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STREAMPLAY STUDIO LIMITED Interim / Quarterly Report 2003
65841_rns_2003-07-30_5cb3aedc-b05e-4ca5-9bfe-84654e610cea.pdf
Interim / Quarterly Report
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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
OUARTERLY ACTIVITY REPORT
Period: April - June 2003
31 luly 2003
SUMMARY
- Abu Dabbab Project (tantalum, tin, feldspar)
- Eqyptian Ministerial Decree Grant of 14 km2 plant-site $\bullet$
- Scoping Study NPV US$127 million, IRR of 36%
- Project revenue US$966 million over $21^*$ vears
- Operating margin US$346 million over 21* years
- Operating cost of tantalum production less than US$5/lb ×.
- 40 tonne bulk sample delivered to pilot plant $\bullet$
- $\bullet$ Commencement of pilot plant testwork
- Advancing product off-take negotiations $\bullet$
- Discussions with international project development banks
- Placement Prospectus
ABU DABBAB TANTALUM, TIN, & FELDSPAR PROIECT
The 40 million tonne Abu Dabbab tantalum, tin, and feldspar project ("Abu Dabbab Project") is located on land adjacent to the western shore of the Red Sea in Egypt.
The Abu Dabbab Project, which is conveniently situated with respect to ocean ports and general infrastructure, is the subject of a 50:50 joint venture agreement between Gippsland Limited ("Gippsland" or "the Company") and the Egyptian Geological Survey & Mining Authority, (a state agency of the Egyptian Government).
The international engineering group Lycopodium Pty Ltd ("Lycopodium") is presently undertaking the bankable feasibility study ("BFS") for the Abu Dabbab Project.
MINISTERIAL DECREE - GRANTING OF ABU DABBAB PROCESS PLANT-SITE
During May 2003 the Egyptian Minister for Industry and Technology, His Excellency Dr Ali Fahmi Al Sa'aidi, issued Ministerial Decree No 91/2003, allocating an area of 14 km2 to the 50:50 joint venture company Tantalum Egypt for the construction of the Abu Dabbab processing plant.
The plant-site is ideally located 6 km from the Red Sea coast and 19 km from the Abu Dabbab 18 km2 Mining Licence situated further inland up Wadi Abu Dabbab. The allocated plant-site lends itself perfectly to the project in that it includes large areas suitable for the process plant construction plus a number of areas that are ideally suited for tailings storage.
The Lycopodium Abu Dabbab Project Scoping Study was based upon a nominal 21 year mine life and a mill feed-rate of 1 Mtpa, whereas in practical terms the 40 Mt resource will support a 40 year mine life at a feed-rate of 1 Mtpa or conversely, a 20 year mine life at a mill feed-rate of 2 Mtpa.
The site allows ready access to the Red Sea for process water whilst enabling mill-feed to be trucked by road-train down the gentle slope from the Abu Dabbab mine site.
The 14 km2 area, which was the Company's first preference, was granted within four weeks of Gippsland's application for the plant-site. The exclusivity, size and prompt granting of the plantsite reflects the high level of support the project is enjoying from all levels of the Egyptian Government, particularly H.E. Dr Ali Fahmi Al Sa'aidi who is most supportive of the project and Gippsland's approach to the overall Abu Dabbab development programme.
TANTALUM
Increase in Tantalum Recovery Rates & Output
During April 2003 Gippsland announced the results of testwork undertaken by SGS Lakefield Research Limited of Toronto Canada ("SGS Lakefield") which achieved an 18.4% increase in tantalum pentoxide ("Ta2O5") recovery rates. The recovery of tin was also increased by a similar quantum. SGS Lakefield is one of the world's leading independent metallurgical laboratories.
Based upon the testwork results achieved during April 2003, the Abu Dabbab Project is now expected to produce approximately 400,000 pounds per year of $Ta_2O_5$ . This $Ta_2O_5$ production rate is based upon a mill throughput of 1 Mtpa however consideration will be given to expanding operations to 1.5 Mtpa or 2 Mtpa shortly after start-up.
Tantalum Price & Market
The tantalum market has witnessed an upturn during recent months with major producers reporting record production and record sales levels. Whilst tantalum spot prices during 2002 are reported to have taken place at less than US$30/lb, the 28 July 2003 edition of the New York publication Platts Metals Week lists a spot price of US$40/lb to US$50/lb for tantalum.
The reduction of tantalum inventories across the supply chain continued during the quarter with evidence of improvement in the global electronics industry, particularly in the Asia-Pacific region.
Gippsland is presently in discussion regarding off-take arrangements with both consumers and processors of Ta2O5 with whom steady progress is being achieved.
FELDSPAR
Upgrade in Feldspar Specification
Notwithstanding the significant $Ta_2O_5$ and tin recovery increases, the SGS Lakefield testwork undertaken during April 2003 produced ceramic grade feldspar having a combined alkali metal (Na2O & K2O) content in excess of 13%. The iron and titanium contents of the feldspar product were further reduced to exceptionally low levels.
