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Gippsland is working on developing its Abu Dabbab tantalum project in Egypt. While Abu Dabbab could potentially supply 25 percent of global tantalum supply, it is rarely mentioned in the tantalum space.
If there is one word that conjures up conversations about the Democratic Republic of the Congo (DRC), conflict-free minerals and regulations put forward by the SEC, it’s tantalum. These overarching issues, while extremely important for tantalum investors and end users, tend to overshadow other goings-on in the tantalum space. In the race to find conflict-free sources of tantalum, it seems that not enough light is being shed on projects outside conflict zones.
One company that made headlines recently, without a blip on the radar, is Australia’s Gippsland (ASX: GIP), which could be inching closer to production from its Egyptian tantalum-tin-feldspar deposit.
Welcome to Gippsland
Gippsland is working on the Abu Dabbab tantalum-tin-feldspar project in Egypt, a project it holds in a 50-percent joint venture with the Mines Department of the Egyptian Government. According to Gippsland’s February investor presentation, Abu Dabbab is set to provide up to 25 percent of primary tantalum supply; conflict-free supply that is. The project puts Gippsland in a position to potentially become the “world’s largest single producer of primary tantalum.”
The project holds approximately 44.5 million tonnes of tantalum, 15.2 million tonnes of which fall into the measured category in its resource estimate. Gippsland’s completed bankable feasibility study (BFS) shows the project’s ability to be fast tracked to production.
Abu Dabbab could have a mine life of 13.5 years with a rate of production of roughly 925,000 pounds of tantalum oxide in slag, 2,200 tonnes of tin metal, and 2.4 Mtpa of feldspar, according to the BFS.
Gippsland has also secured an offtake agreement with HC Starck —a high-tech materials end user— for 600,000 pounds of tantalum oxide per year for 10 years.
What’s left?
Financing. Like all projects, the last steps tend to come down to financing. Gippsland is no different. Gippsland is looking to secure US$225 million in financing to commence the first stage of operations, according to a company presentation. That stage will comprise a 3 million tonnes per year open-pit mine.
In February, amidst climbing conflict-free tantalum prices, a syndicate of four Egyptian banks — Bank Audi, Banque du Caire, Banque Misr and Commercial International Bank — came through to help Gippsland raise debt financing for the project, Metal-Pages reported.
With the financing from the consortium of Egyptian banks secured, Abu Dabbab gained more attention in April as more financial backers came out of the woodwork, expressing interest in the project. The company was approached by three “substantial Gulf financial institutions” interested in participating in the debt-financing package, according to Metal-Pages.
Why is tantalum important?
Though tantalum seems obscure and exists for an extremely niche market, don’t let its importance be undermined. Tantalum is essential for most electronics — mainly in the form of capacitors. Without this rare and extremely strategic metal, luxuries such as smart phones, tablets and computers could not be produced.
With conflict-free regulations stunting tantalum supply from the DRC, several mines suspending production and no new start ups, the tantalum market could be facing a supply shortage in the near future. What would a shortage spell for technological advancements?
Just something to consider.
Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned.
Related reading:
The Conflict Minerals Act: Good Start or Bad Law?
Capacitor Companies Unveil New Technology
Tantalum: An Oversupplied Market Cooling Down?
Global Advanced Metals Buys Cabot Supermetals, Closes Wodgina Tantalum Mine