Gindalbie Metals has signed a US$1.2 billion loan which will underpin the financing of its Karara Iron Ore Project.
Gindalbie Metals has signed a US$1.2 billion loan which will underpin the financing of its Karara Iron Ore Project.
The loan agreement with China Development Bank was signed in Canberra today.
In a statement Gindalbie and its joint venture partner Ansteel, said the landmark debt facility was a major achievement and reflected the quality of the Karara project.
See full statement below:
Canberra, 21 June 2010 - Gindalbie Metals Limited (ASX: GBG - "Gindalbie") today applauded China's support for emerging Australian resource projects following the formal signing of key loan documentation for a US$1.2 billion Project Loan Facility which underpins development of its US$2 billion Karara Iron Ore Project in Western Australia.
Gindalbie and its joint venture partner, Ansteel, said the landmark debt facility was a major achievement in the current uncertain political and economic climate which reflected the quality of the Karara Project - one of the largest resource projects currently under construction in Australia.
The loan facility agreement was signed in Canberra today by Gindalbie's Managing Director, Mr Garret Dixon, representing the joint venture company Karara Mining Limited, and Mr Chen Yuan, the Chairman of China Development Bank.
The documents were signed in the presence of the Vice President of the Peoples Republic of China, Mr Xi Jinping, who is the immediate deputy to President Hu Jintao, and Australian Prime Minister Mr Kevin Rudd.
It is the second time the Karara Project has attracted the support of the highest levels of the Chinese Government after the original joint venture development agreement between Gindalbie and Ansteel was signed in the presence of President Hu Jintao in 2007.
Gindalbie's Managing Director, Mr Garret Dixon, said the completion of final ancillary banking documents and obtaining Chinese regulatory approval for Ansteel's parent company guarantee in coming weeks were the key final requirements to allow drawdown of the Loan Facility to proceed on schedule from July.
"This is a major milestone for the Karara Project and the joint venture partners Ansteel and Gindalbie," Mr Dixon said. "Securing such a large project debt facility, which was arranged under the previous taxation regime, against the current backdrop of massive uncertainty arising from the proposed Resources Super Profits Tax is a considerable achievement. If this project was only at the concept stage I am not sure that it would be proceeding. It would more likely have been put on hold until the issues raised by the proposed new tax on the resources industry were sorted out.
"Signing of the Loan Facility is a reflection of both the unwavering support and commitment for this Project from our Chinese partners and the banking syndicate led by the China Development Bank and Bank of China, together with the fundamental quality and strength of the Karara Project," Mr Dixon continued.
"What is important to remember is we are currently building only the first stage of a world-class, long-life project. Under the right investment regime, both partners are keen to see Karara expanded to reach its full potential and take advantage of the considerable up-front investment they have made to build the necessary infrastructure that is required for these types of projects.
"Our path to production has taken more than four years of hard work - exploration, studies, approvals and financing. That is an enormous risk that has been borne by our shareholders. With iron ore production commencing next year, shareholders will start to be rewarded for their support.
"Karara is a new-generation magnetite mine that is taking low grade iron ore, turning it a premium iron ore product and creating a new market for our natural resources. Along the way we are making enormous investments in common-user infrastructure, supporting communities, creating jobs and paying taxes and royalties."
The 12-year Karara Project Loan Facility is being provided on competitive commercial terms principally by the China Development Bank and Bank of China with Ansteel providing a 100% parent company guarantee.
The Project Loan Facility is based on the US 6 month LIBOR with a competitive margin. Importantly, as the facility is based on an international interest rate benchmark, it provides a very good long term arrangement for the project.
CDB and BOC are two of the most important and largest banks in China and have funded a number of Chinese domestic and international major infrastructure projects. BOC recently expanded its business to Perth in a sign of its commitment to projects in Western Australia.
