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

OVERVIEW

MARCH 2015 QUARTERLY ACTIVITIES & CASHFLOW REPORT

Period: 1 January 2015 to 31 March, 2015

Release Date: 30 April, 2015

Notwithstanding a positive start to the March, 2015 quarter with a new lower risk, staged development plan and financing arrangement, Gippsland received advice in late March from its 50% equity partner in Tantalum Egypt JSC (TE), the Egyptian Company for Mineral Resources (ECMR), that it was seeking to dissolve TE and re-tender the Exploitation Licences. In response, Gippsland sought clarification of the underlying issue and assurances that the ECMR remained supportive of TE and the imminent project development. However, neither the clarification nor the assurances were forthcoming which caused Gippsland to take the precipitous step of withholding funding into TE for expenditure given the arising uncertainty. In turn, the Board requested ASX grant suspension over trading in its shares until a clear picture of the likely outcomes and risks emerges.
Further details will be provided to shareholders as the situation becomes clearer.
The Company regards the new development proposal for the Abu Dabbab tantalum-tin-feldspar project (the Project) with a lower capital cost and a staged development to be a prudent lower risk proposal as it addresses the key operational and tantalum marketing risks in a more modest and staged manner. Indeed, this view is endorsed by the fact that a Memorandum of Understanding to finance the first US$7 million stage of the Project, was signed on the 24 February, 2015. Whilst this move by ECMR is clearly a threat to this financing and Gippsland's ongoing participation in the project - the Company remains positive on the project and firm in its desire to resolve the dispute with ECMR and start development.
Coinciding with the unfolding events in Egypt in late March-early April, increasing business commitments led Mr Ian Gandel, the Company's Chairman and major shareholder to resign from the Board.
The overall situation has led Gippsland to take decisive actions in terms of reducing its costs regrettably including; the termination of the Company's Chief Financial Officer and Project Development Manager, reducing the role of the MENA Regional manager and closing the Perth office.
Over the next few months the Company will pursue its rights in Egypt, restructure its debt and seek opportunities for alternative funding.
FOR FURTHER INFORMATION PLEASE CONTACT
Mike Rosenstreich www.gippslandltd.com
T: +61 8 9340 6000

E: [email protected]

1 GIP March 2015 Quarterly Activities Report

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

QUARTERLY ACTIVITIES & CASH FLOW REPORT

The Directors of Gippsland Limited (Gippsland or the Company) provide the following Activities and Cash
Flow Report for the March 2015 quarter.
1. ABU DABBAB TANTALUM-TIN-FELDSPAR PROJECT (50% INTEREST)
1.1 Introduction
On 24 February, 2015 the Company 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, would have enabled an almost immediate start to a two staged development (referred to as the "400K Plan"), which was planned to achieve first production in 2016. The US$7 million financing agreement was conditional on completion of satisfactory due diligence and approval from the respective boards of each party, as well as other standard conditions precedent including letters of support from ECMR and the Ministry of Investment that it supported the development proposals for TE. The following section summarises the 400K Plan, the financing arrangement with Foxxtel and the events which occurred late in March triggering a dispute with ECMR which has led Gippsland to suspend funding of TE, temporarily until it is resolved.
1.2 The 400K Development Plan
Since mid-2014, Gippsland on behalf of Tantalum Egypt JSC (TE) has been seeking investment from the
Gulf region for the large scale 2Mtpa of ore production plan. Whilst several Parties continued to show
a high level of interest in the opportunity, their assessment and investment time frames kept stretching out, consequently putting pressure on Gippsland's ongoing funding requirements and its relationship with ECMR.
In response the Company devised a new staged development strategy (referred to as the 400K Plan) based on the completed 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, before a third expansion phase to 2Mtpa is assessed based on market conditions.
• 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 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.

