JOHANNESBURG (miningweekly.com) – ASX-listed Gindalbie Metals on Tuesday said that Karara Mining – its 50:50 joint venture (JV) with Ansteel – had received an $84-million cash injection from the Chinese steel group, representing the first instalment of bridging finance to cover Karara’s working capital requirements.
Under a binding memorandum of cooperation, Ansteel had undertaken to provide bridging finance to Karara to fund forecast cash requirements over the next 12 months.
The bridging funding removed the need for Gindalbie to raise further equity capital to support Karara’s working capital requirements during this period. Ansteel, Gindalbie and Karara would negotiate a longer-term working capital facility with third party banks and financial institutions to repay the bridging finance.
Gindalbie previously announced that a separate transaction for injection by Ansteel of a $30-million convertible loan to Karara would be used by the company to refund an earlier $30-million loan by Gindalbie and enable it to pursue other opportunities, while still maintaining a significant stake in a major, long-life mining asset.
The transaction was subject to Australia's Foreign Investment Review Board, Chinese regulatory and other necessary approvals, which have not yet been granted.
Gindalbie further stated that an agreement had been reached with Ansteel to set the reference benchmark pricing index during the first year of the magnetite concentrate sales agreement from the now obsolete yearly Hamersley Iron free-on-board price to the Platts IODEX 62% Fe CFR index. Further, Karara had negotiated the right to sell 30% of magnetite concentrate produced during the first year of the concentrate sales agreement to independent third parties.
Meanwhile, Ansteel continued to be obliged to purchase the remaining 70% of concentrate under the agreement. On the first anniversary of the start of the concentrate sales agreement, the pricing mechanism under this agreement would be renegotiated based on the established market price for Karara magnetite concentrate or other similar magnetite concentrate products.