07/11/2008 - 15:16

Gindalbie accepts AnSteel's $162m offer

07/11/2008 - 15:16

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Gindalbie Metals Limited has accepted an offer from Anshan Iron & Steel Group Corporation worth more than $162 million to complete equity funding in its $1.8 billion Karara Iron Ore Project.

Gindalbie accepts AnSteel's $162m offer

Gindalbie Metals Limited has accepted an offer from Anshan Iron & Steel Group Corporation worth more than $162 million to complete equity funding in its $1.8 billion Karara Iron Ore Project.

Ansteel, its joint venture partner in the project, will fund Gindalbie's share of the equity contribution via a $162.06 million share placement to be undertaken at an issue price of 85 cents per share.

The issue price represents a premium of 105% to the closing price of Gindalbie shares on 31 October, and a 74% premium to the volume weighted average price (VWAP) of Gindalbie shares for the 30 days up until 31 October 2008.

The offer represents a further significant vote of confidence by AnSteel, both in the project and in Gindalbie as an emerging, independent Australian iron ore producer.

Following completion of this offer, and the final equity contribution to the joint venture company Karara Mining Limited, AnSteel will have invested a total of $573.1 million by way of Gindalbie placements and Karara Project equity contributions.

 

Full announcement below:

GINDALBIE ACCEPTS $162.1M ANSTEEL SHARE PLACEMENT OFFER TO COMPLETE EQUITY FUNDING
KEY POINTS
- Proposed share placement to AnSteel comprising 190.7 million shares at A$0.85 per share.
- Issue price represents a 105% premium to the closing price of Gindalbie shares on 31 October 2008.
- AnSteel poised to make final equity contribution of A$143.68 million to Karara.
- Reduces funding risk and leaves Gindalbie debt-free in the current credit market environment.

Gindalbie Metals Limited (ASX: GBG - "Gindalbie") is pleased to announce that it has accepted an offer by its joint venture partner in the Karara Iron Ore Project, Anshan Iron & Steel Group Corporation ("AnSteel"), to fund Gindalbie's share of the equity contribution towards the estimated A$1.8 billion project development cost via a A$162.06 million share placement to Ansteel to be undertaken at an issue price of A$0.85 per share ("Placement").

The issue price represents a premium of 105% to the closing price of Gindalbie shares on 31 October, and a 74% premium to the volume weighted average price (VWAP) of Gindalbie shares for the 30 days up until 31 October 2008.

The proposed Placement, which is subject to execution of formal agreements, shareholder and regulatory approval, represents a further significant vote of confidence by AnSteel, both in the Project and in Gindalbie as an emerging, independent Australian iron ore producer.

Following completion of the Placement and the final equity contribution to the joint venture company Karara Mining Limited, AnSteel will have invested a total of $573.1 million by way of Gindalbie placements and Karara Project equity contributions.

Gindalbie had previously exercised its right, under the terms of the Karara Joint Venture Development Agreement (JVDA), to request AnSteel to arrange finance for Gindalbie's share of the equity contributions to the Project.

AnSteel subsequently responded to Gindalbie's request to provide equity funding via the Placement.

As a result of the significant decline in global equity and credit markets in recent months, Gindalbie's Board has unanimously decided that it is in the best interests of Gindalbie shareholders to de-risk the Company's balance sheet and accept the offer of the Placement.

The Placement will comprise 190,658,824 shares to be issued at a price of A$0.85 per share, to raise A$162.06 million.

The proposed share placement is subject to execution of formal agreements, approval by Gindalbie shareholders, which will be sought at a meeting to be convened as soon as practicable, approval by the Foreign Investment Review Board and Chinese regulatory approvals.

Following completion of the share placement, Gindalbie will have 704,637,674 shares on issue and AnSteel will increase its total shareholding to 255,658,824 shares, representing a holding of 36.28% (compared with 12.6% currently).

Under the agreed payment schedule for equity payments, AnSteel has made three payments to date totaling A$228.4 million and Gindalbie has made one payment of A$18.4 million.

Gindalbie and Ansteel have agreed to re-schedule the final contributions of A$143.68 million each. AnSteel has advised Gindalbie that it has the funds available in Australia to make its remaining equity contribution to Karara Mining Limited and the timing will be finalised during the completion of the placement documentation.

Gindalbie will make its final contribution upon shareholder approval of the AnSteel placement.

Karara Mining Limited currently has approximately A$190 million in cash reserves from earlier equity payments, and the re-scheduled timeframe will have no impact on the ongoing engineering, design and development work currently being carried out for Karara.

"This represents another very significant milestone for the Karara Joint Venture and an enormous achievement in the current difficult market environment," said Gindalbie's Chairman, Mr George Jones.

"I would like to take this opportunity to thank AnSteel for their unwavering support of Gindalbie and the Karara Project.

"This should be seen as a very clear message of confidence to all Government agencies and contractors dealing with Gindalbie on Karara. This reinforces the true spirit of partnership between our two organisations and our shared commitment and vision to deliver a major new iron ore project for the Mid West region of Western Australia.

"While we acknowledge that the issue of new equity represents a movement from our original strategy, it is being undertaken at a time of uncertainty in the world's credit markets where even large blue chip organisations are struggling with refinancing," Mr Jones continued.

"It is at a substantial premium to the current market price and to an existing cornerstone shareholder who is intimately involved with the Company and the Project as our Joint Venture partner.

"This arrangement means Gindalbie will remain debt-free at a corporate level and with cash reserves approximately A$40 million. This puts us in a very strong position for the development of Karara and also our plans to develop other iron ore projects across our 1900 sq km tenement holding in the Mid West," he added.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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