On 13/11/2007 GIP issued a press release that stated: "Gippsland...

On 13/11/2007 GIP issued a press release that stated:

"Gippsland Limited (ASX & AIM: "GIP"), the Egyptian focused tantalum developer, today announces that its 50% owned subsidiary Tantalum Egypt JSC has secured a 10 year contact ("Offtake Agreement") with the German major HC Starck GmbH ("HC Starck") for the supply of six million pounds of tantalum pentoxide ("Ta2O5") from its 40 million tonne Abu Dabbab project in Southern Egypt. [...] Importantly, the Ta2O5 Offtake Agreement contains price escalation clauses tied to production cost increases and a floor Ta2O5 price which will largely underpin the on-going viability of the project. The Offtake Agreement also contains a formula for the Ta2O5 offtake price to be varied to reflect a premium to spot market prices."
As I had said, no ceiling price was mentioned when the off-take was announced in 2007.

In 2009 the company explained: "Tantalum Egypt has executed a 10-year offtake agreement with the German tantalum refiner HC Starck GmbH for the supply of 600,000 pounds of tantalum per year in the form of a 20% Ta2O5 concentrate." Still no mention of the ceiling price. And no glass, BTW.

During 2010, the company announced: "Gippsland is presently in negotiatios with HC Starck regarding revised terms of the Offtake Agreement to reflect, amongst other matters, the production of a synthetic tantalum concentrate ('SynCon') having a  higher Ta2O5 content and therefore a higher value. [...] Negotiations are also seeking to clarify matters relating to the working of the Offtake Agreement price and cost escalation provisions. Uncertainty in relation to the working of these provisions may have a material impact on the project's financial return."

As I had said, they were trying to re-negotiate the pricing mechanism in the off-take agreement. Still no word on the ceiling price.

In November of 2010 Jack Telford resigned as director, effective immediately. On the same day the company announced that "the Board has today terminated Mr Jack Telford’s contract as Chief Executive Officer."

On 18/05/2011, roughly 3 and a half years after announcing the 6Mlbspa HCS off-take agreement, GIP - now under new management - issued a "COMPREHENSIVE REVIEW OF ABU DABBAB PROJECT & PROJECT UPDATE". To the best of my knowledge, on page 7 of this document the existence of a ceiling price is publicly admitted for the first time ever in any of the company's press releases, quarterly or annual reports:

"Under the OTA, contract price is comprised of two elements, being:
• a base price, which moves within a defined floor price and ceiling price in accordance with prevailing
market price and which is adjusted quarterly, and
• a base price escalation, which takes into account changes in project operating and sustaining capital
expenses, and which price escalation is determined annually."

In the original 2007 off-take announcement you can find a certain number with regard to expected annual revenues from the sale of tantalum concentrate. This allows an educated guess as to what the price should have been at the time (2007). Comparing it to today's prices and taking into account the existence of a ceiling price in the off-take agreement could give you an idea of what the company's true problem might be.