PERTH (miningweekly.com) – Chinese major Ansteel was reportedly reviewing its investment in the Karara iron-ore project, in Western Australia, a move which could belly-up partner Gindalbie Metals.
ASX-listed Gindalbie on Tuesday pointed to a memorandum circulated by the CEO of the joint venture (JV) company Karara Mining, which noted that Ansteel was unable to continue to provide funding support to the JV, owing to the downturn in the iron-ore price.
Ansteel had reportedly appointed a third party to review the viability of the Karara operations, as well as potential options for the JV vehicle.
Gindalbie told shareholders that the review was ongoing.
Furthermore, the junior company warned that a decision by Ansteel to withdraw its funding support from the project 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 said on Tuesday that the company had requested a formal notification from Ansteel on its decision regarding ongoing funding support for Karara, but was still awaiting a response.
The JV partners in May last year secured a $1.5-billion refinancing facility for the Karara project, to repay all outstanding amounts of syndicated facilities, which had been due by 2020.
The parties have been working towards a funding solution for the Karara project, as iron-ore prices continued to decline and the mine struggled to meet its nameplate capacity of eight-million tonnes a year.