GIPPSLAND LIMITED Audio Webcast

GIPPSLAND LIMITED (GIP)

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GIPPSLAND LIMITED (GIP) Events

Company (Stock Code)	Date/Time	Event	Timezone: Europe/London
GIPPSLAND LIMITED (GIP)	Mon, 8 Sep 2008 04:30AM 02:30PM Australia/NSW	GIP - Africa Down Under Conference Presentation - Mr Jack Telford, Executive Chairman
GIPPSLAND LIMITED (GIP)	Wed, 25 Jun 2008 04:00AM 02:00PM Australia/NSW	GIP - The Gold Coast Resources Showcase Presentation - Mr Jack Telford, Executive Chairman
GIPPSLAND LIMITED (GIP)	Mon, 8 Jan 2007 06:40AM 04:40PM Australia/NSW	Seiga Drilling Results - Jack Telford, Exec Chairman
GIPPSLAND LIMITED (GIP)	Fri, 28 Nov 2008 03:00AM 03:00AM Australia/WA	Annual General Meeting 1st Floor, 207 Stirling Hwy, Claremont, WA
GIPPSLAND LIMITED (GIP)	Tue, 14 Oct 2008 02:00PM 12:00AM Australia/NSW	Full Year Results
GIPPSLAND LIMITED (GIP)	Thu, 13 Mar 2008 02:00PM 12:00AM Australia/NSW	Interim Results
GIPPSLAND LIMITED (GIP)	Fri, 7 Dec 2007 01:00AM 11:00AM Australia/NSW	Annual General Meeting Suite 4, 207 Stirling Highway Claremont WA 6010
GIPPSLAND LIMITED (GIP)	Thu, 15 Mar 2007 02:00PM 12:00AM Australia/NSW	Interim Results
GIPPSLAND LIMITED (GIP)	Mon, 29 Jan 2007 02:00PM 12:00AM Australia/NSW	Quarterly Production Date
GIPPSLAND LIMITED (GIP)	Wed, 29 Nov 2006 10:00AM Australia/NSW	Annual General Meeting 207 Stirling Highway Claremont WA
GIPPSLAND LIMITED (GIP)	Wed, 15 Mar 2006 02:00PM 12:00AM Australia/NSW	Interim Results
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GIPPSLAND LIMITED (GIP)

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PRESENTATION BY JACK TELFORD, EXECUTIVE CHAIRMAN OF GIPPSLAND LIMITED (GIP)

“Africa Down Under Conference Presentation”

http://www.brr.com.au/event/51098

 

MONDAY, SEPTEMBER 8, 2008, 2:30 PM.

 

            GIP      Thank you, ladies and gentlemen, for attending. It’s my pleasure to tell you about Gippsland, which is quite an advanced company with pre-production.

10                    We’re listed on the Australian Stock Exchange and the London Stock Exchange-AIM. We also trade quite actively on the PLUS markets in London and the Deutsche Borse in Frankfurt.

 

                        You’ll see here our share issue is about a bit over about 300,000 million

15                    shares on issue. Our market capital is around about A$30 million, which we feel is quite disgusting given our assets which I’ll have to lie in telling you about. As far as our major shareholders are concerned, you’ll see on the bottom left there is the IFC. We’re a rather unusual junior and that we have the IFC as our second largest shareholder. The IFC, of course, is the

20                    commercial arm of the World Bank.

 

                        ANZ Nominees, you’ll see there, they are actually the Clearing House for clearing Australian nominees which is a Clearing House for the Frankfurt Stock Exchange and you’ll hear reference to Germany quite often in this

25                    presentation.

 

                        The graph on the right there, it’s quite complex, but basically what it says is, we’ve held over the last 12 months…we’ve held our ground very well in this particular market. We have brokers in London who are doing a really good job

30                    in Fox-Davies and Seymour Pierce, and that Seymour Pierce is our nominated advisor.