2 GIP March 2015 Quarterly Activities Report

• A 3rd stage to further increase ore production and processing to 2Mtpa and upgrade support services such as water and power would be assessed on the basis of technical performance to date and the market conditions for the tantalum and feldspar.
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.
This is regarded as a prudent, staged development case particularly from a commodity marketing perspective for 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. Even at 400,000 lbs pa of Ta2O5 Abu Dabbab would be the largest single tantalum mine in the world supplying approximately 10% of global demand, so clearly more attention needed to be focussed on the commodity marketing and offtake aspects of the operation which the 400K Plan does address well.
For more detail around the 400K Plan, Gippsland lodged a summary presentation on ASX on 26
February, 2015.
As part of the update and technical due diligence process, Gippsland completed an updated Mineral Resource Estimate for the Abu Dabbab Tantalum-Tin-Feldspar Project (Table 1) and the Nuweibi Tantalum-Niobium Project (Table 2); reported in accordance with the guidelines of the 2012 JORC Code. Full details on the resource estimates are available in the report to ASX dated 17 March, 2015.

Table 1: Abu Dabbab Mineral Resource (100g/t Ta2O5 cut-off)

Note 1: Numbers in table may not add correctly due to rounding

Table 2: Nuweibi Mineral Resource (100g/t Ta2O5 cut-off)

Note 1: Numbers in table may not add correctly due to rounding

The two projects are approximately 20 km apart. There are no material changes to either resource estimate from those released previously, such as in the Annual Report for 2014 financial year For Abu Dabbab this update re-affirms a large scale, moderate to high grade tantalum resource with significant tin and feldspar credits which underpins the Company's development and investment plans.
1.3 The Financing Strategy

The objective of the Foxxtel 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.

3 GIP March 2015 Quarterly Activities Report

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 Tantalum International Pty Ltd (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 Memorandum of Understanding (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 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 terms and conditions was attached to the ASX Release dated 26 February, 2015, in Appendix 1.
Gippsland and Foxxtel were progressing well on the various steps required to close the Transaction and were planning to have met all of the conditional aspects by late April, 2015 enabling the Project development to start as soon as possible thereafter, targeting first production in early 2016.
1.4 Egyptian Tenure Issue
In late March, 2015 Gippsland was informed that ECMR, Gippsland's 50% co-shareholder in TE, was planning to contest TE's ongoing rights to hold the tenements over the Abu Dabbab deposit. Gippsland considers that it has complied with all of its contractual and legal obligations with respect to TE for the past 12 years - including through the Arab Spring and Egyptian revolution. To date, Gippsland has invested in excess of US$20 million in the Abu Dabbab Tantalum-Tin Project. As announced on 26
February 2015, Gippsland has signed a MoU with Foxxtel which would see the project start development in a few months. Therefore this action by ECMR, initiated at a time when the Project is closer than it has ever come to going into production, was completely unexpected.
Gippsland has sought urgent clarification from ECMR of its position and assurances in terms of its ongoing support with respect to TE to enable Gippsland to make continued financial investments into TE and to satisfy Foxxtel's due diligence process. ECMR has failed to provide the assurances sought and outlined several grievances in regard to the scheduled start of development activities and the performance of the previous alluvial tin operation as well as the reduced scale of the new 400K Plan. The issue of the project development schedule had been raised by ECMR in discussions in mid-March,
2015 and to pre-empt any possible, but at the time unlikely escalation of this issue, Gippsland had undertaken to the Minister of Petroleum and Mines in a letter dated 16 March, 2015 to commence development activities on the Project by the end of Ramadan (mid July 2015) then it would not contest an Extraordinary General Meeting resolution to dissolve TE and hand the Project and all technical data back to ECMR.

As a consequence of the uncertainty, Gippsland has had to withhold payments into TE resulting in 28 of its 30 Egyptian employees being stood down. By arrangement with ECMR, it has control of the day-to- day operations of TE and has taken steps to maintain a small presence on site and the corporate office on behalf of TE.

