14/01/2009 - 10:59

China approves $1.8bn Gindalbie loan

14/01/2009 - 10:59

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One of China's largest banks has given its approval to a $1.8 billion loan to Gindalbie Metals' Karara iron ore joint venture following completion of due diligence.

One of China's largest banks has given its approval to a $1.8 billion loan to Gindalbie Metals' Karara iron ore joint venture following completion of due diligence.

The Perth explorer said the China Development Bank had approved a loan of up to $US1.2 billion ($A1.8 billion), fulfilling one of the conditions for the $1.8 billion JV with Chinese company AnSteel. .

The bank has been involved with the funding of a number of major infrastructure projects in China including the Three Gorges Dam and Beijing's new airport.

Gindalbie said the parties are working to finalise the debt structure in the first half of this year with the loan subject to conditions including environmental approvals for the project and the finalisation of equity contributions.

Meantime, Gindalbie and AnSteel are nearing completion of a $534.1 million equity funding deal.

AnSteel has been making staggered payments towards the Karara project, contributing $228.4 million so far with one remaining payment of $143.68 million to be made during the first half of this year.

Gindalbie has made one payment of $18.38 million towards the project and its final payment of $162.06 million will be covered by AnSteel through a share placement subject to shareholder approval.

The $162.06 million placement was considered the second best deal of 2008 in WA Business News' upcoming edition.

Should the placement go ahead, AnSteel will emerge with a 36.28 per cent in Gindalbie.

The meeting is scheduled for early next month.

Following all the equity payments, the Karara joint venture will have some $400 million in cash.

Shares in Gindalbie climbed six cents to a high of 74c before easing to 69.5c at 13:09 AEDT.

 

 

The announcement is below:

 

 


Gindalbie Metals Limited (ASX: GBG - "Gindalbie") is pleased to report a further significant achievement in the funding process for the Karara Iron Ore Project in Western Australia with the announcement of conditional approval by the China Development Bank (CDB) for up to US$1.2 billion for the Karara Project Loan.

The commitment follows the completion of due diligence on the Karara Project by the CDB during 2008 followed by approval from CDB's Loan Review Committee.

CDB is one of the most important and largest banks in China which has funded a number of major infrastructure projects in China including the Three Gorges Dam, railways, roads and Beijing's new airport.

The loan commitment at this stage of the funding process is consistent with the normal procedure followed by Chinese banks. The final approval in the process is subject to receiving environmental approvals in Western Australia, finalising equity contributions into Karara, a confirming valuation report and successful detailed term sheet negotiations which are currently under discussion.

In addition, CDB have formed a dedicated team working on syndication negotiations with a number of Chinese Domestic and International Banks. Gindalbie and Ansteel are working with CDB towards finalising the debt structure in the first half of 2009.

Another key component of funding for the Karara Project that is nearing completion is the A$534.1 million equity funding package. AnSteel have made three payments to date totaling A$228.4 million and Gindalbie one payment totaling A$18.38 million.

The final payments of A$143.68 million each, are due to be made during the first half of 2009. Gindalbie's final equity contribution will be funded through a A$162.06 million share placement comprising 190.7 million shares at 85 cents each to AnSteel.

This share placement is subject to approval by shareholders at a meeting which has been convened for 4 February 2009.

At completion of the share placement, the Karara Joint Venture will have approximately A$400m in cash.

Gindalbie's Chairman, Mr George Jones, said the formal project loan approval represented a key milestone for the Joint Venture, reinforcing the strategic importance of Gindalbie's relationship with AnSteel and their commitment to secure project financing.

"The financial strength of AnSteel, which is owned by the Chinese Government, underpins this debt structure which is being provided by China's most important bank," Mr Jones said. "Because of the size and scale of AnSteel, and their relationship with CDB, the joint venture is in a privileged and unique position in being able to receive formal commitment given the current global credit market."

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