Gippsland focuses on world-scale projects which have been over-looked by major resource groups. Projects which have undergone detailed exploration and which have the potential to be brought into production quickly are a prime target for the Company. Gippsland's success in this area is due in part to the Company's philosophy of entering into equitable joint venture arrangements with overseas nationals. The Company's prime assets are the 40 million tonne Abu Dabbab and the 98 million tonne Nuweibi tantalum-tin projects located in the Central Eastern Desert of Egypt, adjacent to the western shore of the Red Sea.
Gippsland notes rising tantalum prices as constraints on ‘conflict tantalum’ supply tighten
In its Q3 report, Gippsland Limited (ASX: GIP, FSE: GIX) highlighted that the increased scrutiny on ‘conflict tantalum’ producers is having a positive impact on the tantalum market. The company emphasised the anticipated supply-shortfall as responsible tantalum refiners and electronic equipment manufacturers seek a stable, long-term and conflict-free supply of the vital strategic raw material.
According to Gippsland, the increasing constraint on the use of conflict tantalum, along with the general tightening supply of tantalum feedstock, has seen the spot price for tantalum concentrate increase from approximately US$35 per pound in January 2010 to US$52 per pound in April 2010.
“It is anticipated that the price of tantalite will continue to rise steadily during the coming months in anticipation of the critical shortage of tantalum feedstock predicted to occur through to late 2012”.
Gippsland is currently developing the Abu Dabbab Tantalum-Tin-Feldspar project in the Central Eastern Desert in Egypt. According to Gippsland, Abu Dabbab is generally recognised as the most advanced new tantalum project, with JORC Code Resources and Reserves that exceed competitors by a significant margin.
The Abu Dabbab Project has a JORC compliant mineral resource of 44.5 Mt (million tonnes) at a grade of 250 g/t (gram per tonne) Ta2O5 (tantalum), while the company's nearby Nuweibi tantalum deposit has a JORC mineral resource of 98 Mt at a grade of 147 g/t Ta2O5.
Abu Dabbab is scheduled to produce in excess of 650,000 pounds of tantalum pentoxide per year over a projected mine life of 20 years. The project will also produce approximately 1,530 tonnes of LME grade tin per year.
“The past quarter has seen continued and increased international focus on the problems associated with Conflict Tantalum being produced in Central Africa, predominately in the Democratic Republic of Congo (DRC)”, Gippsland stated.
“The situation in these conflict areas and the trade in 'conflict' commodities that sustains the conflicts has drawn the attention of the United Nations, the United States Congress, and tantalum end-users, driven by a very active campaign led by organisations such as Global Witness and Enough!”
“As an immediate result, there are two bills before Congress the effect of which would be to outlaw trade and use of 'Conflict Tantalum' in the United States. Likewise, the United Nations Security Council is considering the imposition of sanctions on companies, their directors and individuals engaged in the trafficking Conflict Tantalum.”
Furthermore, Gippsland noted that the Electronic Industry Citizenship Coalition (EICC) – an industry group including Apple (NASDAQ: AAPL) Sony (TYO: 6758), Microsoft (NASDAQ: MSFT) and Research In Motion (NYSE: RIM) - met in April to establish guidelines under which tantalum smelters would be required to demonstrate that their tantalum product is conflict-free.
Other members of the EICC include Cabot Corporation, HC Starck, Dell, Nokia, Motorola, Hitachi, IBM, Lenovo.
Gippsland has an agreement with HC Starck GmbH, a German tantalum refiner, for the delivery of conventional tantalum concentrates. In the update, Gippsland told investors that it is currently negotiating with HC Starck to alter the agreement and take account of the delivery of a more valuable high purity synthetic tantalum concentrate – referred to as SynCon.
“Gippsland is also in negotiation with other tantalum consumers who appear to be concerned about the continuity of supply in light of the removal of Conflict Tantalum from the market, steadily increasing tantalum feedstock prices and the looming shortfall in supply."
In terms of Abu Dabbab development, the company noted that it received approval from the Egyptian National Centre for Planning State and Usage, for a 5km long, 40m wide ‘corridor’ to the Red Sea shoreline, which will enable seawater to be drawn directly from the sea.
Abu Dabbab is expected to consume approximately 18,000 cubic metres of seawater per day, previously the company had expected to extract the water from an on-land bore-field 2km from the coast. Gippsland said the ‘corridor’ represents a ‘much-preferred means of sourcing seawater’ as it will avoid the need to construct and operate a 16 hole bore-field as previously planned.
