Company Announcements Office Regulatory News Service Australian Stock Exchange Limited London Stock Exchange Limited 20 Bridge Street London EC2 1HP SYDNEY NSW 2000 United Kingdom Dear Sir/Madam
OFFTAKE AGREEMENT SIGNED FOR TANTALUM
The Directors of Gippsland Limited ("Gippsland" or "the Company") wish to advise that Gippsland has entered into a Heads of Agreement with a material buyer of tantalum pentoxide concentrate of financial substance (one of the Top 8 buyers of tantalum pentoxide concentrate in the world), regarding the sale by Gippsland on a “take or pay basis” of three hundred and twenty thousand (320,000) pounds of tantalum pentoxide per annum to be produced by commercial mining operations at the Abu Dabbab Project where commercial mining operations are expected to commence in January 2006, over a fixed period of four (4) years between Calendar Years 2006 and 2009.
The parties have agreed on the price in USD for each of the three hundred and twenty thousand (320,000) pounds of tantalum pentoxide per annum which are the subject of this preliminary Heads of Agreement. The agreed upon 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 material buyers of tantalum pentoxide concentrates of financial substance (both are amongst the Top 8 buyers of tantalum pentoxide concentrate in the world) which taken together results in the sale by Gippsland on a "take or pay basis" of a total of four hundred and twenty thousand (420,000) pounds of tantalum pentoxide per annum to be produced by commercial mining operations at the Abu Dabbab Project. Four hundred and twenty thousand (420,000) pounds per annum is currently estimated to be 100% of the initial per annum production of tantalum pentoxide from the Abu Dabbab Project.
Abu Dabbab Project
Gippsland via its 100% owned Australian incorporated and registered subsidiary Tantalum International holds a 50% ownership interest in the Abu Dabbab tantalum, tin and feldspar project located adjacent the western shore of the Red Sea in the Central Eastern Desert of Egypt by way of a 50% shareholding in Tantalum Egypt (the Egyptian incorporated and registered company which fully owns the Abu Dabbab Project).
NPV of the Abu Dabbab Project The NPV of the Abu Dabbab Project at a discount rate of 6% is approximately US$185M and indicating an IRR of 49%. Gippsland owns 50% of the Abu Dabbab Project. The Directors of Gippsland are of the firm opinion that the Abu Dabbab Project will enjoy the lowest cost of production globally. Except for any unforseen delays, the Abu Dabbab Bankable Feasibility Study is expected to be completed during July 2004.
