalum Ta2O5. The company is currently evaluating

the property.

Ticker TSXV:PAW

Date July 18, 2011

Share Price $0.70

52 Week High $1.87

52 Week Low $0.17


Market Cap $77.8

Net Debt -$1.00

Cash & Short Term Investments $1.14

Debt $0.13

Total Enterprise Value $76.8

EV/Resource Contained (t Nb) $1.1

Price/Volume Chart

Project Details

Name Mrima Property

Location Kenya

Project Stage Scoping Study


Type of Ore Carbonatite- nephelite

syenite


Off take agreement n/a

Target Production (year) >2014

Target Production (tonnage) n/a

Resource

Measured n/a

Indicated n/a


Nb2O5

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Jul-10 Oct-10 Jan-11 Apr-11

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Pacific Wildcat Resources Corp. (TSXV:PAW, C$0.70) Selected

Rare Earth Company Snapshots

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Commerce Resources Corp. engages in the exploration and

development of rare metals and rare earth elements in Canada.

The company primarily focuses on the development of the Upper

Fir deposit on its Blue River Tantalum/Niobium project located in

British Columbia, Canada. Commerce Resources Corp. was

incorporated in 1999 and is based in Vancouver, B.C., Canada.

The Upper Fir property is located in the Kamloops Mining

Division of British Columbia, approximately 10 kilometres north

of the Town of Blue River. The deposit contains an indicated

mineral resource of 36.35 million tonnes with 195 ppm Ta2O5

and 1,700 ppm Nb2O5 and inferred resources of 6.40 million

tonnes containing 199 ppm Ta2O5 and 1,890 ppm Nb2O5.

Commerce Resources owns 100% of the Blue River Tantalum-

Niobium property, and the various projects within the property

are not subject to any royalties, back-in payments or other

agreements.

Tantalum-bearing minerals are typically found in pegmatitic ores;

however, the Blue River Tantalum-Niobium project consists of a

carbonatite system with a unique anomaly of high-grade

tantalum. The carbonatite is a relatively soft host rock and during

crushing it leaves the tantalum and niobium minerals largely

intact, translating into a higher rate of recovery than that

obtained from tantalum projects hosted in pegmatites.

Preliminary tests suggest that the recovery rates for both

tantalum and niobium may also be higher than the industry

average.

The property has excellent infrastructure, with good access to

water, proximity to power and a readily accessible system of

paved roads. In fact, the Yellowhead Highway, Canadian

National Railway and BC Hydro power lines cross Commerce’s

property. Such infrastructure should translate into relatively low

capital and operating costs.

The Upper Fir project is advancing as scheduled, the Company

expects to complete the preliminary economic assessment this

year and start production before 2015.

Commerce also owns the rare earth Ashram deposit in Quebec,

which has been ranked as possibly one of the largest rare earth

deposits outside of China. The initial NI 43-101 report estimates

inferred resources of 117.34 million tonnes at 1.74% TREO, with

good quantities of critical rare earth elements.

Ticker TSXV:CCE

Date July 18, 2011

Share Price $0.52

52 Week High $1.08

52 Week Low $0.25


Market Cap $67.91

Net Debt -$7.64

Cash & Short Term Investments -$7.64

Debt $0.00


EV/Resource Contained (t) $72.07

Price/Volume Chart

Project Details

Name Upper Fir, Blue River

Location Canada, BC

Project Stage Scoping study

Size of Property 105,373 (Blue River)

Type of Ore carbonatite-nephelite syenite


Off take agreement n/a

Target Production (year) 1.5 million lbs Ta2O5;

6.0 million lbs of Nb2O5

Target Production (tonnage) <2015

Resource

Measured n/a

Indicated 36.35Mt @ 195 ppm (g/t)

Ta2O5; and 1,800 ppm (g/t)

Nb2O5


Ta2O5; and 1,890 ppm (g/t)

Nb2O5

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Commerce Resources Corp. (TSXV:CCE, C$0.52) Selected Rare

Earth Company Snapshots

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Gippsland Limited engages in the exploration and development of

mineral resources primarily in Egypt. It explores for tantalum,

niobium, feldspar, as well as gold, copper and nickel. The

company focuses on the development of the Abu Dabbab

tantalite, tin and feldspar project located within the Central

Eastern Desert in Egypt, and the Adobha project, a copper, gold

and volcanogenic massive sulphide project with a 2,100-square-

kilometre exploration license and three prospecting licenses in an

area of 100 square kilometres in the northwestern part of Eritrea.

It also holds interests in the Nuweibi project located inland from

the western shore of the Red Sea; nine tenement areas located in

the Wadi Allaqi region situated to the southeast of Aswan in

Egypt; and the Heemskirk tin deposit located in the northwest of

Tasmania, Australia. Gippsland Limited is based in Claremont,

Australia.

