Suite 12, 186 Hay Street

Subiaco WA 6008

Australia

t: +61 8 9340 6000 f: +61 8 9340 6060

PO Box 8206

Subiaco East WA 6008

Australia

e: [email protected] w: www.gippslandltd.com

Conditional Financing Agreement for New Staged

Abu Dabbab Tantalum-Tin-Feldspar Development

Release Date: 26 February 2015

Key Points

• Conditional financing agreement reached with prominent Egyptian businessmen.

• Gippsland to gain a new Egyptian equal-equity partner in its Abu Dabbab Project holding company, TIPL, through this transaction contributing a stronger local presence to develop and grow this business;

• A new $35 million staged development plan for Abu Dabbab deposit - "the 400K Plan".

• First production from Stage 1 of 92k lbs of Ta2O5 and 260 t of tin on an annualised basis planned for early 2016. Funding for Stage 1 to be secured pursuant to this transaction.

• Stage 2 production profile of 400k lbs of Ta2O5 and 960 t of tin per year to follow on 12 months later.

• Current non-renounceable Rights Issue closing date extended to 3 March, 2015.

1. SUMMARY

The Directors of Gippsland Ltd (ASX:GIP) are pleased to announce that the Company has signed a conditional financing agreement with a Taiwan based Company, Foxxtel Inc., associated with Egyptian businessman Mr Ashraf Henin (Foxxtel or the Investor). The financing, if completed, will enable an almost immediate start to a two staged development (referred to as the "400K Plan"), which is planned to achieve first production in 2016. The US$7 million financing agreement is conditional on completion of satisfactory due diligence and approval from the respective boards of each party, as well as other standard conditions precedent.
On this basis the Board has decided to extend the closing date of the non-renounceable rights offer outlined in the prospectus, dated 12 December, 2014 until 3 March, 2015.

2. THE 400K PLAN

The 400K Plan was developed by Gippsland recently as a response to the lack of traction for the 2 to 3 Mtpa mining and processing development plans which Gippsland and its local advisors attribute to a lack of familiarity with mining and tantalum amongst Gulf investor's, the c.US$140 million capital expenditure and the requirement to undertake additional testwork to complete the 3 Mtpa case feasibility study (refer September 2014 Quarterly Report to ASX).
The Company devised a staged development strategy based on the existing feasibility study testwork and equipment selection data, focussed around the existing gravity concentrator plant, site infrastructure and services from the alluvial tin operation which was closed in September 2014. The 400K Plan involves a two stage development scenario with a total expenditure of US$35 million culminating in annualised production of 400,000 lbs of Ta2O5 (hence 400K Plan), 960 t of tin metal and 1 Mt of ceramic grade feldspar.
Stage 1: Capital expenditure estimate of US$7 million (including 20% contingency factor and two months working capital) to mine and process 360,000 t and on an annualised basis to achieve a production profile of approximately 92,000 lbs of Ta2O5 and 260 t of tin metal. The key items of new equipment required are a crushing and grinding circuit, thickener unit, power plant and a small concentrate upgrade and smelting unit as well as general upgrades to site services and facilities.

Stage 2: Capital expenditure estimate of US$28 million (including 30% contingency factor) to increase production and processing to 1.4 Mtpa to produce approximately 400,000 lbs of Ta2O5, 960 t of tin metal and 1 Mt of ceramic grade feldspar per annum over a 25 year time frame. The capital expenditure would be on further crusher and grinding circuit upgrades as well as the installation of a flotation plant to remove silica and feldspar prior to the gravity concentrator, power supply and service upgrades as well as

