Resource boost at Gippsland
Companies: GIP
09/04/2008
growthcompany.co.uk
Tantalum and tin hopeful Gippsland has increased the indicated resources estimate at Abu Dabbab in Egypt from 2.1 million to 13 million tonnes.
Based in Australia and quoted Down Under and on AIM, the company says a recent ‘low-cost’ drilling programme has reconfirmed estimates of a possible 40 million tonnes at Abu Dabbab, at 243 grammes of tantalum per tonne of ore and 0.09 per cent tin. Within this total, the surest ‘measured’ amount remains 12 million tonnes, but the ‘indicated’ total leaps from 2.1 million to 13 million tonnes, while the more speculative ‘inferred’ quantity falls from 26 million to 15 million tonnes.
Gippsland says it expects to update the resource again in the middle of next month. Chairman Jack Telford suggests the improvement so far achieved will ‘further heighten investor and project financiers’ confidence in the project’.
He says the estimated capital cost of Abu Dabbab is some £63 million, which the company expects to fund on an 80 per cent debt, 20 per cent equity basis. The company argues it will be able to use sea water, rather than defensively desalinated water, for much of the production process, thus cutting both capital and operating costs.
Gippsland, which in November announced a deal to supply 600,000 lbs of tantalum a year from Abu Dabbab to German group HC Starck for ten years, expects to produce around 1,350 tonnes of tin each year from the same project, says Telford. With the tin price up from $14,000 (£7,000) a year ago to $20,500 now, he contends it should generate additional revenue of £5 million a year over an expected mine life of 20 years.
Gippsland shares, which fell from 6.75p to 2.5p during 2006, now stand at 4.12p, up 0.25p this morning, valuing the company at £12.4 million. They have speculative appeal, subject to overall stock market conditions. |