4 GIP March 2015 Quarterly Activities Report

Foxxtel has written to Gippsland on 6 April, 2015 "flagging that if these concerns cannot be resolved Foxxtel would withdraw from the transaction." It is clear that the actions of ECMR have compromised the project financing transaction with Foxxtel and the process is currently suspended.
Gippsland has briefed legal advisors experienced in international disputes and familiar with Egypt. The prime objective is to work with these advisors to achieve a positive reconciled outcome with ECMR which will allow the project financing and development to recommence. However the fall back position is for the Company to protect its interests through both Egyptian and international legal avenues. This process is still at a very preliminary stage and there remains considerable uncertainty in regard to the Company being able to resume its operations in Egypt.
2. Corporate
2.1 Non Renounceable Pro-rata Entitlement Issue
In December 2014, Gippsland announced a non-renounceable pro-rata entitlement issue (Entitlement Issue) to raise up to $1.96 million on the basis of 5 new shares in Gippsland, for every 7 existing shares held at the Record Date, at an issue price of $0.002 per share.
Acceptances were received for a total of 473,448,708 shares for proceeds of $946,897.42. Shareholders also subscribed for a further 48,974,077 shares in respect of shortfall of $97,948.15. Therefore the total amount raised was $1,044,845.57 and the balance of the shortfall was 460,220,130 shares (for $920,440.26).
2.2 Financial Position
Cash at the end of the March quarter was $410k. Total net operating outgoings for the quarter were
$396k, which includes; development expenses of $188k comprising Project Development Manager's salary, care and maintenance of the Abu Dabbab Project site, an allocation of the Cairo office costs, expenses related to review of the Abu Dabbab Mineral Resource and the compilation of the new 400K Development Plan. Administration costs include a major allocation of the Cairo administrative costs and the production costs relate to old invoices from the alluvial tin operation.
During the March quarter, $552k of loan funds from Gandel Metals were offset against the Entitlement Issue application of Abbotsleigh Pty Ltd, a related entity of Gandel Metals. The Gandel Metals loan currently stands at $3.34 million. The repayment date of the Gandel Metal loans has been extended to
30 June, 2015 and discussions are in progress to restructure this debt.
2.3 Board and Management Changes
Subsequent to the end of the quarter, on 14 April 2015, Mr Ian Gandel announced his resignation as a Director and Chairman of Gippsland. Mr Michael Rosenstreich was subsequently elected to replace him as Chairman. Mr Gandel commented "I was originally planning to step-back from my Chairman role as Gippsland transitioned into the development phase of Abu Dabbab with its new partner, Foxxtel due to increasing and pressing business commitments elsewhere. I consider that it is in the best interests of the Company to handover to Mike now to develop and lead a revised corporate strategy. I wish the newly formed Board every success and assure them of my ongoing interest and support as a major shareholder and creditor of the Company." As well, Mr Rowan Caren, Company Secretary was appointed as a Director.

To further reduce costs the Company has decided to close its Perth office and until the ECMR issue is resolved run a "virtual" office. This has resulted in several key staff changes including; the Chief Financial Officer, Mr Geoff Hawkins leaving the Company effective at the end of April, 2015 with the financial management of the Company to be handled by Rowan Caren. Mr Brian Talbot, the Project Development Manager will also finish with Gippsland in early May, 2015. The Directors deeply regret

5 GIP March 2015 Quarterly Activities Report

these losses and thank both Geoff and Brian for their outstanding contributions. Mr Rosenstreich will reduce to a 50% time commitment on an interim basis to manage the dispute resolution, guide the restructure process and assess any new project opportunities, working closely with Rowan Caren.
The Company's non-executive directors have agreed to a fee moratorium until 30 June, 2015 and fees accrued but not paid for the past year may also be included in the debt restructuring process outlined above.
3. Exploration
There was no further progress with either of the two parties who were reviewing the exploration database for Gippsland's Eritrean projects (under confidentiality agreements) late last year. Discussions have commenced with a new group to assess their interest in forming an exploration joint venture. The projects are regarded as highly prospective but Gippsland does not plan to expend further funds on them at this stage.

There were no material exploration activities during the quarter.
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 214,286 ordinary shares in the Company. Mandu Superannuation Fund Pty Limited of which Dr Chisholm is director and shareholder holds 5,765,080 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.

6 GIP March 2015 Quarterly Activities Report

Attachment 1 Tenement Details
Tenements Held at 31 March 2015

Country Project Tenement Status Interest held by Gippsland

Egypt Abu Dabbab Exploitation Licence 1658 Granted 50%1

Egypt Abu Dabbab Exploitation Licence 1659 Granted 50%1

Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt Egypt

Nuweibi

Wadi Allaqi - Seiga Wadi Allaqi - Shashoba Wadi Allaqi - Haimur Wadi Allaqi - Garayat Wadi Allaqi - Koleit

Wadi Allaqi - Nile Valley A Wadi Allaqi - Nile Valley E Wadi Allaqi - Abu Swayel Wadi Allaqi - Um Tiur

