Shareholders in Gindalbie Metals have approved a $162 million share placement to AnSteel, which will boost the Chinese steelmaker's stake to over 36 per cent.
Shareholders in Gindalbie Metals have approved a $162 million share placement to AnSteel, which will boost the Chinese steelmaker's stake to over 36 per cent.
At a meeting this morning, shareholders overwhelmingly voted in favour of the placement, which paves the way for the completion of a $534.1 million equity funding package for the $1.8 billion Karara iron ore joint venture in the Mid West region.
The placement has yet to receive approval from the Chinese government and the Foreign Investment Review Board.
However, Gindalbie will issue 190.65 million shares at a price of 85 cents each to Angang Group Hong Kong, a holding company for AnSteel.
Shares in Gindalbie were down 0.5 cents to 62c at 15:10 AEDT.
On completion of the placement, AnSteel's stake in Gindalbie will rise from 12.6 per cent to 36.28 per cent.
Gindalbie will use the proceeds from the placement to cover its second equity contribution of $143.68 million.
AnSteel, which has been making staggered payments towards the project, has one final payment of $143 million.
Funds from the equity contributions will go to Karara Mining, a joint venture company between Gindalbie and AnSteel.
Karara Mining currently has $150 million in cash reserves from earlier equity payments.
The announcement is below:
Gindalbie Metals Limited (ASX: GBG - "Gindalbie") is pleased to advise that it has received overwhelming support from shareholders to approve the proposed $162.06 million share placement to its joint venture partner, Anshan Iron & Steel Group Corporation ("AnSteel"). The approval clears the way for completion of the $534.1 million equity funding package for the A$1.8 billion Karara Iron Ore Project.
In an overwhelming response, less than 1% of Proxies received were against the resolution, which was considered at the General Meeting held in Perth today. Shareholders who attended the meeting also voted overwhelmingly in favour.
Gindalbie can now progress with the allotment of 190,658,824 shares to Angang Group Hong Kong (Holdings) Limited or its nominee at a price of $0.85 per share once AnSteel receives final Chinese Government and Australian Foreign Investment Review Board approvals. After completion of the placement, Gindalbie will have 704,637,674 shares on issue, with AnSteel increasing its total shareholding from 12.6% to 36.28%.
Gindalbie's Chairman, Mr George Jones, thanked shareholders for their overwhelming support: "The completion of this share placement represents a pivotal turning point in the Company's history and corporate development as an emerging Australian iron ore producer.
"I would like to take this opportunity to acknowledge the ongoing support of AnSteel and the close relationship we enjoy with them. The completion of a capital raising of this scale - at a substantial premium to market - would simply not have been possible in the current market environment without the backing of a substantial group such as AnSteel which is totally committed to the project and shares our long-term objectives and vision."
The proceeds of the placement will be utilized to fund Gindalbie's second equity contribution of $143.68 million towards the $534.1 million equity funding component of the Karara Project. AnSteel is also required to make a final contribution of the same amount.
Gindalbie and Ansteel have agreed to re-schedule the final contributions to the first half of 2009. The joint venture company, Karara Mining Limited (KML), currently has approximately A$150 million in cash reserves from earlier equity payments, and the re-scheduled timeframe will have no impact on the ongoing engineering, design and development work currently being carried out for Karara.
Pre-development activities are already well advanced, with site construction poised to commence subject to receipt of final environmental approvals.
Today's successful EGM follows the recent conditional approval received by the China Development Bank, for up to US$1.2 billion for the Karara Project Loan. The Company has also been made aware that in recent weeks the
Environmental Protection Authority of Western Australia has met to consider its report and recommendations for the
Karara project.
"The Karara Project is ready to go subject to final Governmental approvals, with funding solutions, engineering and predevelopment activities well underway," Mr Jones said.