 

                        The five directors were all reasonably long in the tooth. We’ve got about 30 years plus each, that’s about 140 years of experience there. We cover most

35                    scenes… what you require for the mining industry, industrial chemistry, geology, mining, engineering, metallurgy, law and finance, so I think we’re a well-based group of people to bring any project forward with considerable success.

 

40                    We have three projects, basically, two of which are in Egypt, Abu Dabbab and Nuweibi, I think you describe as the jewel in our crown. I’ll describe that one in more detail shortly. Wadi Allaqi is located southeast of Aswan. It’s an exploration program we have there. It’s for copper, nickel, and gold. We have a modest resource there of gold from the first part of exploration amounting to

45                    about 83,000 ounces and clearly, it needs more work, but there’s one deposit there of copper, nickel, which has got some very handsome grades which we plan to explore more in the future.

 

                        In Australia, we have a free carried interest in the Heemskirk tin deposit which was referred to as Asean tin deposit in the years gone by. It has a resource of 7.3 million tonnes just under 0.7%. It’s in a joint venture with Stellar Resources, and Stellar and Gippsland have recently agreed to put their

5                      relative shares into a company, the Columbus Metals, which we plan to float on the ASX very shortly.

 

                        In Egypt, we have located Abu Dabbab and Nuweibi on the western shore of the Red Sea. We’re in an area which is well endowed with infrastructure. That

10                    coast along there is an important aspect of the Egyptian tourist industry. We have good highways, there is an international airport not far from about 30 kilometres from our site, so we’re well situated.

 

                        Wadi Allaqi, I mentioned, you can see in that rectangle to the southeast of

15                    Aswan is where the copper, nickel, and gold exploration programs have been taking place.

 

                        Moving on to Abu Dabbab and Nuweibi, this is a joint venture in effect with the Egyptian Mines Department. Tantalum Egypt is the company which is

20                    registered in Egypt. It holds the licenses for both Abu Dabbab and Nuweibi. The Egyptians in this joint venture have contributed in the form of the deposits. Abu Dabbab is fully explored when we took hold and got the deposit. The Egyptians vended that into the company. In today’s terms, it would cost at least $10 million to explore it to the level that it is currently.

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                        A snapshot on the Tantalum industry, its one which we all use everyday in the form of cellphones, laptops, etc., by way of electronic capacitors. It’s a strategic metal and one which we’re all very dependent on. It’s also a super alloy, It’s used for making turbine blades for example for jet engines, it has an

30                    extreme melting point, which is only surpassed by uranium and tungsten. That’s also used in the chemical plant and equipment fabrication. It has an extreme resistance to acid attack. The supply problems have been up and down in recent years and they’re not looking so certain at this stage. The main supplier has been from western suppliers…. has been from Western

35                    Australia, from Greenbushes which has been shut down for almost three years, and I understand the underground mine is flooded. The other supplier was Wasilla from Port Hedland, and I believe like all good deposits, it’s slightly coming to its end. So, Abu Dabbab is the only project that is coming on stream that I believe that can replace the shortfall that’s going to occur in

40                    2010, 2011.

 

                        Abu Dabbab is held and our license which is 20 square kilometres, and the license is tenure 30 plus 30 years, so we’ll be there for a long time. The project itself is located about 20, 24 kilometres of the western shore of the

45                    Red Sea, on land. It’s well placed, as I mentioned, to infrastructure. Well, you’ll see water for the processing, so we’ve got plenty of that, down the road at the Red Sea. The other project that I mentioned and I’ll mention more detail later on, Nuweibi, is about 16 kilometres south of that Abu Dabbab exploration license.

 

                        Resources, we have both resources and reserves having completed the bankable feasibility study. We recently upgraded the resources such that we now have 44.5 million tonne in total; 15.2 million tonnes are in the Measured

5                      and 17.3 are in the Indicated. Very recently, we, as a result of modelling, we recalculated the ore reserves. We have just over 15 million tonnes in the Proven and over 15 million tonnes in the Probable, so of the 44 million tonnes, we have just over 30 million tonnes in the Proven and Probable Ore Reserve category.

