08/01/2016 - 15:07

Gindalbie in trading halt as Karara fears grow

08/01/2016 - 15:07

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Gindalbie Metals has gone into a trading halt following a media report suggesting its Chinese majority shareholder and project partner will no longer keep the jointly owned Karara project afloat.

Gindalbie owns as 48 per cent stake in the Karara iron ore project in WA, with Chinese steelmaker Ansteel holding the majority 52 per cent slice.

Gindalbie Metals has gone into a trading halt following a media report suggesting its Chinese majority shareholder and project partner will no longer keep the jointly owned Karara project afloat.

Gindalbie shares were halted from trade this morning, freezing the stock at a near-record low of 2.1 cents, with the company offering no explanation for the move.

Gindalbie owns as 48 per cent stake in the Karara iron ore project in WA, located inland from Geraldton, with Chinese steelmaker Ansteel holding the majority 52 per cent slice.

Ansteel also holds a 35 per cent shareholding in Gindalbie.

The West Australian reported this morning that the project’s chief executive Zhang Zhao Yuan told Karara’s employees (of which there are about 1,000) this week that 2016 would be a critical period for Karara.

“Firstly, its parent company is unable to continue provide funding support to Karara due to the impact of economic and industry downturn,” he was quoted as saying.

“Secondly, Karara is still facing significant cost pressure and being in a loss position.”

In November, Gindalbie chairman Keith Jones told shareholders that the Karara project was bleeding cash, and would only remain open as long as Ansteel continued to support it financially.

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