Exploitation Licence 1785

Exploration Licence 2

Exploration Licence 2

Exploration Licence 2

Exploration Licence 2

Exploration Licence 2

Exploration Licence 2

Exploration Licence 2

Exploration Licence 2

Exploration Licence 2

Granted Pending Pending Pending Pending Pending Pending Pending Pending Pending

50%

-

-

-

-

-

-

-

-

-

Eritrea Adobha Exploration Licence Granted 100% Eritrea Adobha (Gerasi South) Exploration Licence Granted 100% Eritrea Adobha (Gerasi) Exploration Licence Pending -

Notes:

1. Gippsland holds 50% of the shares in TE JSC which holds the exploitation licences.

2. Tenements granted subject to an agreement with the Egyptian Government (EMRA) dated 21 June 2004, however the status of these tenements is in dispute with EMRA which the Company hopes to resolve through the grant of a large Exploration Licence area that encompasses all of the nine disputed tenements. Until the dispute is resolved, the Company believes it is prudent to list its interest as Nil.

Schedule of Mining Tenements acquired and disposed of during the quarter

There has been no change in the attributable interest in any tenements over the past 3 months.

Country Project Tenement Area at beginning of period

Area relinquished

Area at end of period

Eritrea Adobha Exploration Licence 792km2 - 792km2

Eritrea Adobha (Gerasi South) Exploration Licence 75km2 - 75km2

7 GIP March 2015 Quarterly Activities Report

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Appendix 5B

Rule 5.5

Mining exploration entity and oil and gas exploration entity quarterly report

Name of entity

Gippsland Limited

ABN Quarter ended ("current quarter")

31 004 766 376 31 March 2015

Consolidated statement of cash flows

Cash flows related to operating activities

1.1 Receipts from product sales and related debtors

1.2 Payments for (a) exploration & evaluation

(b) development

(c) production

(d) administration

1.3 Dividends received

1.4 Interest and other items of a similar nature received

1.5 Interest and other costs of finance paid

1.6 Income taxes paid

1.7 Other - refund of Egyptian costs

Net Operating Cash Flows

+ See chapter 19 for defined terms.

01/05/2013 Appendix 5B Page 1

Appendix 5B
Mining exploration entity and oil and gas exploration entity quarterly report

Net financing cash flows (brought forward)

Net increase (decrease) in cash held

1.20 Cash at beginning of quarter/year to date

1.21 Exchange rate adjustments to item 1.20

1.22 Cash at end of quarter

* Development includes allocation for site care and maintenance costs.

** Production includes payment of outstanding amounts in relation to the alluvial tin project incurred up to the date of closure of the project on 10 September

2014 and closure costs for the alluvial tin project.

Payments to directors of the entity, associates of the directors, related entities of the entity and associates of the related entities

Current quarter

$A'000

1.23 Aggregate amount of payments to the parties included in item 1.2 60

1.24 Aggregate amount of loans to the parties included in item 1.10 Nil

1.25 Explanation necessary for an understanding of the transactions

Payments of consulting fees and directors fees to directors and director related entities

Non-cash financing and investing activities

2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

None

2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

None

Financing facilities available

3.1 Loan facilities

3.2 Credit standby arrangements

Estimated cash outflows for next quarter

4.1 Exploration and evaluation

4.2 Development

4.3 Production

4.4 Administration

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.

+ See chapter 19 for defined terms.

Appendix 5B Page 2 01/05/2013

Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Changes in interests in mining tenements and petroleum tenements

6.1 Interests in mining tenements and petroleum tenements relinquished, reduced or lapsed

6.2 Interests in mining tenements and petroleum tenements acquired or increased

Issued and quoted securities at end of current quarter

7.12 Unsecured notes (totals only)

+ See chapter 19 for defined terms.

01/05/2013 Appendix 5B Page 3

Appendix 5B
Mining exploration entity and oil and gas exploration entity quarterly report

Compliance statement

1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5).

2 This statement does /does not* (delete one) give a true and fair view of the matters disclosed.

Director: M.B. Rosenstreich

Date: 30 April 2015

Notes

1 The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements and petroleum tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement or petroleum tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.

4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.

5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

+ See chapter 19 for defined terms.

Appendix 5B Page 4 01/05/2013