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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 tweaks feasibility study for Abu Dabbab tantalum project
Gippsland Ltd said the feasibility study for the Abu Dabbab tantalum project in Egypt has raised the capital expenditure estimate by US$48 million from the previous November 2007 forecast to US$173 million, but the company said the rise is partially associated with the significant increase of tantalum product grades achieved at the property.
The group is well advanced in its project finance negotiations with the German bank KfW IPEX-Bank GmbH (KfW) and Deutsche Investitions und Entwicklungsgesellschaft mbH (DEG), both part of KfW Bankengruppe GmbH, which is 80 percent owned by the German federal government and 20 percent by the German federal states.
The new capex estimate includes provision for the installation of additional plant and equipment associated with the significant increase of tantalum product grades from 20 percent to 55 percent tantalum pentoxide (Ta2O5). Gippsland said it recently upgraded the refining process to production of a high purity synthetic tantalum concentrate, known in the industry as SynCon, which also reduced the presence of unwanted metallic impurities to less than 0.1 percent combined uranium and thorium.
Gippsland noted that the revised capex estimate figure also assumes record high construction material costs as well as high plant and machinery costs and record high fuel prices. Therefore, the figure is “quite conservative and given the probable economic circumstances ahead, these costs are likely to decline,” it said.
The Abu Dabbab Project is scheduled to produce approximately 650,000 pounds per annum of tantalum, expressed as Ta2O5, plus approximately 1,500 tonnes of tin metal per annum.
Tantalum Egypt JSC has contracted with German tantalum major HC Starck GmbH for the supply of 600,000 pounds of Ta2O5 per annum for the initial 10 years.
It expects that KfW and DEG will state their position with respect to project finance for the project by the end of February 2009.
Gippsland is targeting an attractive 80 percent debt and 20 percent equity ratio for the financing and is in early-stage talks with third parties comprising tantalum industry participants and investment houses.
