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Excerpt from Paydirt Gippsland Ltd article September 2008:


Jack Telford says------------

We will come onto the market in a very big

way (once we start producing) because we will

be the second largest producer of tantalum

globally," he said.

While that might be enough for many companies

Telford said Gippsland had no intention

of resting on its laurels and was targeting

the number one position of world's tantalum

producer.

"We certainly don't plan to stay there (second).

If we plan well, we could certainly become

the largest producer of tantalum.

"We have enough resource to expand and

take ourselves to first position."

Telford said the company was getting more

and more inquiries about additional supplies

and it was looking "more and more evident"

that the company would ramp Lrp to 3 mtpa

sooner rather than later.

Among myriad small delays, which can be

expected with any project, there has been

the need to navigate through the sometimes

labyrinthine Egyptian bureaucracy and the unfortunate

timing of off-take partner HC Starck

GmbH changing hands, virtually as the deal

was on the verge of completion.

Though the agreement with Starck, for aLmost

all tantalum production for the flrst 10

years of project life is now in place, the delay

caused by the takeover has added nearly two

years to the process turning Gippsland from

explorer to producer.

There is no doubt in Telford's mind, however,

that the wait will have been worth it.

As well as tantalum, the 44.5mt resource

grades at 0.09% tin. lt also contains feldspar,

a by-product of the tantalum and tin extraction

process.

The extraction of the feldspar, used in high

quality ceramics, is scheduled for stage two of

the project.

"Treatment cost of the feldspar - which we

virtually get for nothing anyway, because it's a

waste product of the milling process - is about

$US5s/t and at a conservative estimate we

could sell it on a FOB (Free on Board) basis for

about $U520-25/t.

"We have the capacity to produce up to

1.5mt of Feldspar, so that adds $US22 million

plus to the bottom line each year

"The revenues from feldspar are extraordinary

because they mean the whole project

ends up having only 20% waste.'

The company will also benefit from its negotiation

of a project specific free-trade zone, by

which Gippsland will pay no tax, no sales tax

and no import duty.

Other advantages include minimal infrastructure

costs: No need for rail access as

major highways are within a few kilometes,

international airports are also close by and

port access at a choice of locations is virtually

guaranteed.

Finance for the project (capex is expected

to be a little over $US125 million) is being provided

by German banks, which have negotiated

an 80% debt-2o% equity arrangement-a

"brilliant result for the shareholders".

Also in its favour is the structure of the mineralisation,

which will result in very little in-pit

grade control being required once mining is

underway.