10/11/2010 - 10:51

Gindalbie may produce iron ore early

10/11/2010 - 10:51

Bookmark

Save articles for future reference.

Gindalbie Metals says it may produce its first iron ore earlier than its targeted date of mid-2011 and is set to reap strong margins for the bulk commodity.

Gindalbie Metals says it may produce its first iron ore earlier than its targeted date of mid-2011 and is set to reap strong margins for the bulk commodity.

Gindalbie chairman George Jones says first production of hematite iron ore from its $2 billion Karara project in the midwest region is on track to start mid next year.

"If we can make that happen sooner than mid-year, we will," he told the company's annual general meeting in Perth.

Magnetite iron ore production would start by the end of 2011, he said.

"Based on current spot prices, our high-grade magnetite concentrate would fetch more than $150 a tonne.

"With cash costs, before royalties, of around $42 a tonne, that is an operating cash margin of more than $100 a tonne or more than $800 million a year - and Gindalbie owns half of Karara."

The other half is owned by Gindalbie's largest shareholder, China's Angang Steel Company (Ansteel).

It has agreed to buy 30 million tonnes (Mt) of iron ore from the project each year over a mine life estimated at 30 years.

By the end of 2011, Karara's output rate will be 10 Mt per annum.

"Our growth plan is to potentially double magnetite production to 16 million tonnes and then double it again to more than 30 million tonnes per annum," Mr Jones said.

"The project site at Karara is a hive of activity."

Gindalbie was pursuing its plan announced in February to acquire and develop other major resource projects after Karara, he added.

"Ansteel has given us its full support to look for and acquire other projects and opportunities, together with development opportunities within Gindalbie's own mid-west tenement position," he said.

"Preference will be given to those projects and acquisitions which involve a steel feedstock such as iron ore, coking coal, manganese, chromite and nickel."

He said he had recently spent a great deal of time in China and it was clear the economy was very strong, with several significant new developments boding well for the future of iron ore demand.

Meanwhile Gindalbie has announced it has completed a $74.5 million share placement to its joint venture partner Ansteel.

The placement formed part of the $206.4 million capital raising earlier this year, has been completed following receipt of final Chinese regulatory approval.

 

 

See statement below:

Gindalbie Metals Limited (ASX: GBG - "Gindalbie") is pleased to advise that the $74.5 million share placement to its joint venture partner Ansteel, which formed part of the $206.4 million capital raising earlier this year, has been completed following receipt of final Chinese regulatory approval.

Gindalbie has allotted 80.107 million shares at $0.93 per share to Angang Group Hong Kong (Holdings) Limited and the placement funds have been received, increasing the Company's cash reserves to approximately $200 million.

The completion of the placement enables Ansteel to maintain its 36.12% interest in Gindalbie following the other elements of the capital raising completed earlier this year - a $111.8 million institutional share placement and a strongly supported Share Purchase Plan (SPP) to existing shareholders.

The funds raised are predominantly being used to fund Gindalbie's equity share of the construction cost of the Karara Project, as well as its equity share of the estimated $430 million working capital requirements for the Project. Any surplus funds will strengthen the Company's working capital position and its ability to target new growth opportunities.

Gindalbie's Managing Director, Mr Garret Dixon, said the completion of the share placement to Ansteel marked the final stage of the $206.4 million capital raising undertaken earlier in the year.

"I would like to take this opportunity once again to acknowledge Ansteel for their long-standing support of Gindalbie and the Karara Project," said Gindalbie's Managing Director. "Karara is the biggest and most advanced iron ore development underway in the Mid West. Construction of the minesite and all associated infrastructure required for our start-up, including Geraldton Port, is progressing well and we remain on track for first production in the first half of 2011."

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options