1 Conditional Financing Agreement for New Staged Abu Dabbab Tantalum-Tin-Feldspar Development 26 February 2015

equipment to further clean and dry the feldspar to a ceramic grade saleable quality. The existing 50 tph gravity circuit does not require further increased capacity in Stage 2 as the removal of the feldspar and silica effectively scalp off 70 to 80 % of the feed mass with minimal loss of tin or tantalum, prior to the gravity plant.
This is regarded as a prudent, staged development case particularly from a commodity marketing perspective for Tantalum Egypt JSC (TE), with only modest initial sales into the tantalum and feldspar markets planned, but sourced from a strategically significant large scale deposit to underpin further marketing and expansion opportunities.
Stage 2 as presented is dependent on completion of verification and process design testwork in regard to the feldspar/silica flotation, continuing on from previous testwork undertaken by Gippsland. Additional engineering and cost analysis as part of a standard feasibility study process is also planned over a 12 month period. The samples for this testwork have already been collected and are ready for despatch. Stage 1 is based largely on feasibility study data, direct supplier quotes and operating experience from the alluvial tin operation. The Company plans to update the current mine plan in collaboration with an Egyptian mining contractor.
Further details and outcomes of financial modelling will be released as the 400K Plan is fully completed and approved by the Board of TE, planned for April 2015. Other details on the project development pre- requisites are detailed in the September 2014 Quarterly Report to ASX. For more detail around the 400K Plan, Gippsland has separately lodged a summary presentation on ASX today.

3. THE FINANCING STRATEGY

The objective of the transaction is to secure investment funding and a new partner to collaborate with Gippsland in supporting TE to develop the Project and subsequently to grow the business via expansions and optimisations of the Project, develop new projects such as Nuweibi and grow through new project acquisitions. However the current mining finance market is poor and resource company valuations are at around 20 year lows making funding large scale projects extremely difficult.
The transaction process and structure outlined below has been agreed with Foxxtel to focus the cash investment into the development of Stage 1 of the 400K Plan and to manage the financial exposure of Foxxtel in step-wise increments. The process is planned to have the Investor owning 50% equity in TIPL through an "earn in" whereby the Investor will provide and arrange funding for all of the Stage 1 project development up to a total expenditure of US$7 million (the Transaction). Key details of the MoU are:

Convertible Loan Agreement - the MoU is a conditional agreement whereby the Parties enter into the Transaction by way of a Convertible Loan Agreement with a limit of US$7 million to be drawn down by the issue of a series of Convertible Loan Notes. The Convertible Loan Notes will be secured, have a coupon of

12% pa and will automatically convert into 50% of TIPL equity upon the commencement of first commercial production from Stage 1. The Convertible Loan Notes become repayable if there is a material, unrectified default or a conversion has not occurred before expiry.

General Conditions - The general terms and conditions will include:

• Technical and commercial due diligence;

• Mutual agreement on the Stage 1 Approved Development Plan and Budget;

• Execution of a Convertible Loan Agreement and a TIPL Shareholder's Agreement; and

• The approval of the each of the respective boards.

A more detailed outline of the MoU is attached in Appendix 1.

Gippsland and Foxxtel are expediting the steps required to close the Transaction and are hoping to have met all of the conditional aspects by late April and start the Project development as soon as possible thereafter aiming for first production in early 2016.

The Investor was introduced to Gippsland by Australian resources and commodity trading company HTE Group. HTE is eligible to receive; a 7.5% success based fee (to be paid in cash or part Gippsland shares) payable on completion and receipt of each funding tranche; and a Share Incentive Fee of 25 million

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Gippsland shares to be issued upon execution of all documentation and completion of the first funding drawdown pursuant to the Transaction.

4. COMMENTARY

The Company considers that this is an excellent outcome for all stakeholders involved in the Abu Dabbab
Project in an extremely difficult market. Subject to completing the preceding conditions and gaining at least the minimum subscription funds through the current rights issue, this enables Gippsland to fast track the development of Abu Dabbab, create jobs in Egypt and establish a sound business platform with positive cash flows from a diverse commodity mix.
Gippsland's Managing Director, Mike Rosenstreich commented that "the 400K Plan opened up all kinds of new investor opportunities and we are very pleased to be working with Mr Ashraf Henin and gain the benefit of his local expertise to finally establish this business. We are very grateful to the entire TE Board and shareholders for their strong support and patience to get to this stage as well as to Gippsland shareholders and Chairman, Ian Gandel for his faith to continue to fund the Company to this point".
The Company will now focus on closing the non-renounceable rights offer by the 3rd March, 2015 and placing any shortfall shares that may be available before the 11 March, 2015. "Gippsland will continue to operate on its current "austerity budget" settings whilst it seeks to close this deal and finalise the 400K Plan ready to start in a few months" Mr Rosenstreich said.
Further updates will be provided as appropriate.
Mike Rosenstreich (Managing Director)
www.gippslandltd.com
T: +61 8 9340 6000

E: [email protected]

