float of allaqi gold assets

Gippsland toys with gold float
Companies: GIP
05/10/2005

Egypt-focused tantalum hopeful Gippsland has raised £600,000 at 4p and contemplates floating off its gold arm.

Broker Hoodless Brennan raised the money for Western Australia-based Gippsland, headed by Aussie entrepreneur Jack Telford, who proclaims an ambition to make its Abu Dabbab prospect in Egypt the second largest tantalum producer in the world. AIM-quoted Gippsland, which lost £870,000 in the year to June, reports that Abu Dabbab has a total measured, indicated and inferred resource of 40 million tonnes at Abu Dabbab with a grade of 252 grammes of tantalum per tonne of ore, plus 98 million tonnes at another Egyptian prospect Nuweibi – which Telford says the company can increase to 120 million tonnes – at 143 grammes a tonne.

Telford is talking to banks and hopes to have project finance in place by Christmas for Abu Dabbab, where an independent feasibility study suggests production could start in 2007 at the rate of 650,000 lbs of tantalum, 1,530 tonnes of tin and 1.5 million tonnes of feldspar a year. The hope is that capital expenditure of £44 million could yield revenues of £275 million and cashflow of £80 million a year for the first 13 years of a 20-year mine life and Gippsland says it already has offtake agreements for the first five years of production.

The company is also hoping to develop gold, copper and nickel prospects at another Egyptian project, Wadi Allaqi, where recent trenching has shown some encouraging gold grades. Telford hints that floating Nubian Resources, Gippsland's Wadi Allaqi arm, is one possibility that could come under review.

Since we highlighted Gippsland's speculative potential at 3.5p last November, the shares have climbed 53 per cent to 5.38p, valuing the company at £8.8 million. Hold on for now.

Robert Tyerman