Gippsland Limited announced Thursday the extinguishment of the 5% royalty that was to be levied by the Egyptian government on gross sales revenue arising from production at the Company’s Abu Dabbab tantalum project.
The abolition of the Project’s 5% royalty obligation has been approved by the Egyptian Prime Minister Dr Ahmed Nazef and the Minister of Petroleum Eng. Sameh Samir Fahmy. The impact of the removal of the 5% royalty has resulted in a significant financial benefit to the Bankable Feasibility Study ("BFS") for the Abu Dabbab Project in Egypt.
According to Gippsland, the extinguishment of the royalty is a significant development since the announcement on 3rd November 2004, which released the results of the 2Mtpa Abu Dabbab BFS completed by the international engineering group Lycopodium Pty Ltd. The BFS results incorporated the payment of a 5% royalty to the Egyptian Government.
The 2Mtpa BFS was undertaken based upon an arbitrary study period of 13 years however the Abu Dabbab-Nuweibi resource base of 138Mt is expected to provide a mine life well in excess of 20 years.
Commenting on the extinguishment of the 5% royalty today, Jack Telford, Executive Chairman, of Gippsland said: "Our primary focus in Egypt is to develop long term tantalum, tin and feldspar production in the country and I believe the removal of the 5% royalty payment by the Egyptian Government is another clear illustration of support for our activities in developing this important world-scale project. Based upon a 20-year mine life, the Abu Dabbab project is likely to generate sales in excess of US$700 million and a net free cashflow of approximately US$230 million over the 20-year period."
Gippsland Limited is an Australian based international resource company listed on the Australian Stock Exchange and the London Stock Exchange's Alternative Investment Market (AIM) where it trades under the codes "GIP" (Shares) and "GIPO" (Options). Its prime assets are the 40 million ton Abu Dabbab and the 98 million ton Nuweibi tantalum-tin projects located in the Central Eastern Desert of Egypt, adjacent to the western shore of the Red Sea.