Gippsland Ltd.’s main tantalum project, Abu Dabbab tantalum-

tin-feldspar, is located within the Central Eastern Desert in

Egypt. The deposit has total resources of 44.5 million tonnes

at 250 ppm Ta2O5. The property is located about 16 kilometres

inland from the western shore of the Red Sea and it is being

developed by Tantalum Egypt JSC, a company incorporated

in Egypt and 50%-owned by the Egyptian Government via the

Egyptian Mineral Resources Authority (EMRA) and 50% by

Tantalum International Pty Ltd., which is a 100%-owned

subsidiary of Gippsland Ltd.

The bankable feasibility study (BFS) prepared by the

international engineering group Lycopodium Engineering Ltd.

determined that the Abu Dabbab deposit has the potential to

become a major global supplier of tantalum while operating

from a low-cost basis. The updated study indicates that at 3

million tonnes per year mill feed rate, 925,000 (600,000

pounds under off-take agreement) of Ta2O5; 2,200 tonnes of

tin metal and 2.4 million tonnes of feldspar per year can be

produced. The updated capital cost is estimated at US$225

million.

An agreement has been reached with a leading tantalum

consumer for the supply of 6 million pounds of tantalum

pentoxide to H.C. Starck over the initial 10 years of

production. The pricing formula contained in the off-take

agreement is set to provide protection against production cost

increases.

The company intends to start production in 2013.

Ticker ASX:GIP

Date July 18, 2011

Share Price $0.03

52 Week High $0.07

52 Week Low $0.03


Market Cap $16.88

Net Debt -$1.22

Cash & Short Term Investments $1.22

Debt $0.00


EV/Reserves Contained (t) $20.30

Price/Volume Chart

Project Details

Name Abu Dabbab

Location Egypt

Project Stage Feasibility


Type of Ore Li-albite granite


Off take agreement Yes

Target Production (year) > 650,0000 lbs Ta2O5

Target Production (tonnage) 2013

Resource

Measured 15.20Mt @ 290ppm (g/t)

Ta2O5

Indicated 17.30Mt @250 ppm (g/t)

Ta2O5


Ta2O5

Reserves

Proven 15.2Mt @ 260ppm (g/t)

Ta2O5

Probable 15.04Mt @250 ppm (g/t)

Ta2O5

Ownership 50%

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Gippsland Limited (ASX:GIP, A$0.03) Selected Rare Earth Company

Snapshots

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Tantalum and Niobium - Comparable Companies Analysis

Exchange:Ticker AIM:NVTA TSXV:CCE TSXV:PAW ASX:GIP TSX:AVL TSXV:QRM ASX:RMR

Company Name Noventa Commerce

Resources

Pacific

Wildcat

Gippsland Avalon Quest Rare

M inerals

Ram

Resources

Primary Project(s) M arropino/

M orrua

Upper Fir M rima Hill Abu Dabbab Nechalacho Strange Lake M otzfelt

Geography M ozambique BC, Canada Kenya Egypt Northwest

Territories

Quebec/

Labrador

Greenland

Share Price:

Current £0.35 $0.53 $0.71 $0.03 $5.87 $5.08 $0.02

% Abov e/Below 52 Week Low 11.3% 112.0% 317.6% 0.0% 158.6% 145.4% 15.4%

% Abov e/Below 52 Week High -86.2% -50.9% -62.0% -60.9% -39.2% -42.8% -63.4%

Trading Currency GBP CAD CAD AUD CAD CAD AUD

Daily Volume Traded (mm) - 3 Month Avg 0.38 0.29 0.20 0.50 0.69 0.35 0.89

Enterprise Value -£1.9 $60.26 $76.80 $15.66 $542.90 $268.71 $14.79

Market Capitalization £8.92 $67.9 $77.8 $16.9 $552.7 $296.0 $9.1

Resource (Mt):

Measured - - - 15.20 - - -

Measured & Indicated 12.78 36.35 - 35.20 57.49 -

Measured, Indicated & Inferred 15.90 42.75 105.30 44.50 226.88 114.80

Other - - - - - - 500.00

Grade (Ta2O5%) 0.04% 0.02% - 0.03% 0.04% 0.01% 0.01%

Contained M&I (Mlb) 9.86 15.63 - 20.18 50.70 - -

Contained Total (Mlb) 12.27 18.38 - 25.51 200.07 30.37 132.28

Ta Current Price (US$/lb) $130 $130 - $130 $130 $130 $130

Contained M&I Resource Value (US$ M) $1,282.0 $2,031.5 - $2,623.0 $6,590.7 $0.0 $0.0

