Gindalbie raises $33m for Karara iron ore project

Aspiring iron ore producer Gindalbie Metals Ltd's Karara iron ore project in Western Australia's mid west region has taken a major step forward with agreement for a $33 million capital raising.
The share issue, together with existing cash reserves, will increase Gindalbie's cash position to $40 million and underpin the two stage development of its Karara project, 220 kilometres east of Geraldton.
The first production of high grade direct shipping (DSO) hematite iron ore is scheduled for the second half of 2007, beginning at 1.5 million tonnes a year and rising to 4mt/year by 2009.
"Step out drilling to the north of the initial resource area is underway and will continue as part of the company's plans to achieve a one billion tonne magnetite iron ore resource capable of supporting a 7mt/year high grade concentrate/pellet project," Gindalbie's managing director David McSweeney said.
An initial resource for the Karara magnetite deposit is due for release in March this year.
"Gindalbie is on track to become a DSO iron ore producer in the short term, while progressing the company's longer term goal of becoming the region's largest supplier of blast furnace pellets," he said.
The company has told WA Business News its iron pellet plant is scheduled to go into production in 2010, probably in Geraldton and fed by slurry pipeline from the mine site.
Thiess Pty Ltd has been appointed to facilitate the completion during 2006 of a definitive feasibility study for the development of both the pellet and DSO projects at Karara.
The 90 million shares at 37 cents each will be issued in two tranches to Australian and international institutional clients of Southern Cross Equities Ltd.
The first tranche of 47 million shares will be issued immediately, the second tranche of 43 million shares requiring shareholder approval around April 10, 2006.
Following allotment of the new shares, Gindalbie will have 428,284,406 shares on issue with a market capitalisation at the placement price of $158 million.