AnSteel pays $123m for Gindalbie project

At a time of market volatility, Perth-based Gindalbie Metals Ltd has eliminated the need to raise equity as its Chinese project partner AnSteel contributes a further $123 million to the $1.8 billion Karara iron ore project.

AnSteel has only one more payment to make in October this year of $144 million to take its interest in Karara to 50 per cent.

So far the Chinese company has paid $228 million of the total amount of $372 million.

Gindalbie managing director Garret Dixon said the third payment by AnSteel takes the cash balance of the joint venture company Karara Mining Ltd to over $200 million.

"KML currently has more than $200 million in available cash reserves which will be utilized for the ongoing predevelopment activities at Karara, including final engineering and design work and long-lead equipment items such as the recent orders totaling approximately $70 million for two high pressure grinding rolls and four large ball mills," Mr Dixon said.

Gindlabie will be contributing $162 million towards the development, which the company, as part of the JV agreement, has elected to borrow from AnSteel as debt.

"This application to AnSteel eliminates the need for Gindalbie to raise equity funding in the current difficult period for financial markets," Mr Dixon said.

"We expect that this finance will be provided at competitive rates, reinforcing the strength of the joint venture and the significant benefits of having a joint venture partner with the depth and financial capacity of AnSteel."