CHAIRMAN’S STATEMENT AND OPERATING REVIEW

Clinton Wood

2007 was a difficult year for Noventa with the ramp up at our Marropino operation taking longer than expected and proving to be more complex than anticipated.

Marropino – tantalum

Early on in the second quarter of 2007 it became clear that the ramp-up performance was not being achieved with regard to targeted run-of-mine throughput and product recovery. As a precaution, and with the assistance of independent industry experts, a review was initiated of the plant performance, the mine plan and a geological review of the ore body.

The outcome of the review of the geology and the mine plan supported the geological data and assumptions contained in the Independent Competent Persons Report prepared by SRK Consulting for the AIM Admission. While in the short term certain deviations from the long-term norms are anticipated (i.e. the ore grade and the percentage oversize), these can be expected to average out over the life of mine. In line with the modifications noted in the Admission Document it became clear that some form of feed blending would be required in order to minimize the effects of these short term deviations.

As regards the wet processing plant, the Company's investigations also confirmed that the installation of additional primary screening capacity would be required. Furthermore, test work conducted by SGS Lakefield Research Europe Limited indicated that the Company would benefit from additional dry processing of the wet plant concentrates using specialised equipment. Nagrom, a company based in Perth (Western Australia) which has in excess of twenty years experience in beneficiating tantalum-bearing concentrates, was contracted to supply and operate the required specialised equipment. The installation of the additional equipment and various related modifications were carried out during a planned ten week shutdown that commenced in September 2007.

Due to significant difficulties being experienced in re-commissioning the plant after the shutdown, only 32,800 lb of finished concentrate was produced during the year; of which 15,000 lb were in stock at year end.

It is pleasing to note that the run-of-mine throughput has progressively improved following the implementation of a blending program and certain capacity enhancements. Feed rates in excess of 200 tonnes per hour, albeit for relatively short periods, have been achieved indicating that the plant can be operated at its designed capacity. The planned ramp up of production at the Marropino plant continued in the new year with feed rates averaging 160 tonnes per hour for the first quarter 2008. Sustainable operation at 200 tonnes per hour is expected from the third quarter of 2008 onwards.

The grade of run-of-mine ore fed to the plant has consistently been above target and averaged more than 190 ppm for the first quarter of 2008 against a target which increased from 160 ppm to 180 ppm.

The oversize feed is considered economically barren and represents that portion of the feed material that the plant is not designed to process. The percentage of oversize in the plant feed has decreased from a high of 60% in May 2007 to close to the current year's target of 40% in March 2008, which is encouraging.

Recoveries have improved from around 40% in January 2008 to in excess of 55% in March 2008, which was above target. Recoveries represent the portion of tantalum in our feed that the wet process plant is able to recover.

Production increased by 43% from a daily average of 300 to 430 lb of tantalum concentrate per day during the first quarter of 2008. Targeted production for the quarter was a daily average of 475 lb. All tantalum concentrate produced has been to client specification. The Company produced 34,100 lb of concentrate during the first quarter of 2008.

Plant and equipment at Marropino continue to generate an unexpectedly high maintenance and repair demand, thereby negatively affecting plant availability and operating time. The extended downtime can in large be attributed to the particularly abrasive nature of the ore, coupled with the remote and arduous local operating environment. The 2,500 km logistics pipeline means that breakdowns, for which we have no onsite spares, can result in extensive downtime. Operator error is also a contributing factor and an intensive training program was undertaken during 2007. This has started to show encouraging results, with both formal and on the job training being undertaken on a regular basis.

To achieve targeted production levels the plant needs to be available and operating 75% of the time, around the clock. While availability has improved from around 50% in January 2008 (and on occasion has exceeded 90%) the average for the first quarter was only 56% as a result of unexpected equipment outages, which have now been rectified .

Marropino is forecast to produce 200,000 lb of tantalum concentrate in 2008.

Marropino – morganite

During 2007 the business plan with the Company's gemstone partners was finalized and an agreement relating thereto was concluded. The Company entered into an exclusive agreement with Miranda Gems (HK) ("Miranda") and Goldleaves Trading Limited ("GTL") for the processing and marketing of morganite gemstones extracted from the Marropino mine. Miranda is believed to be one of the largest gemstone suppliers in the world. GTL, a wholly owned subsidiary of LJ International (a NASDAQ listed company), is reputed to be the largest colored gemstone jewellery producer in the world. The exclusive arrangement is structured to enable Noventa to participate in the downstream added value generated by selling the final cut gemstone to gem retailers and jewellery manufacturers (i.e. in addition to Noventa being paid for the rough morganite supplied, it also participates in the profits earned for the sale of the final cut gemstone). Noventa retains ownership of the morganite up until the final point of sale. The proceeds from the morganite sales are shared between Noventa, Miranda and GTL on an agreed basis.

