The Directors of Gippsland Limited (‘Gippsland’ or ‘the Company’) [ASX: GIP, FRA: GIX] released an Activities Report for the period October - December 2010, together with details of events up to the date of the report.
Please find below an excerpt from the company’s activities in Eritrea.
Eritrea (Adobha Project)
Gippsland’s 100% owned subsidiary Nubian Resources Pty Ltd holds a 2,100km² Exploration Licence plus three 100km² Prospecting Licences (total 2,400km²), in the highly prospective Adobha region of The State of Eritrea (‘Licences’).
The Licences cover 2,400km² of a highly mineral endowed region of Eritrea that is regarded as very prospective for volcanogenic massive sulphide (VMS) mineralisation and structurally controlled gold mineralisation. Local examples of these types of deposits are the Bisha base metal deposit (1.44 million ounce gold and 0.39 million tonne copper) located some 174km to the south and the 0.760 million ounce Zara gold project (Koka deposit) located only 16km to the south of the Company’s most southern Licence. The large area covered by the Licences forms part of the Precambrian Nubian-Arabian Shield that also hosts the 13.7 million ounce Sukari gold deposit.
Under the terms of the Eritrean Mining Act, Prospecting Licences are granted for one year after which they may be converted to Exploration Licences or surrendered. Exploration Licences have tenure of three years which can be extended for a further two years.
The Licences secure a large area around the promising base metal prospects discovered by the Company during recent regional reconnaissance geochemical surveys. The geochemical surveys and subsequent follow-up involving rock-chip sampling and geological mapping identified large areas of visible copper mineralisation, some of which contained associated lead and zinc. The geochemical surveys targeted the highest ranked of the interpreted Thematic Mapper satellite image anomalies. A number of anomalies are still to be examined.
During the quarter Gippsland has been preparing to complete geological mapping at 1:25,000 scale over the whole of the tenement area with 1:5,000 scale mapping over areas of interest such as outcropping mineralisation, geochemical anomalies and areas of hydrothermal alteration. Gippsland has purchased high resolution ALOS satellite imagery over the whole of the project area and has completed a geological interpretation of this imagery at a scale of 1:25,000. A broad scale interpretation at 1:250,000 has also been completed which has been exceptionally useful in identifying mappable units.
The interpretation work is a vital prelude to the field mapping which can now proceed and, as a consequence, will take considerably less time than originally forecast. Field work will commence during February and will continue through to April involving geological mapping and geochemical sampling.
A status report on the proposed spin off of the Eritrean assets and the Company’s interests in the Tasmanian Heemskirk Tin Project is included later in this report.
CORPORATE
Placement to raise $3.2 million
During October 2010 Gippsland successfully raised the sum of $3.2 million (before costs) by way of a placement to institutional and sophisticated clients of Patersons Securities Limited which placed 80 million fully paid ordinary shares at $0.04 per share.
Spin off IPO of Eritrean and Tasmanian Assets
During the quarter, Gippsland has made significant progress in relation to the tasks involved with then proposed spin off via an IPO and listing on ASX Limited (‘ASX’) of Gippsland’s 100% owned Adobha Project located in the State of Eritrea and Gippsland’s 40% interest in the Heemskirk Tin Project located in Tasmania.
Gippsland’s primary focus is on the development of its 44.5 million tonne Abu Dabbab Project located in Egypt and to progressing the financing and construction of Abu Dabbab Project, which has the potential to be the world’s largest single source of the highly strategic supermetal tantalum.
Adobha Resources Ltd (‘ARL’) has been incorporated and, under the current proposal, will purchase from Gippsland the Adobha Project and Gippsland’s 40% interest in the Heemskirk Tin Project, in exchange forequity in ARL. ARL will seek to raise sufficient funds to explore the Adobha Project via an underwritten IPO prospectus, with Gippsland shareholders to be offered the opportunity to subscribe for ARL shares on a pro-rata basis.
It is the Board of Gippsland’s view that the Adobha Project and Gippsland’s 40% interest in the Heemskirk Tin Project are not currently attributed a significant valuation by the market and also believe that the potential value of these assets would be substantially unlocked by dedicated funding via an IPO of ARL on ASX.
Further updates in relation to the progress of the IPO and proposed timetable will be announced when available.
