News

Gippsland toasts major supply contract

13 November 2007 14:39:00

Shares in mining company Gippsland surged ahead Tuesday after its jointly owned subsidiary secured a ten year contract to supply six millions pounds of tantalum pentoxide.

Tantalum Egypt JSC, jointly owned by Gippsand and the Egyptian government, has been contracted to supply 600,000 pounds of tantalum pentoxide each year for ten years to German company HC Starck.

The supplies will be drawn from Tantalum Egypt's 40m tonne Abu Dabbab project in southern Egypt.

The Abu Dabbab project is expected to initially produce 650,000 pounds of tantalum pentoxide so the HC Starck agreement will soak up most of that supply.

Gippsand was unable to reveal the terms of the HC Starck deal, but did reveal that, using the current spot price for tantalum pentoxide, the Abu Dabbab project is expected to generate revenue in excess of $280m from tantalum pentoxide sales over its first ten years of activity.

"This expanded agreement is a major development for the company and its shareholders, which include the International Finance Corporation, the commercial arm of the World Bank," said Gippsland chairman Jack Telford.

"The offtake agreement largely protects Gippsland shareholders from production cost escalations, significantly reducing market risk," he added.

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