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STREAMPLAY STUDIO LIMITED Capital/Financing Update 2004
65841_rns_2004-11-02_541acf09-8cbb-4128-ac9e-3a449d5b7d8d.pdf
Capital/Financing Update
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Suite 34, 18 Stirling Highway, Nedlands WA 6009 PO Box 352, Nedlands WA 6909, Australia ABN 31 004 766 376 Tel: (08) 9389 8611 Fax: (08) 9389 8612 E-mail: [email protected] www.gippslandltd.com.au
3 November 2004
Pages: 3
Company Announcements Office Australian Stock Exchange Limited 20 Bridge Street SYDNEY NSW 2000
Requlatory News Service London Stock Exchange Limited London EC2 1HP United Kinadom
Dear Sir / Madam
EXPANDED 2Mtpa BANKABLE FEASIBILITY STUDY COMPLETED
During the quarter, the Directors of Gippsland Limited ("Gippsland" or "the Company") released the results of the 1.26Mtpa Abu Dabbab Bankable Feasibility Study ("BFS") undertaken by the international engineering group Lycopodium Pty Ltd.
Following dramatic changes in the global tantalum supply chain that occurred during the quarter, the Company was urged by tantalum consumers to increase the capacity of the Abu Dabbab project to 2Mtpa so as to provide greater product output.
On 3rd November 2004, the Company took delivery of the 2Mtpa BFS which highlighted:
- Gross sales revenue in excess of US$500 million over initial 13 years of its estimated $\Delta$ 20-year mine life (based upon tantalum and tin sales alone: upside with feldspar)
- Ą. Net free cash flow of US$127 million over initial 13 years of estimated 20-year mine life
- ÷. IRR 17.4% on all equity basis
- IRR 29% on basis 80% debt & 20% equity $\sigma_{\rm c}$
- Capital Expenditure US$80.5 million ÷.
- $\Delta$ Capital repayment period 4.5 years
The BFS determined that the project will produce in excess of 650,000 pounds of tantalum pentoxide ("Ta2O5") per year which will firmly establish the operation as the world's second largest tantalum producer. The project will also produce 1,530 tonnes of tin metal per year.
The project will generate gross sales revenue in excess of US$500 (A$694*) million during the first 13 years of its estimated 20-year mine life. These sales are from tantalum and tin only and exclude all potential feldspar sales revenues.
A net free cash flow of US$127.6 (A$177.2*) million will be generated during the first 13 years of its estimated 20-year mine life.
The BFS also concluded that the project has an Internal Rate of Return ("IRR") of 17.4% on an all equity basis. Significantly, assuming a debt: equity ratio of 80:20, the IRR for equity holders increases to approximately 29%.
ABU DABBAB RESOURCES
The previously announced Abu Dabbab Resources at a 0.01% Ta2O5 cut-off are as follows:
| Measured | 12.0 Mt at 0.0274% Ta 2 O 5 , 0.16% SnO 2 | ||
|---|---|---|---|
| Indicated | 2.1 Mt at 0.0260% Ta 2 O 5 , 0.21% SnO 2 | ||
| Inferred | 26 Mt at 0.0240% Ta 2 O 5 , 0.08% SnO 2 | ||
| Total All Categories | 40 Mt at 0.0252% Ta 2 O 5 , 0.11% SnO 2 |
Note: minor mismatch in totals due to rounding of tonnes and grade
ABU DABBAB RESERVES
| Proved OreProbable Ore | Total Proved and Probable | |||||||
|---|---|---|---|---|---|---|---|---|
| ThousandTonnes | $Ta_2O_5$% | SnO 2$%$ | ThousandTonnes | $Ta_2O_5$$%$ | SnO 2% | ThousandTonnes | $Ta_2O_5$% | SnO 2$%$ |
| 12,493 | 0.026 | 0.158 | 2,107 | 0.025 | 0.199 | 14,601 | 0.026 | 0.164 |
| Inferred Resources included in final pit outline but not classified as reserves | ||||||||
| Thousand | $Ta_2O_5$ | SnO 2 |
|---|---|---|
| Tonnes | % | $\frac{1}{2}$ |
| 10.457 | 0.026 | 0.118 |
Inferred Resources below RL314 are expected to be upgraded to higher Resource categories and converted to Reserve status by way of in-fill drilling programmes undertaken as mining progresses.
Mining will take place by a single open pit having a diameter of 500 metres and a relatively low waste stripping ratio of 1.1:1. A high level of mining recovery and minimal ore loss is predicted.
ABU DABBAB PROJECT FINANCE
The Company is currently in negotiation with a number of leading banks in relation to project finance for an estimated start up date of April/May 2006. While a number of project finance options are being considered, it is anticipated that the Abu Dabbab project will enjoy a debt-toequity ratio in the order of 80:20.
TANTALUM OFF-TAKE AGREEMENTS
The company has entered into tantalum off-take heads of agreements for a total of 420,000 pounds of Ta2O5 per year over a 4-year period. Negotiations are presently under way to enter into similar agreements for the balance of $Ta_2O_5$ production. The negotiations include extensions in contract duration.
"We are delighted with the outcome of the BFS which clearly demonstrates that the Abu Dabbab project will be highly profitable whilst enjoying low production costs and a mine life of approximately 20 years" said Executive Chairman Mr Jack Telford today. "This 20-year life does not take into account the tantalum resources contained in the Company's nearby 98Mt
Nuweibi tantalum deposit, nor the project's potential to produce in excess of 1.5 million tonnes per annum of ceramic grade feldspar". Feldspar production will be considered as a separate study following commencement of tantalum and tin production.
ABU DABBAB OWNERSHIP
The 40Mt Abu Dabbab project is 100% owned by the Egyptian registered company Tantalum Egypt LLC, in which Gippsland has a 50% interest by way of an incorporated joint venture with the Egyptian Geological Survey & Mining Authority. Tantalum Egypt also owns the Mining Licence for the 98Mt Nuweibi tantalum deposit located some 17km from Abu Dabbab. The Abu Dabbab plantsite has been strategically situated to accept delivery of mill feed from both deposits.
Yours faithfully GIPPSLAND LIMITED
respect
R J (Jack) Telford Executive Chairman
For further information please contact:
Jack Telford Gippsland Limited Tel: +61 (0)8 93898611 [email protected] www.qippslandltd.com
Leesa Peters / Laurence Read Conduit PR Tel: +44 (0)20 7936 9095 [email protected] [email protected]
Bill Sharp / Les Polden Hoodless Brennan & Partners Plc Tel: +44 (0)20 7610 8565 [email protected] [email protected]
$*$ US$1.00 = A$0.72
Note:
In accordance with Listing Rule 5.10 of the Australian Stock Exchange Limited, the geological information in this report that relates to mineral resources and ore reserves is based on information compiled by Gippsland Director Dr John Chisholm, who is a Fellow of the Australasian Institute of Mining and Metallurgy, with over 25 years experience in the mining industry.