12/01/2016 - 09:45

Gindalbie plummets on Karara woes

12/01/2016 - 09:45

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Shares in embattled iron ore miner Gindalbie Metals plummeted this morning after the company said attempts to clarify funding arrangements with its joint venture partner had been met with silence.

Gindalbie and Ansteel jointly own the Karara iron ore project in WA.

Shares in embattled iron ore miner Gindalbie Metals plummeted this morning after the company said attempts to clarify funding arrangements with its joint venture partner had been met with silence.

Gindalbie entered a trading halt last week amid reports that its Chinese majority shareholder and partner on the Karara project, Ansteel, would no longer keep the iron ore project afloat.

In a statement today, Gindalbie said it was aware of reports of a memorandum circulated by the chief executive of the Karara project, Zhang Zhao Yuan, to the project’s staff.

Gindalbie said the memorandum stated Mr Zhao Yuan as saying Ansteel was unable to continue to provide funding support for Karara due to “the economic and industry downturn”.

It also mentioned strengthening management practices and reporting, as well as continued cost cutting efforts across Karara’s key operational areas.

Shares in Gindalbie were hammered in early trade, down 66.6 per cent to 0.7 cents this morning before recovering slightly to close at 0.9 cents each.

“Gindalbie has requested a formal notification from Ansteel on their decision regarding ongoing funding support for the Karara project and has yet to receive a response,” Gindalbie said in a statement.

“As part of efficiency and cost reduction measures, Ansteel has engaged a third party to review the viability of operations as well as potential options for Karara. It is our understanding that this review is ongoing.

“A decision by Ansteel to withdraw funding support could lead to claims under various operating and financing guarantees against Gindalbie, which if successful could cast doubt on Gindalbie’s ability to continue as a going concern.”

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.

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