10

                        We have completed the bankable feasibility study, which is very ably undertaken by Lycopodium. It’s based on a 2-million tonne per annum throughput which will generate an excess of 650,000 pounds of tantalum pentoxide for the year that will make us very firmly the second largest

15                    producer of tantalum in the world. We do have plans to expand and if we increase by a modest amount, we’ll actually be the largest tantalum producer globally. The project will also produce about 1,500 tonnes of tin which we’ll produce on site as an LME grade metal. The project is unusual in that, in the pictures you’ll see shortly, the mineralised iron is in a rock which has got a

20                    very high feldspar content and we have shown a test work that we can actually, after stripping out the tin and tantalum through the gravity separation process, we can undertake a very simple marker float to get rid off rubbishy marker and a few other minor elements, and we end up with superb feldspar which is used to making ceramic tiles. This will ultimately result in the project

25                    having 20% waste in total. Every ton of material we mine, we will sell 800 kilos. Feldspar might be able to start in touch stage 2.

 

                        This is the picture I referred to, you can see the white area of the exposed mineralisation. To give you an indication of scale, if you’ll look high, you’ll see

30                    a four-wheel drive at the base of the white. It’s a massive, massive upper granite. In the cross section, you’ll see the pink there is the mineralised zone. It is quite unusual than that remarkable in that the mineralisation, particular the tantalum is very evenly distributed through that pink region. Tin decreases marginally with depth, but it’s of no consequence. So this lends itself to a very

35                    simple open pit. You saw the white picture of the deposit, well because of mineralisation is so consistent, we all  (inaudible) (00:08:34) great control probably in the order of 50-meter ventures and mining will take place by eye rather than by chemical control. The  strip ratio is very handsome, it’s 0.83:1.0. In the early years, we’ll be driving up into the pit, of course, so we

40                    won’t have a strip ratio.

 

                        The horizontal blue lines that are illustrated there are actually the exploration edits that were constructed by the Russians in the early ‘70s. We can walk through the deposit in three locations through those edits which totalled about

45                    710 meters, so the exposure of the mineralisation is exceptionally brilliant.

 

                        This is a picture of Nuweibi, again, you can see the white feldsparic material which caused the tantalum mineralisation. This one is a larger deposit, I mentioned, it’s 16 kilometres south, again, a 20-square- kilometre tenement and again 30 plus 30 year tenure. This particular resource is open at depth. It’s open to the west and it’s open to east. But at this stage, we have 98 million tonnes, but I believe it’ll go well in excess of 120 million tonnes, what we do eventually get around to doing some exploration, which if course, will

5                      make it three time the size of Abu Dabbab. It’s unlikely we’ll do any exploration down here for at least a decade, because we have so much in the way of material at Abu Dabbab.

 

                        This section shows again the pink mineralisation and the drillholes that you

10                    can see, a buttoned-in mineralisation which is the reason it’s open at depth. We have a very unusual but very attractive physical arrangement in Egypt. First of all, we have no royalty. We did have a 5% royalty, but we negotiated out way of that. The whole project is set up in a free trade zone specifically for our project. These forward some wonderful benefits. We have no sales, tax,

15                    we have no import duty, and most importantly, we have no profit tax. This regime will last for the life of the project and if that’s not enough to attract you, we pay 13 cents a litre for diesel fuels which is the largest single cost for any mining operation.

 

20                    Now you may ask: how the Egyptians get their revenue from this? Well basically, after putting the projects or the deposits into the joint venture, Gippsland responsibility is to arrange project finance to arrange a technology, build a project and when revenue stream commences, the banks get their money back, we haven’t worked that…a way of avoiding that plus interest.

