Suite 34, 18 Stirling Highway, Nedlands WA 6009 PO Box 352, Nedlands WA 6909, Australia A.C.N. 004 766 376 Tel: (08) 9389 8611 Fax: (08) 9389 8612 [email protected] www.gippslandltd.com

QUARTERLY ACTIVITY REPORT

Period: October - December 2005 31 January 2006

HIGHLIGHTS

❖ Abu Dabbab tantalum project finance mandate
❖ Abu Dabbab locked-cvcle testwork completed
❖ Mobilisation of Abu Dabbab earthmoving and mining contractors
❖ Completion of Abu Dabbab Social & Environmental Impact Assessment
Wadi Allagi gold exploration expansion $\mathcal{L}_{\mathcal{F}}$
❖ Indaba 2006 International Mining Conference

ABU DABBAB PROJECT FINANCE MANDATE

During the October to December quarter the Directors of Gippsland Limited ("Gippsland" or "the Company") have continued negotiations in regard to project finance for the Company's 40Mt Abu Dabbab tantalum-tin project. The Directors are pleased to report that the negotiations, which are progressing well, are expected to be completed during early February 2006.

ABU DABBAB LOCKED CYCLE TESTWORK

During the quarter the company completed the locked cycle testwork for the Abu Dabbab project. The testwork, which achieved increased tantalum and tin recovery, confirmed previous testwork results while highlighting a number of opportunities to refine process engineering design and optimise tantalum recovery.

MOBILISATION ABU DABBAB EARTHMOVING & MINING CONTRACTORS

During the quarter Gippsland together with its Eqyptian joint venture partners held on-site meetings with a group of Egyptian earthmoving and mining contractors that have been selected to participate in the bidding process for the initial engineering contracts associated with the Abu Dabbab project. The major tasks discussed with the contractors relate to the timing and initial development of the 2Mtpa open pit mine and haul road construction.

Similar site meetings will take place during the current quarter in relation to plantsite and tailing storage facility earthworks. It is intended that by holding these preliminary discussions, the contract tender process following a project go-ahead decision will be as short as possible.

ABU DABBAB SOCIAL & ENVIRONMENTAL IMPACT ASSESSMENT

The Environmental Impact Assessment ("EIA") for the Abu Dabbab Project was approved by the Egyptian Government's Environmental Affairs Agency in September 2005. The structure and content of the EIA, undertaken over a period of some 16 months, was completed in accordance with quidelines established by the World Bank Group which complemented those provided by Egyptian legislation.

During the quarter Gippsland subsequently commenced an Environmental and Social Impact Assessment ("ESIA") to present to the broader international community, completing this task in January 2006. The ESIA expanded the EIA to include greater emphasis on socioeconomic baseline information, socioeconomic impact assessment, mitigation strategies for potential negative social impacts, broad strategies for implementing community development initiatives while describing the public consultation procedures carried out to date and procedures for ongoing public consultation.

The ESIA undertaken by the company's environmental consultants Environics Eqypt and Klohn Crippen Berger Ltd demonstrates the Company's commitment to world best practice environmental and sociological standards.

WADI ALLAOI GOLD EXPLORATION

During the July-September and October - December quarters of 2005 the Company released outstanding gold exploration results for its Wadi Allaqi exploration areas located to the south-east of Aswan in Egypt. The Company subsequently entered into a drilling contract which was due to commence during January 2006 however delays arranging passage through Egyptian customs for the new multipurpose drilling rig caused its shipment from Australia to be delayed by approximately one month. Shipping space has now been booked on a vessel due to sail from Fremantle on 3 February 2006 for Port Said.

While the rig is in transit, Gippsland will complete additional mechanical trenching where the previous sampling ended within mineralisation. While the machinery is on site some road access and drill pad preparation for the drilling programme will be completed. The Directors are confident that the trenching programme will highlight extensions to the know areas of high-grade mineralisation thus providing additional high-priority drill targets within the areas being explored.

