GIP Gippsland

RNS Number:4288B
Gippsland Limited
30 July 2004


                                
GIPPSLAND LIMITED

QUARTERLY ACTIVITY REPORT
Period: April - June 2004
30 July 2004

HIGHLIGHTS
++++++++++++++++++++++++++++++++++++
* Nine new gold, copper, nickel projects
* Encouraging Abu Swayel copper nickel results
* Off-take agreement signed for tantalum
* Doubling of tantalum production
* Tantalum off-take negotiations for expanded production
* Abu Dabbab bankable feasibility study completion
* Abu Dabbab Fast-Track Start-Up
* Egyptian Government Cabinet Changes
++++++++++++++++++++++++++++++++++++

NINE NEW GOLD, COPPER, NICKEL PROJECTS

During the quarter Gippsland announced that the Egyptian Government had granted
it the rights to explore eight gold areas and one copper-nickel area in the Wadi
Allaqi region of Egypt.

The public signing ceremony which took place in Cairo on 21 June 2004, was seen
as a major milestone for the Egyptian resource industry and the Company as the
Wadi Allaqi area is considered to have been a significant source of the gold
produced within Egypt during the Pharaohic period.

The Wadi Allaqi district is located 160km southeast from Aswan in the
south-western part of the Eastern Desert of Egypt covering an area of about
12,000km2. The area, which is bounded to the west by Lake Nasser and to the east
by the Red Sea, is readily accessible by a bitumen road and is situated some
300km from the Company's 40Mt Abu Dabbab and 98Mt Nuweibi tantalum projects.

Within the Wadi Allaqi district about 19 historical gold occurrences and
deposits are known, most of which were superficially mined by the ancient
Egyptians and Romans. A small number of the deposits were mined by the British
during the late 1800s and early 1900s. The historical mining was focused
entirely on the near-surface high grade quartz veins and alluvial gold.

Evidence of the historical mining activity is clearly seen in stoped out quartz
veins at shallow depths by means of shafts and adits. Waste dumps and tailing
are present at a number of these deposits indicating that they were sites of
significant mining activity by the ancients. Apart from limited regional
exploration during the 1960s and 70s under the auspices of the United Nations
there has been no exploration or mining since the early 1950s when Egypt became
a republic.

The nine (9) Wadi Allaqi projects, each 16km2 in area, awarded to Gippsland are:

GOLD: Umm Garayat, Koleit Umm Qurayyat, Nile Valley Block A, Nile Valley Block
E, Seiga, Umm El Tuyer, Haimur, Umm Shashoba.

COPPER / NICKEL: Abu Swayel

The geology of the Wadi Allaqi region comprises the most southerly part of the
Late Precambrian Arabian Shield and contains a northwest and west trending belt
of metasedimentary and metavolcanics schist, ophiolites and gabbro/granite
complexes which are overlain unconformably by Nubia Group sandstones of Upper
Cretaceous age.

Under the agreement executed, Gippsland, via its 100% owned United Kingdom
registered subsidiary Nubian Resources PLC, shall explore the areas over a four
year period during which time any of the Exploration Licences will be converted
to Mining Leases on delineation of a viable resource. A non-binding exploration
programme has been agreed for year one and may be varied as exploration
proceeds. Exploration expenditure during subsequent years will be determined and
dependent upon progressive exploration results.

Upon the discovery of a viable resource in any or all of the nine Exploration
Licences, Nubian Resources shall establish a 50:50 Joint Venture with the
Egyptian Geological Survey Authority (EGSMA) to undertake exploitation of such
resources. The terms and conditions of the Joint Venture have been agreed to and
make allowance for Nubian Resources to manage all exploration and subsequent
exploitation stages of the project.

The Company was granted first choice of targets within Wadi Allaqi, an area in
which Gippsland geologists have delineated numerous and quite obvious drilling
targets. Seven of the eight gold Exploration Licences cover historical gold
mining workings which they consider to clearly be a most attractive element of
this new project.

Subject to representing the best interests of Gippsland shareholders and at the
appropriate time it is the Directors' intention to admit Nubian Resources to AIM
(London Stock Exchange) whilst seeking to retain a substantial interest so as
not to distract from the development of the existing Abu Dabbab and Nuweibi
projects.

ABU SWAYEL COPPER / NICKEL RESULTS

During the quarter Gippsland geologists completed a review of unpublished
exploration data for the Company's recently acquired Abu Swayel Copper/Nickel
project. The previous exploration work comprises ten diamond drill holes and a
shaft with a single cross-cut all of which test an area of ancient workings.

Copper at Abu Swayel was mined by the ancient Egyptians from shallow open cut
workings which can be traced over a length of 180m. An ancient furnace, slag and
pottery remains are evidence that some on site processing of the copper ore was
completed. In the early part of the 1900s the Nile Valley Company sank a shallow
shaft with a cross-cut at the 22m level to test the vertical continuity of the
mineralisation.

In the early 1960s the shaft was deepened to 69m and ten diamond drill holes
were completed to test the down dip continuity of the mineralisation over a
strike length of 200m. Of the 1,205m of drilling completed, only 21 samples
ranging from 1-2m in length were assayed. Three of the holes returned
significant Cu and Ni values.