Contained Total Resource Value (US$ M) $1,594.9 $2,389.2 - $3,316.0 $26,009.6 $3,948.2 $17,196.0

Grade (Nb2O5%) - 0.18% 0.65% - 0.38% 0.14% 0.14%

Contained M&I (Mlb) - 62.49 - - 424.72 - -

Contained Total (Mlb) - 170.96 1,508.95 - 1,900.70 354.33 1,543.23

Nb Current Price (US/lb) - 20.41 20.41 - 20.41 20.41 20.41

Contained M&I Resource Value (US$ M) - $1,275.5 - - $8,668.5 $0.0 $0.0

Contained Total Resource Value (US$ M) - $3,489.4 $30,797.7 - $38,793.3 $7,231.8 $31,497.4

TEV / Contained Ta (US$/lb) -$0.2 $3.4 n/a $0.7 $2.8 $9.3 $0.1

TEV / Contained Ta Resource Value 0.90% 2.98% n/a 0.54% 2.23% 7.87% 0.06%

TEV / Contained Nb (US$/lb) n/a $3.9 $0.1 n/a $0.3 $0.9 $0.01

TEV / Contained Nb Resource Value n/a 2.98% 0.27% n/a 1.50% 4.30% 0.03%

Resource Type NI 43-100 NI 43-100 NI 43-101 JORC NI 43-101 NI 43-101 n/a

Stage of Development Production/

Expansion

Scoping

Study

Scoping

Study

Feasibility Bankable

Feasibility

Pre-

Feasibility

Exploration

Target Completion Date for Current Stage 2012 2011 2012 2012 Q4 2011 Q4 2011 2012

Target Production Start-Up In Production 2015 2015 2013 2016 2016 2015

Source: Capital IQ; Company Reports; JSI Analyst: Luisa Moreno , Ph.DUSD/GBP: 1.61; USD/AUD: 1.06; USD/CAD: 1.05 [email protected]

Niobium

Tantalum

July 19, 2011

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Companies Mentioned in This Report

Anglo American Plc LSE:AAL

Apple Inc. NYSE:AAPL

Airbus SAS

AVX Corp.

Avalon Rare Metals Inc. TSX:AVL, AMEX:AVL

Cabot Corp. NYSE:CBT

Companhia Brasileira de Metalurgia and Mineração

Dell Inc. NYSE:DELL

Gippsland Ltd. ASX:GIP

Global Advanced Metals Pty Ltd.

Globe Metals and Mining Ltd.

Greenland Minerals and Energy Ltd. ASX:GGG

H.C. Stark GmbH

IAMGOLD Corp. NYSE:IAG

Motorola Solutions Inc. NYSE:MSI

Nippon Steel Corp. JP:5401

Ningxia Non-Ferrous Metals Import and Export Corporation in China

Noventa Ltd. AIM:NVTA, TSX:NTA

Pacific Wildcat Resources Corp. TSXV:PAW

POSCO NYSE:PKX

Quantum Rare Earths Development Corp. TSXV:QRE

Quest Rare Minerals Ltd. TSXV:QRM, AMEX:QRM

Ram Resources Ltd. ASX:RMR

Sony Corp. NYSE:SNE

Tantalum Egypt JSC

Tertiary Minerals Plc LSE:TYM

Treibacher Industrie AG

Yara International ASA OSL:YAR

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Acronyms

ASSM Artisanal and Small Scale Mining

BGS British Geological Survey

BRIC Brazil, Russia, India and China

CAGR Compounded Annual Growth Rate

CBMM Companhia Brasileira de Metalurgia and Mineração

DNSC Defense National Stockpile Center

DRC Democratic Republic of Congo

GAM Global Advanced Metals Pty Ltd.

HSLA High Strength Low Alloy (Steel)

LCT Lithium, Caesium and Tantalum

LED Light Emitting Diodes

LiTaO3 Lithium Tantalite

MRI Magnetic Resonance Imaging

Nb2O5 Niobium Pentoxide

NbC Niobium Carbide

NbCl5 Niobium Chloride

PWC Pacific Wildcat Resources Ltd.

REE Rare Earth Element(s)

Ta2O5 Tantalum Pentoxide

TaC Tantalum Carbide

TaCl5 Tantalum Chloride

TANCO Tantalum Mining Corporation of Canada

TIC Tantalum-Niobium Study Centre

USDLA United States Defense logistics Agency

USGS United States Geological Survey

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Contact Info:

Institutional Trading Brad Parkes, Head Sales &Trading 416-866-8345 [email protected]

Anne Brooks 416-866-8317 [email protected]

Joseph Thomson, Quantitative 416-866-8343 [email protected]

Institutional Sales

Chris Barnes 416-866-8306 [email protected]

Jeff Armstrong 416-866-8362 [email protected]

Steven Low 416-866-8349 [email protected]

Equity Research

Bill Cabel, Head of Research – IPPs 416-866-8356 [email protected]

John McIlveen - Renewable Energy 416-866-8303 [email protected]

Khurram Malik – Cleantech 416-866-8314 [email protected]

Luisa Moreno – Metals & Mining 416-866-8380 [email protected]

Mark Jarvi – Associate 416-866-8354 [email protected]

Moiz Valji – Associate 416-866-8374 [email protected]

Jacob Securities Inc.

