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Additional Information

Market:	ASX FRA
Sector:	General Mining
EPIC:	GIP
Latest Price:	0.01 (0.00%)
52-week High:	0.03
52-week Low:	0.01
Market Cap:	12.68M

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Gippsland Limited

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 continuing tantalum offtake negotiations with HC Starck

Wednesday, July 28, 2010

Gippsland (ASX: GIP, FRA: GIX) has advised it is negotiating with HC Starck regarding revised terms of the offtake agreement for output from the Abu Dabbab Tantalum-Tin Project in Egypt, to reflect the production of a synthetic tantalum concentrate having a higher Ta2O5 content and therefore a higher value.

This follows an earlier agreement with the German tantalum refiner HC Starck GmbH, whereby HC Starck had contracted to purchase 600,000 pounds per year of Abu Dabbab tantalum (in the form of tantalum pentoxide – Ta2O5) for a period of ten years. In August 2009, the Company advised the market that the original milestones under the Offtake Agreement had not been met. The Offtake Agreement has been extended to 31 December 2010.

While the negotiation continues, the spot market price of tantalum has increased from approximately US$38 per pound in December 2009 to the present price of approximately US$80 per pound because of a global shortage in tantalum supply.

The company has also entered into discussions with other tantalum refiners, while the HC Starck discussions are in progress.

Proposed financing for the Abu Dabbab project with KfW-IPEX Bank GmbH was well advanced. Prior to the onset of the global financial crisis, the legal and technical due diligence had been largely completed by the bankers. A key outstanding part of the financing arrangement is the revised terms of the Offtake Agreement with HC Starck to take into account the delivery of the tantalum SynCon.

The financing mandate with KfW was extended through to 31 December 2009; however it has not been formally extended further as to do so would incur a fee to Gippsland. Discussions with KfW are ongoing.

The financing discussions await completion of negotiations with HC Starck, or other tantalum refiners.

Gippsland has indicated that the detailed engineering and construction that was planned to commence by 2010 with commissioning in 2012, is now expected to commence during the first quarter of 2013 due to delays in the HC Starck offtake negotiations.

The shortage in tantalum supply is expected to continue through to at least 2013 by which time Abu Dabbab is expected to largely satisfy demand with its initial production of in excess of 650,000 pounds of tantalum per year.

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