In 2007, the Group extracted 2,613 kg of morganite from the main pit at Marropino, of which 1,016 kg were delivered to our partners. Having processed a significant portion of the delivered morganite "rough", it is estimated that the "rough" run-of-mine morganite will yield 11% in sliced material. Assuming this to be the case, Noventa can expect to earn between $700 and $800 per kg of morganite "rough" mined. This estimate is likely to improve as our partners gain more experience in processing and marketing the Marropino morganite. It is estimated that 5,000 kg of morganite "rough" will be extracted in 2008. However, there is a significant delay between the extraction of the morganite and the receipt of cash from the sale of the final polished gemstone.

Morrua

Marropino mine with Morrua mountain to the north

The development of the Morrua mine has progressed to the point where a decision on when to raise the necessary funding for implementation can now be made. The project has been unavoidably delayed as a result of uncertainty around the timing of grid power being delivered to Morrua by the state owned utility Electricidade de Mocambique EP ("EDM"). The Company was originally told that the electrification project would be completed by August 2007, with grid power being available at both Morrua and Marropino. Investigations on the ground indicate that the project is underway and that most of the equipment needed is onsite. EDM's project management team now anticipate that the project will be completed in August 2008. It is difficult to assess the likelihood of EDM completing this project on time.

The additional time has been used to perform further optimisation work, which has resulted in estimated annual production being increased from 400,000 to 450,000 lb. The original plant design was estimated to cost $36 million in October 2006 terms and the cost to completion will need to be escalated accordingly. Our current plan is to secure the capital for the project once we have certainty on the availability of power and start construction thereafter, with mechanical completion expected to take 12 months.

Exploration at Mutala, Ginama and Gile

At Mutala, further pitting, trenching and sampling was undertaken. This work will materially assist in the firming up of the currently known ore resource and allow for the fast tracking of the development of the concession. Evaluation work is also in the planning stages for both the Ginama and Gile projects where a similar programme to Mutala is envisaged.

Personnel

The Group has been fortunate to attract some very experienced staff to its operation over the past six months. The new senior management team at the mine have made a number of changes to the day to day operations at Marropino and this is reflected in improvements in productivity. We look forward to further progress in this area during 2008.

At the date of this report, our group employed 433 staff, 419 of whom are based in Mozambique with 14 at the logistical base in South Africa.

Social and community activities

Local children with non-executive director at Morrua

During 2007 the construction of a school and clinic in the local village of Marropino commenced. As a result of the rapid growth in the size of the village since mining operations commenced, the Company decided to significantly increase the size of the school from that originally planned. The school and the clinic are both substantially complete and will be handed over to the local community as soon as they have been appropriately furnished. The local authorities will be responsible for the staffing and running of the school and the clinic.

The Company has a medical station on the mine site, staffed by a full time local nurse and qualified ALS paramedic. While the medical station is primarily focused on treating the expatriate and local workforce, it also provides limited treatment to the workers' direct family members.

Due to the lack of portable water in the Marropino village the Company sponsored the drilling of a borehole and the installation of a pump when the Marropino mine was established. This is the local community's only source of clean water and has significantly reduced the incidents of water related illnesses. The Company frequently assists in the maintenance and / or replacement of the pump to ensure a source of clean water for the village.

With malaria being particularly prevalent in the area, the Company has undertaken to provide each worker with a mosquito net and to subsidize the cost of an additional net for his / her family. In addition, the Company has a regular spraying programme in place to combat the proliferation of malaria carrying mosquitoes.

Objectives for 2008

Mining fleet in operation at Marropino open-pit

The principal objectives for 2008 are:

• Reach targeted production levels at Marropino;
• Produce 200,000 lb of tantalum concentrate;
• Extract 5,000 kg of morganite and deliver it to the joint venture;
• Secure the funding needed for the hard rock circuit at Marropino and commence construction on schedule;
• Engage with the Mozambican authorities and provide appropriate support to assist with completion of electrification program ; and
• Continue to promote the health, safety and development of our employees and to enrich the environment and communities in which we operate.

I would like to thank my fellow Board members, the management team, advisors and employees for their considerable efforts over the past year.