25                    But what is unusual is the Gippsland gets it CAPEX back as well plus interest and then when the project is completely debt-free, the revenue is split on the equity basis of 50/50 between the joint venture partners. So, our Egyptian friends do get a good revenue stream, but they only enjoy that revenue stream after the project is up and running and it’s totally debt-free.

30

                        We have concluded a 10-year Offtake Agreement for 90% plus of all tantalum we produce during that period. The Offtake Agreement is with HC Starck, a German major. They and Cabot in the States are the major consumers of the tantalum in the world. I believe Starck are the largest. We’ve sold 600,000

35                    pounds of tantalum pentoxide per year for the initial ten years or 6 million pounds over the ten years. That leaves us with about 50,000 pounds spare which we have a number of offers already, people lining up to take that, but we’re not too sure what we’ll do with that.

 

40                    The Offtake contract underpins the whole of the project. We have a base price for the tantalum over that 10-year period. However, we have an arrangement whereby the…any cost increases that occurred during that 10-year period get transferred directly to the Offtake price, so we have virtually no exposure to the tantalum cost increases. In addition, we have clauses in

45                    the Offtake Agreement whereby if the spot market increases, we get a benefit to the spot price…the contract spot price, not directly, but we do get some benefit, and now conversely, if the price of tantalum falls through the floor, our Offtake price for tantalum cannot fall below the escalated cost price over that 10-year period. So as you can see, the risk for a tantalum is very minimal, if not zero.

 

                        I mentioned Starck, there are a wonderful joint venture partner and wonderful

5                      German technologists. They’re the largest consumers of tantalum in the world and they’re an ideal partner for us.

 

                        As far as project finance is concerned, we’re looking at CAPEX of $125 which is going to increase, November 2007. It will increase, but we believe it won’t

10                    increase dramatically. We’re in negotiation with KfW, the German bank, so you’ll hear the word “Germany” again and we’re looking at a debt-to-equity ratio of 80:20 which for Gippsland shareholders is brilliant. The KfW through DEG had an arrangement to provide project finance and mezzanine finance for any project that’s been developed in a developing country and that

15                    product ends up in Germany. In another words, the product is imported to Germany.

 

                        We can’t mention the Offtake price at this stage, it will change in time to come but the revenue stream in the project is brilliant. The internal rates of return

20                    and the net (inaudible) (00;14:02) will be announced before long when we’ve finalized the revised CAPEX.

 

                        Production, we’re looking at starting in 2010, which as I mentioned, will see us as the second largest, instantly, the second largest producer in the world.

25                    Feldspar, I mentioned briefly is used for making ceramic tiles. We have Heads of Agreement in place for 2.65 million tonnes of feldspar over five years. This is from one consumer alone in Italy where we’ve done extensive test work. Feldspar has the potential to add $20 million to the bottom line each year. I’m not talking about gross revenue, I’m talking about net revenue

30                    to the bottom line, and we don’t only apply those figures to the financials, but when you do, they’ll become rather unreal.

 

                        So in summary, we have a total of 140 odd million tonnes in JORC resources, 30.24 tonnes are in the form of group Proven and Probable Reserves. We’re

35                    looking at 2 million tonnes per annum, so clearly, we’ve got a very long lifetime and even more evidently, we have a very clear room to expand which, as I say, will take us to the large number one position. We have been… wonderful potential as far feldspar is concerned for the revenue.

 

40                    I mentioned Wadi Allaqi and Tasmania, I won’t go into those details now. As far as the investment potential is concerned, we have 5.0p or A$0.10, Seymour Pierce and Fox Davies have given us a target of A$0.41 and A$0.64 per share each. So, we believe there’s a lot of upside in the company. It’s a hurried presentation because there’s so much to say, but if you’d like to call

45                    past booth 12 and call on me or my associates there, we’d be pleased to give you a copy of the presentation and discuss it further.

 

                        Thank you.

 

PRESENTATION CONCLUDED

 

 

 

 

Contact brr@brr.com.au for more information

 

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