Gindalbie makes way for AnSteel

Chinese steelmaker AnSteel is set to lift its stake in Gindalbie Metals to 36 per cent as the miner sets a date for a shareholders meeting for the approval of a $162 million placement.

In a letter to shareholders, chairman George Jones urged shareholders to vote in favour of the placement, which will see the company issue 190.66 million shares at a price of 85 cents each to AnSteel.

Should shareholders approve the placement, AnSteel will emerge with a 36.28 per cent interest. The Chinese company currently holds a 12 per cent interest.

AnSteel has been making staggered equity payments towards the $1.8 billion Karara iron ore joint venture, contributing some $411 million, excluding the $162 million share placement.

The final equity contribution of some $142 million will be made early next year.

The $162 million share placement covers Gindalbie's final contribution towards the iron ore project, and will give the project

The $162 million share placement covers Gindalbie's final contribution towards the iron ore JV, and will boost the project's cash reserves to some$450 million.

Gindalbie will be left debt free with around $40 million in cash.

Deloitte's independent expert's report into the share placement found the deal to be fair and reasonable to Gindalbie shareholders.

Shareholders have previously been concerned with dilution of their shareholding.

The meeting is scheduled for February 4 next year.

Shares in Gindalbie closed unchanged at 61.5 cents today.