GIP Gippsland

RNS Number:1309Y
Gippsland Limited
29 April 2004


Gippsland Limited

QUARTERLY ACTIVITY REPORT
Period: January - March 2004
29 April 2004

+++++++++++++++++++++++++++++++++++++++++++

SUMMARY

Corporate

* Admission to AIM - London Stock Exchange, March 2004
* Capital Raising UK#700,000 (A$1.7 million)
* Voluntary relinquishment of Directors' options

Abu Dabbab Project

* Scoping Study indicates doubling of Tin revenue to US$10 million/year
* Tantalum 5-year Off-take LOI - expected revenue US$17 million
* Bankable Feasibility Study near complete

Evaluation of New Egyptian Projects

+++++++++++++++++++++++++++++++++++++++++++

The Directors of Gippsland Limited ("Gippsland" or "the Company") are pleased to
provide the following activity report for the period January to March 2004.

(A) CORPORATE

ADMISSION TO AIM - LONDON STOCK EXCHANGE

On 9 March 2004, Gippsland was admitted to the London Stock Exchange Limited's
("LSE") Alternative Investment Market ("AIM") in doing so become the first
Australian company to list on AIM via the fast track Designated Markets route.
Consequently the Company's securities now trade on the Australian Stock Exchange
Limited ("ASX") and the LSE under the symbols: Ordinary Fully Paid Shares "GIP"
and Options "GIPO"

Grant Thornton (UK) was appointed as Nominated Advisor while the UK based broker
Hoodless Brennan & Partners Plc was appointed as the Company's Broker.

In addition 2,790,567 unlisted options (with an exercise price of 2.8 UK pence
and expiring on or before 8 March 2007) were issued to Hoodless Brennan &
Partners Plc as part consideration for co-ordinating the placement and a further
100,000 listed options were issued to a UK based public relations consultant.

FUNDRAISING

In conjunction with the AIM admission Gippsland raised #0.7 (A$1.7) million
through the issue of 25 million ordinary shares at 2.8 pence (A$0.068) each to
institutional and other investors. The placement was facilitated by Hoodless
Brennan & Partners Plc.

CANCELLATION OF DIRECTORS' UNLISTED OPTIONS

During the quarter Gippsland Directors finalised the cancellation of the
Company's class of unlisted options each of which have an exercise price of 14
cents and an expiry date of 11 July 2004. These 11,000,000 unlisted options were
cancelled for no consideration as a consequent of which this class of unlisted
options ceased to exist.

A total of 9,250,000 of the options were held by Gippsland Directors who agreed
to cancel their unlisted options in order to simplify Gippsland's capital
structure so as to assist the Company's admission to the LSE/AIM. Gippsland
Directors were also of the view that a more simplified capital structure will
facilitate the attraction of substantial European investors to the Company's
share register.

(B) 40Mt ABU DABBAB PROJECT - TANTALUM, TIN, FELDSPAR

DOUBLING OF TIN REVENUE

The Directors have determined that the recent substantial rise in the price of
tin will considerably improve the economics of the Abu Dabbab project.

The Abu Dabbab scoping study completed by Lycopodium Pty Ltd indicates that,
based upon a mill feed-rate of 1Mtpa, the Abu Dabbab project would produce
approximately 1,000 tonnes of tin per annum over the estimated mine life of 40
years. Tin revenues to be generated from Abu Dabbab are estimated to be the
third largest after the revenues to be generated from the sale of tantalum and
feldspar.

The tin revenues contained in the scoping study were based upon a London Metal
Exchange Limited ("LME") tin price of US$3,954 per tonne whereas the current LME
tin price is in the order of US$9,000 per tonne. Based on the scoping study, the
increase in the price of tin is estimated to generate additional revenue of US$5
million per annum over the 40-year period which equates to more than
US$200,000,000 of additional revenue over the mine's projected life.
Consequently, the Abu Dabbab scoping study Net Present Value (NPV) increased
from US$127 million to US$185 million (at a discount rate of 6%) while the
Internal Rate of Return (IRR) moved from 36% to 49%.

TANTALUM OFF-TAKE

During the quarter the Directors of Gippsland announced that the Company had
entered into a letter of intent ("LOI") with a major Asian group of companies
("the Group") in relation to the off-take of 500,000 pounds of tantalum to be
produced at the Company's 40Mt Dabbab tantalum-tin-feldspar ("Abu Dabbab")
project located in Egypt.

The Group is a major blue chip international industrial operation involved in
the tantalum processing industry.

Pursuant to the LOI, Gippsland and the Group ("the Parties") will proceed to
execute an off-take agreement for 100,000 pounds of tantalum per annum for an
initial period of five years commencing during 2005, which based upon the
current tantalum market price is anticipated to produce revenue in excess of
US$17 million (A$22 million) over the five year period.

Under the LOI, the Parties have the option to consider Gippsland undertaking
down-stream processing to produce high purity tantalum and/or any tantalum
derivatives which the Group may require from time to time.

The Directors are currently undertaking detailed off-take negotiations with two
leading tantalum concentrate consumers with respect to an additional 320,000
pounds of tantalum, which at an initial mill feed-rate of 1Mtpa, represents the
balance of the estimated initial production capacity of 420,000 pounds of
tantalum per annum.

FELDSPAR OFF-TAKE

As announced, an initial heads of agreement has been executed with a major
European group for the off-take of 2.65Mtpa of feldspar over a 5-year period
which based on current prices CIF Europe is anticipated to produce revenue in
excess of US$90 million over the 5-year period. Discussions are currently under
way with additional consumers of feldspar with the aim of concluding further
off-take agreements which will facilitate the early expansion of the mill
feed-rate from 1Mtpa to an anticipated 2Mtpa.