Wadi Allagi exploration results to date include:

Seiga (gold)

At Seiga previous sampling has delineated a 50.5m wide zone of gold mineralisation averaging 5.5g/t across old workings. This wide zone of mineralisation includes 20.3m at 7.40g/t and 8m at 7.7g/t (trench CP1) and 20m at 2.83g/t. (trench CP2) located immediately to the west of CP1.

Rock chip sampling and shallow trenching along a profile 70m to the north (CP6) returned 15.5m at 9.25g/t. The profile included 4.5m at 6.69g/t on the western side of some old 4.5m wide workings plus 11m at 10.29g/t on the eastern side where the sampling profile ended.

The trenching programme determined that the gold mineralisation extends over a length of 250m and is open to the north and south and in part to the east and the west.

A first phase drilling programme totalling 2,300m to test the prospect has been prepared and will be the first site to be drilled.

Haimur (gold)

The trenching results confirmed the presence of anomalous gold values within the bedrock and that the regolith sampling had been effective. The best intersection recorded by the trenching was 5m at 44.45g/t in trench HT9. The results are considered to be very encouraging as they confirm the presence of anomalous gold in the bedrock closely associated with zones of shearing.

INDABA 2006 INTERNATIONAL MINING CONFERENCE - CAPE TOWN

The Company will be represented at the Indaba 2006 International Mining Conference being held in Cape Town, South Africa 7 - 9 February 2006. Gippsland has acquired a display booth (number 163) and will be making a presentation to conference attendees.

AGUERO DISPUTE

As previously disclosed to the marketplace, one of Gippsland's investee companies is Here2win.com Pty Ltd ("Here2win") in which Gippsland owns a 90% interest. Mr Alex Aquero "Aquero" through his wholly owned company, Highforce Investments Pty Ltd ("Highforce"), holds a 10% equity stake in Here2win.

In 1999 Gippsland entered into a Deed with Aquero to form Here2win for the purpose of establishing a business selling to internet users a horse racing gaming product. The terms of the Deed provided that Aguero be appointed as Managing Director of Here2win and be entitled to certain benefits upon satisfaction of certain conditions including proper performance of his duties as set out in the Deed, use of investment funds solely for the purposes set out in the Deed and establishment of the business with a website that allowed arms length paying customers to subscribe for the products of the business.

On 14 August 2000 Gippsland announced to the Australian Stock Exchange Ltd that the services of Aguero, had been terminated. The Here2win business was never established.

In 2001 Aquero commenced an action against Gippsland in the Supreme Court of Western Australia alleging a breach of the Deed and entitlement to certain benefits under the Deed. Aguero is claiming damages based on what he alleges is the money he would have recovered if he had received and sold and/or exercised Gippsland options and/or Giopsland shares in the period between March-April 2000.

Gippsland continues to vigorously defended Aquero's claim on the basis (amongst other things) that Aquero has breached the Deed and is not entitled to the benefits claimed and that in any event, the damages claimed cannot be properly substantiated.

Gippsland has counterclaimed for re-payment of $450,000 paid to Aguero/Highforce in the period from November 1999 to May 2000.

The trial of this action is listed to be heard by the Supreme Court of Western Australia commencing 17 March 2006.

For further information please contact:

Jack Telford	Leesa Peters / Laurence Read
Gippsland Limited	Conduit PR	Les Polden
Tel: +61 (0)8 9389 8611	Tel: +44 (0)20 7429 6666	HB-corporate
[email protected]	[email protected]	Tel: +44 (0)20 7510 8576
www.gippslanditd.com	[email protected]	[email protected]

Note: In accordance with Listing Rule 5.6 of the Australian Stock Exchange Limited, the geological information in this report that relates to Exploration Results, Mineral Resources and Ore Reserves is based on data compiled by Dr John Chisholm, a Fellow of The Australasian Institute of Mining and Metallurgy. Dr Chisholm who is an Executive Director of Gippsland Limited with over 25 years experience in the mineral industry including the evaluation of exploration data, mineral resources and ore reserves, has consented to the issue of the information in this report in the form and context in which it appears.

AI assistant