199 Bay Street, Suite 2901

Commerce Court West, PO Box 322

Toronto, ON M5L 1G1

Phone: (416) 866-8300

Fax: (416) 866-8333

www.jacobsecurities.com

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Appendix: Important Disclosures

Analyst Certification: Each authoring research analyst and associate of Jacob Securities Inc. (“Jacob Securities”) whose name appears on the front page of this investment research hereby certifies that (i) the recommendations and opinions expressed in this investment research accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring analyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the authoring analyst in the investment research.

The compensation of Research Analysts is intended to reflect the value of the services they provide to the clients of Jacob Securities. As with most other employees, the compensation of Research Analysts is impacted by the overall profitability of the firm, which may include revenues from investment banking activities of the firm's Corporate Finance department. Research Analysts' compensation is not, however, directly related to any specific corporate finance transactions.

Company Disclosures: NVTA/NTA: 2

2. The fundamental research analyst(s) and or associate(s) have visited material operation of this issuer.

Ratings & Risk Rankings: Each analyst assigns a rating that is appropriate to the analyst`s view of how that stock will perform (total return basis) over the next 12 months on an absolute basis. At times the anticipated total returns may fall outside of the general ranges stated below due to near-term events, market conditions or stock volatility or, in some cases, company-specific corporate structures that result in consistently high yields.

Ratings. Buy: Anticipate total return appreciation generally in excess of 15% over the next 12 months. Speculative Buy: Anticipate total return appreciation generally in excess of 25% over the next 12 months, however, the company is either pre-revenue, has negative cash flow, or a major unpredictable event may occur within 12 months. Hold: Anticipate limited total return (general appreciation less than 15% [or 25% for speculative rated stocks] or decline less than 10%) over the next 12 months. Reduce: Near term price outlook is for a negative return; however the long term outlook is for a positive return. Sell: Near term and long term return is expected to be negative.

Risk Rankings. Low: Low financial and operations risk, high predictability of financial results, low stock volatility. Medium: Moderate financial and operations risk, moderate predictability of financial results, moderate stock volatility. High: High financial and or operation risk, low predictability of financial results, high stock volatility.

Research Distribution: Jacob Securities distributes research through Bloomberg, Thomson One, Capital IQ and client email lists.

Analyst Trading: Jacob Securities does not permit analysts to own or trade securities of the companies they cover.

Risk Qualifier: The information contained in this investment research has been compiled by Jacob Securities from sources believed to be reliable, but no representation or warranty, express or implied, is made by Jacob Securities its affiliated companies or any other person as to its fairness, accuracy, completeness or correctness. Jacob has not independently verified the facts, assumptions, and estimates contained herein. All estimates, opinions and other information contained in this investment research constitute Jacob Securities’ judgement as of the date of this investment research, are subject to change without notice and are provided in good faith but without legal responsibility or liability.

This investment research is provided for information purposes only and does not constitute an offer or solicitation to buy or sell any designated investments discussed herein in any jurisdiction where such offer or solicitation would be prohibited. As a result, the designated investments discussed in this investment research may not be eligible for sale in some jurisdictions. This investment research, is not, and under no circumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. To the fullest extent permitted by law, none of Jacob Securities, its affiliated companies or any other person accepts any liability whatsoever for any direct or consequential loss arising from or relating to any use of the information contained in this investment research.

Jacob Securities Inc. is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and Canadian Investor Protection Fund (CIPF).This research report is intended for Institutional and Accredited Investors. Please do not forward without the expressed written consent of Jacob Securities. Disclosure for Clients Outside of Canada. Jacob Securities is a registered entity in Canada only. As such, this research report was not prepared subject to any disclosure or disclaimer requirements outside of Canada.

This material is not directed to, or intended for distribution to or use by, any person or entity if Jacob Securities is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to such person or entity. This report may not be reproduced, re-distributed or passed to any other person or published in whole or in part for any purpose without the prior consent of Jacob Securities. Additional information is available upon request.

Ratings Distributions: Buy: 30% Speculative Buy: 33% Hold: 30% Reduce: 0% Sell: 4% Restricted: 4%

© Jacob Securities Inc. All rights reserved.

tantalum & niobium primer: jacob securities (july 2011)

Economy & Finance