The testwork also determined that the specification of the feldspar produced may be adjusted to meet the market requirements for the material's various uses. During the testwork programmes three feldspar grades were produced as detailed in the table below.
| Grade | Na 2 O | $K_2O$ | SiO 2 | $Al_2O_3$ | CaO | MaO | MnO | Fe 2 O 3 | TiO 2 |
|---|---|---|---|---|---|---|---|---|---|
| Feldspar F1 | 8.68 | 3.46 | 69.1 | 18.7 | 0.05 | 0.09 | 0.02 | 0.28 | < 0.01 |
| Feldspar F2 | .44 | 2.99 | 72.9 | 16.1 | 0.05 | 0.15 | 0.01 | 0.18 | < 0.01 |
| Feldspar F3 | 9.66 | 3.37 | 68.0 | 19.5 | 0.04 | < 0.05 | < 0.01 | 0.03 | < 0.01 |
Independent in-plant testwork undertaken in a number of Italian ceramic tile factories has shown that grades F1, F2 and F3 are each ideally suited to the production of premium quality ceramics (including gress porcellanato tiles). The detailed testwork programmes addressed grindability, fusibility, linear shrinkage, degree of whiteness on fusion and general behaviour when mixed with
other tile raw materials. The in-plant tests verified that Abu Dabbab feldspar is superior in quality to the bulk feldspars currently available to Italian and Spanish tile producers. The Company's Italian consultant ceramicists determined that the F3 grade feldspar was of outstanding quality suitable for the production of the highest quality sanitary ware and ceramic glazes.
Based upon a mill feed-rate of 1 Mtpa the Abu Dabbab Project is expected to produce 800,000 tpa of ceramic grade feldspar at start-up however recent feldspar market studies indicate that early consideration must be given to increasing Abu Dabbab feldspar production to $1.2 - 1.8$ Mtpa shortly after start-up.
Feldspar Price
The Lycopodium Scoping Study used a price of US$31/t for Abu Dabbab feldspar. Recent market investigations in both Italy and Spain have re-confirmed that US$31/t is a realistic price for Abu Dabbab feldspar grades F1 and F2. The Company's Italian consultant ceramicists have advised that the F3 feldspar, being of an exceptional quality, will attract prices of up to US$150/t.
TIN
The project will produce about 1,000 tpa of metallic tin (99,99%) which will be routinely sold on market or via the London Metal Exchange.
BANKABLE FEASIBILITY STUDY
The BFS, which is being undertaken by the engineering group Lycopodium, is proceeding to expectations and is progressively producing encouraging results.
Despite the late arrival of the 40 tonne bulk sample, the Gippsland and Lycopodium are fully focused on completing the BFS by the end of the 2003 calendar year.
The BFS is proceeding based on an initial throughput of 1 Mtpa. However, if Abu Dabbab feldspar sales proceed as expected, an early decision will be made to expand the operation to between 1.5 Mtpa and 2 Mtpa.
40 TONNE PILOT PLANT BULK SAMPLE
As previously announced, the BFS will include a detailed pilot plant programme based upon a 40 tonne bulk sample. The 40 tonne sample arrived in the port of Fremantle during July having been delayed several weeks whilst being transhipped in the Greek port of Piraeus. The 14 week pilot programme is scheduled to commence during the first week of August 2003.
The pilot plant programme is being undertaken to optimise past testwork achievements at a larger scale and to finalise the design of the overall project flow-sheet.
PROJECT FINANCE
The Company has been approached by a number of project finance companies and international development banks, all of which have expressed interest in providing project finance. The company is presently undertaking preliminary discussions with the banks which include the International Finance Corporation (IFC), the commercial arm of the World Bank.
FUND RAISING
During July 2003, Gippsland released a prospectus for the placement of 14 million fully paid ordinary shares in Gippsland, each at an issue price of 5 cents per share to raise the sum of $700,000 to be used for working capital and the execution of the BFS currently being undertaken by the resource engineers Lycopodium. The issue which is scheduled to close on 14 August 2003 has not to date been completed.
A copy of the prospectus is available to all applicants via the link "Prospectus" on the Gippsland website www.gippslandltd.com.au.
CONCLUSION
The Directors consider the Lycopodium Scoping Study, a detailed document of some 330 pages, has demonstrated that the Abu Dabbab Project is an outstanding project having the potential to generate revenue of US$966 million and an operating margin of US$345.6 million over a 21 year period based upon a mill feed-rate of 1 Mtpa.
The Lycopodium Scoping Study determined an Abu Dabbab Project NPV of US$127.1 million at a 6% discount rate.
At current exchange rates, Gippsland's half share in the Abu Dabbab Project equates to approximately A$96 million.
Based upon the Lycopodium Abu Dabbab Scoping Study, the operating cost of tantalum production net of tin and feldspar credits is less than US$5/lb.
The Directors believe that this tantalum production cost will set a new standard for the tantalum industry and will ensure that the Abu Dabbab Project quickly becomes a major participant in the global tantalum market.
RJ (Jack) Telford Executive Chairman
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.