Competent Persons Compliance Statement

The information in this announcement that relates to Exploration Targets, Exploration Results or Mineral Resources is

based on, and fairly represents, information and supporting documentation prepared and compiled by Dr John Chisholm, a Competent Person who is a Fellow of the Australasian Institute of Mines and Metallurgy. Dr Chisholm is employed by Mandu Pty Limited which provides geological consulting services to the Company. Mandu Pty Limited holds 125,000 ordinary shares in the Company. Mandu Superannuation Fund Pty Limited of which Dr Chisholm is director and shareholder holds 3,362,963 ordinary shares in the Company. Dr Chisholm has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the "Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves". Dr Chisholm consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Disclaimer

Statements contained in this material, particularly those regarding possible or assumed future performance, costs, dividends, production levels or rates, prices, reserves or potential growth of Gippsland Ltd (or its affiliates), industry growth or other trend projections are, or may be, forward-looking statements. Such statements relate to future events and expectations and, as such, involve known and unknown risks and uncertainties. Actual results and developments may differ materially from those expressed or implied by these forward looking statements depending on a variety of factors.

Nothing in this announcement should be construed as either an offer to sell or a solicitation of an offer to buy or sell shares of Gippsland in any jurisdiction.

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APPENDIX 1: MOU GENERAL OUTLINE OF TERMS AND CONDITIONS

PARTIES:

1. Foxxtel Inc. (Investor/Lender) incorporated in Canada and Taiwan of 14F-7 Guanxi Rd, HsinChu City, Taiwan
2. Gippsland Ltd (Gippsland) ABN 31 004 766 376 of Suite 12, 186 Hay Street, Subiaco, Perth, Western
Australia;
3. Tantalum International Pty Ltd (TIPL) ACN 086 594 498 of Suite 12, 186 Hay Street, Subiaco, Perth, Western Australia. The term "TIPL" will also apply in the case where the parties agree to transfer all of the TIPL assets into a special purpose vehicle as an alternative more appropriate holding entity for the assets and the investments, such as the proposed Dubai registered Ta'adeen Investments Ltd.

BACKGROUND

• Gippsland owns 100% of the shares in TIPL. TIPL owns 50% of the shares in Egyptian registered

Tantalum Egypt JSC (TE). TE holds 100% of two Exploitation Licences which cover the Project as
well as an adjacent Licence known as Nuweibi which also covers a large tantalum Mineral Resource. The Government of Egypt through its agency, ECMR owns the other 50% of TE shares.

• Gippsland on behalf of TE has undertaken extensive, detailed, feasibility study work on the Project culminating in advanced development plans for two large scale development options referred to as the 2 Mtpa Case and the 3 Mtpa Case.

• Gippsland has spent approximately US$24 million on the Project and Nuweibi to 30 June 2014 based on audited accounts.

• The assets of TIPL effectively comprise the 50% shareholding in TE and a loan to TE for US$10.3 million as at 30 June, 2014 which is to be repaid on a priority basis from project cash flows.

• In early 2015, recognising the slow progress in attracting development investment capital into the large scale development options, Gippsland developed a smaller scale, staged development plan (referred to as the 400K Plan) based on the feasibility study flow sheets and the existing equipment and services at the project remaining from its alluvial tin operation which was closed down in September 2014.

• Foxxtel was introduced to Gippsland by HTE Group and Gippsland agrees to pay HTE Group a fee of

7.5% on the proceeds of any investment received resulting from the MoU in cash or Gippsland shares as mutually agreed.

1. CONVERTIBLE LOAN AGREEMENT AND KEY TERMS

The MoU is a conditional agreement whereby the Parties agree to enter into the Transaction by way of a
Convertible Loan Agreement under the framework terms, which are set out below.
Investor agrees to provide and arrange US$7 million for stage 1 and will work with Gippsland in good faith to establish a solid financing plan which may include loans from Egyptian Institutions or specialist equipment financiers known to the Investor.
Key loan terms include:
i. Loan amount and structure: US$7 million by way of a series of Convertible Loan Notes to TIPL. ii. Parties to the Loan: the Borrower will be TIPL and the Lender will be the Investor.
iii. Use of funds: to fund the development of Stage 1 of the 400K Development Plan and other agreed

working capital needs of TIPL but not to fund the corporate administration costs of Gippsland except as directly applicable to TIPL).