Table 1: Abu Swayel - Best Cu & Ni Intersections
Location      From (m)     To (m)            Interval (m)    Cu (%)      Ni (%)
DH01           21.00       23.60                  2.6        1.16        0.24
DH02           25.70       29.95                 4.25        1.58        0.23
DH14           48.55       49.85                 1.30        2.23        0.20
Shaft          30.00       40.00                10.00        1.87        1.53
Cross-cut       7.50       15.50                 8.00        4.11        1.77

Except for geological mapping there has been no exploration outside of the
immediate vicinity of the ancient workings since the early 1960s. The results of
the previous exploration clearly show that mineralisation is present at grades
and over widths that would be readily detected by geophysical methods such as
electromagnetic ("EM") plus induced polarisation ("IP") techniques.

The Abu Swayel licence covers 16km2 of favourable stratigraphy along strike from
the old workings which have not been tested for Cu-Ni mineralisation. Much of
the area is covered by thin wadi sediments which can be readily explored by
means of ground geophysical methods.

An exploration programme of geological mapping, geochemical sampling, EM & IP
together with follow-up drilling of the geophysical anomalies has been prepared.

ABU DABBAB TANTALUM-TIN PROJECT

SECOND TANTALUM OFF-TAKE AGREEMENT SIGNED

During May 2004, Gippsland entered into a Heads of Agreement ("Agreement") with
a major buyer of tantalum in concentrate (one of the Top 8 buyers of tantalum in
the world), regarding the sale by Gippsland on a "take or pay basis" of 320,000
pounds of tantalum per year over a fixed period of four (4) years between
Calendar Years 2006 and 2009.

The parties have agreed on the price in USD for the 1,280,000 pounds of tantalum
covered by the Agreement. The agreed price cannot be disclosed however due to
reasons of commercial confidence.

The signing of this Agreement means that Gippsland has now entered into two (2)
Heads of Agreement with two major buyers of tantalum (both are amongst the Top 8
buyers of tantalum in the world) which taken together results in the sale by
Gippsland on a "take or pay basis" of a total of 420,000 pounds of tantalum per
annum.

DOUBLING OF TANTALUM PRODUCTION

During May 2004, the Company's consultant engineers determined that the initial
production rate for the Company's 40Mt Abu Dabbab tantalum project can be
increased by approximately 26% by over-sizing the primary SAG mill and ball mill
thus increasing tantalum Stage 1 production from approximately 420,000 pounds
per year to in excess of 500,000 pounds per year.

The initial installation of the over-sized 2MW SAG mill and 1.4MW ball mill will
enable Stage 2 project expansion to be undertaken quickly and at relatively
minimal cost. This will be achieved by the retro-installation of a second 1.4MW
ball mill which is calculated to expand the mill feed-rate to 2Mtpa thus
increasing tantalum production from >500,000 pounds per year to >800,000 pounds
per year.

The production rate of 2Mtpa, which will be achieved without increasing the size
of the mining fleet, is anticipated to take place within one year of
commencement of operations.

ADDITIONAL TANTALUM OFF-TAKE NEGOTIATIONS FOR EXPANDED PRODUCTION

The Company is currently in negotiation with a number of major tantalum
consumers with the view to secure long-term off-take agreements for the
increased tantalum production resulting from the Stage 2 project expansion to
2Mtpa.

BANKABLE FEASIBILITY STUDY

The international engineering group Lycopodium Pty Ltd is presently finalising
the bankable feasibility study ("BFS") for the Abu Dabbab Project. The BFS was
scheduled to be completed during July 2004 however the expansion of production
from 1Mtpa to 1.26Mtpa has made it necessary to implement minor process plant
engineering design changes to cater for the expanded plant capacity.

The Directors believe that this delay is justified given the increased scale of
economy achieved by this expansion and are confident that the BFS will be
completed during August 2004.
The delay in completion of the BFS is not expected to delay the project's
planned start-up during the first quarter of 2006.

FAST-TRACK START-UP

In order to fast-track the commencement of operations, the project will proceed
based upon the production of tantalum and tin alone. While the project has the
potential to produce approximately 1 million tonnes ceramic grade feldspar per
annum, the BFS and thus the project will progress independent of feldspar
production. The project's viability is not dependent upon feldspar revenue and
production of feldspar will be considered as a separate issue following
commissioning of the tantalum and tin production facilities.

As the BFS progresses, the Directors are becoming increasingly confident that
the 40Mt Abu Dabbab operation has the potential to become the world's largest
and lowest cost tantalum producer. The nearby presence of the Company's 98Mt
Nuweibi tantalum deposit supports this opinion.

EGYPTIAN CABINET CHANGES

During the past 2 weeks important changes have been made to the Egyptian
Government Cabinet with the appointment of Prime Minister Ahmed Nazief (52) and
14 mainly younger Ministers many of whom have a sound track record in the
private commercial and industrial sectors.

The Egyptian resource sector now comes under the umbrella of the newly formed
Ministry of Industry and Foreign Trade which is a combination of the old
Ministry of Industry and Technological Developments and the Ministry of Foreign
Trade. The newly appointed Minister His Excellency Mr Rashid Mohammed Rashid is
a most successful and highly respected industrialist having widespread interests
throughout Egypt.

Even at this early stage, it is clear that the dynamic changes that have taken
place bodes well for the Egyptian resources industry.

RJ (Jack) Telford
Executive Chairman

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 M Chisholm, who is a Fellow of the Australasian Institute of
Mining and Metallurgy, with over 25 years experience in the mining industry.




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

END
MSCSDDFFSSLSEDW

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

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