(C) ABU DABBAB BANKABLE FEASIBILITY STUDY

During the quarter sound progress was achieved in taking the bankable
feasibility study ("BFS") forward. The BFS is scheduled for completion during
mid-July 2004.

ON-SITE ENGINEERING STUDIES

The majority of the work associated with the BFS focused upon on-site
engineering and costs associated with overall project.

During March 2004 a team of Gippsland's engineers visited Abu Dabbab to
undertake various tasks associated with the BFS. This engineering work extended
to hydrology, hydrogeology, environmental impact study plus the geotechnical
engineering associated with both the mine site and the process plant site. The
work also included engineering tasks associated with the bulk feldspar shipping
facilities.

The engineers confirmed that the proposed mine-site and plant-site were well
suited for the establishment of mining and engineering facilities.

NEW ACCESS ROAD

During March 2004 Gippsland engineers delineated a new Abu Dabbab access route
which is well suited for the construction of an access road and most importantly
is approximately 6km shorter than the present Wadi Abu Dabbab route

The delineation of this new route is considered to be a most significant
development in that it will reduce the capital outlay required for the
construction of the road between the mine-site and the process plant-site.
Additionally the new route will result in reduced road maintenance and ore
haulage costs, most significant benefits which will accrue over the life of the
project.

PILOT PLANT TESTWORK

During the quarter the Directors undertook a technical review of a new but
commercially untried flotation process which at laboratory scale had
demonstrated recoveries in the order of 80% for both tantalum and tin. While the
laboratory testwork demonstrated increased recoveries it was determined that
high reagent costs and the associated complicated flow-sheet did not provide an
advantage over the traditional gravity separation process route. Additionally it
was considered that the disposal of tailings resulting from the flotation route
may pose an environmental risk. Conversely the well tested gravity process route
does not use tantalum and tin flotation chemicals whilst achieving recoveries
rates in the order of 70%.

Thus, Abu Dabbab will proceed by way of well tested and proven gravity recovery
process. The testwork for the gravity process is nearing completion.

(D) 98Mt NUWEIBI DEPOSIT - TANTALUM, TIN, FELDSPAR

It is anticipated that the 98Mt Nuweibi deposit will be processed at the Abu
Dabbab process plant to be located some 15km distant. During March 2004,
Gippsland confirmed that the existing track linking the deposit with the process
plant-site is well suited for the establishment of a haul road.

As is the case with the Abu Dabbab deposit, the mineralogy of the Nuweibi
deposit is relatively simple in that it does not contain high levels of
detrimental contaminants or minerals associated with uranium and thorium which
curse a number of tantalum deposits throughout the world preventing commercial
development.

The Nuweibi mineralisation is exposed as a hill of up to 115 metes in height
above the wadi floor while diamond drilling programmes determined that the
mineralisation extends to 200 metres below the wadi floor. Like the Abu Dabbab
deposit, Nuweibi is well suited to open-pit mining at an expected waste/ore
strip ratio of less than 1.5:1. It is anticipated that the use of one processing
plant for both the Abu Dabbab and Nuweibi deposits will greatly enhance the
project's economics.

Like Abu Dabbab, the Nuweibi is 50% owned by Gippsland by way of a joint venture
with the Egyptian Government. Ownership of both deposits is the form of Mining
Licences having tenure of 30 years with an optional 30-year extension.

(E) NEW PROJECTS

The Directors are continuing to evaluate new North African resource projects
which will compliment the Company's existing activities in Egypt. Gippsland is
currently reviewing a number of Egyptian gold and base metals projects with the
aim to further diversify the Company's activities and asset base in that
country. While projects having the capacity to produce early cash-flows are of
particular interest, the prime focus is directed towards potentially world-class
projects.

The Company's dual ASX - LSE/AIM listing is expected to assist the Company's
North African expansion plans initiatives.

(F) OUTLOOK

The Directors are confident that the outlook for the Abu Dabbab project and
Gippsland is most encouraging.

* Bankable feasibility study scheduled for completion mid-July 2004
* Positive metallurgical testwork results are being achieved
* Encouraging tantalum and tin markets
* Most opportune start-up timing (late 2005) - robust tin & tantalum markets.
* Possible expansion of asset base with new Egyptian projects

RJ (Jack) Telford
Executive Chairman
www.gippslandltd.com.au

For further information please contact:

Jack Telford
Executive Chairman
Gippsland Limited
Tel: +61 (0)8 93898611
jtelford@gippslandltd.com.au

Bill Sharp
Hoodless Brennan & Partners Plc
Tel: +44 (0)20 7610 8565
Fax: +44 (0)20 7538 1625
billsharp@hoodlessbrennan.com

Laurence Read/Leesa Peters
Conduit PR
Tel: +44 (0)20 7936 9095
Fax: +44 (0)20 7995 5923
laurence@conduitpr.com

Note:
In accordance with Listing Rule 5.10 of the Australian Stock Exchange Limited,
the geological information in this report that relates to mineral resources and
ore reserves is based on information compiled by Gippsland Director Dr John
Chisholm, who is a Fellow of the Australasian Institute of Mining and
Metallurgy, with over 30 years experience in the mining industry.



                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
MSCQKCKQFBKKPQB

Gippsland (LSE:GIP)
Historical Stock Chart
From Jun 2024 to Jul 2024

Gippsland (LSE:GIP)
Historical Stock Chart
From Jul 2023 to Jul 2024