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iv. Funding and Drawdown: The lender will fund a "Loan Account in accordance with the indicative schedule set out below. The Borrower may drawdown on that account subject to meeting standard drawdown precedents (to be agreed) to the satisfaction of the Lender, such as progress and reconciliation against the 400K Development Plan.
The Convertible Loan notes would likely each be issued with face value of US$100,000 as monthly drawdowns are made by the Borrower against the available loan limit in the Loan Account.
Note - drawdown "in kind" is acceptable where, subject to regulatory and standard fiduciary controls, the Lender/Investor may provide the loan amount as capital goods for the Abu Dabbab Project.
v. Coupon: there will be a 12% per annum coupon, with interest payable quarterly and within seven days at the end of each quarter in Gippsland shares (Shares) or cash at the election of Gippsland. In the event Gippsland elects to pay a quarterly coupon instalment in Shares, the number of such Shares will be issued based on the volume weighted average Share price of the prior quarter's Share trading on the Australian Stock Exchange and the USD:AUD exchange rate of the preceding day.
vi. Term: The loan facility and the Notes will have a term of five years from the date of the first drawdown.
vii. Conversion & Repayment: The Convertible Loan Notes will automatically convert to shares in TIPL equivalent to 50% of the issued share capital at the commencement of Stage 1 commercial production. The Convertible Loan Notes will become repayable if there is any material, unrectified breach by the Borrower or in the event conversion has not taken place prior to the expiry of the Term. Any amount drawn down will be immediately repayable in the event Gippsland shareholders fail to vote in favour of the Transaction, should such an approval from shareholders be required.
viii. Security: the Convertible Loan Notes will have first ranking security. Security will comprise TIPL's shares in TE JSC and wherever possible direct charges over various key capital items such as process plant components.
ix. Covenants and undertakings will be standard for a Loan facility of this type. Gippsland will be required to maintain a cash liquidity covenant of US$1 million from the time that total drawdown reaches $5 million.

2. GENERAL TERMS AND CONDITIONS

The Parties agree to negotiate in good faith and expeditiously to reach mutual agreement on the Convertible
Loan Notes and the TIPL Shareholder's Agreements.
Completion of the Transaction in the MoU is conditional on certain conditions and terms. The general terms and conditions of the Transaction will include:
a. Due Diligence: technical and commercial due diligence including review of shareholder agreements, tenements, offtake arrangements and financial position of TE to the satisfaction of the Investor at his sole discretion. Due diligence is to be completed within 60 days of signing the MoU. The investor will have an obligation to advise Gippsland as soon as it becomes aware of any matter arising during the due diligence process that could lead it to withdraw from the Transaction or seek to vary the Transaction terms. Should such an issue be identified then Gippsland will have the right to terminate the Transaction.

b. Agreed Stage 1 budget: Lender and TIPL will agree a Final Development Plan and Budget for Stage 1 in advance of any draw-down.

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c. Stage 2 rights: Gippsland and the Lender must agree unanimously the final approval with respect to the budget for Stage 2 and any funding arrangements for that stage.
d. Documentation: Lender, Gippsland and TIPL will enter into a definitive Convertible Loan Notes
Agreement and Shareholders Agreement, as applicable, to the satisfaction of the relevant parties.
e. Securities and Liabilities: the Investor is to acquire 50% of TIPL free of any security interest or liabilities other than securities agreed as part of this Transaction. TIPL warrants that its shares in TE are also free of any securities and liabilities other than environmental liabilities and specific "Aged Liabilities" which are to be paid out by Gippsland.
Gippsland shall warrant against any claims by third parties against TIPL or liabilities of TIPL to third parties in excess of US$100,000 for a period of 12 months arising from historic actions, omissions or transactions and indemnify the Investor against any such claim arising.
The Convertible Loan Notes Agreement will also contain representations, warranties and indemnities which are customary for a transaction of this nature.
f. Approvals & Notifications: the Transaction shall be subject to various corporate and regulatory approvals including but not limited to Gippsland, TIPL and the Investor board approvals. Notification will need to be made to various Egyptian regulatory authorities and approvals sought if required.
g. Termination date: The MoU will be valid for 90-days from signing unless otherwise extended by mutual consent of the Parties.

3. INDICATIVE TIME LINE

Gippsland proposes the following indicative timetable.

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