Gindalbie Metals Limited  is pleased to provide an operational and funding update for the Karara Project as it continues to move through the critical commissioning and ramp-up phase. While the commissioning of the Karara Concentrator is continuing with no material issues encountered, as outlined in the March 2013 Quarterly Report, product shipments have been below internal forecasts because of minor delays in the production ramp-up. To assist with short-term working capital requirements, Gindalbie and Ansteel each contributed A$50 million through subordinated, interest-free loans to the joint venture company Karara Mining Limited (“KML”) during the March Quarter, 2013. During April, Gindalbie and Ansteel each advanced a further A$30 million loan to KML on similar terms. Gindalbie made its payments from existing cash reserves. Subsequently, agreement has been reached with Ansteel for a financing arrangement to assist Gindalbie to replenish its cash reserves to more comfortable levels.

Ansteel has agreed, subject to Foreign Investment Review Board (FIRB) approval and consent by KML’s Chinese lenders, to advance to KML a second A$30 million loan, to allow repayment by KML of Gindalbie’s A$30 million loan. Ansteel has also granted Gindalbie an option to purchase the second A$30 million loan at its face value (plus interest at a rate of 6% per annum). The arrangement replenishes Gindalbie’s cash reserves to more than A$35 million and provides a significant timeframe to investigate options to accommodate exercising the option to purchase the loan, including the sale of its Lodestone Magnetite Project and/or the development of the Shine hematite DSO project. In the event Gindalbie fails to exercise the option to buy the loan within 12 months it has been agreed that Ansteel may convert all or part of its two loans to KML totaling A$60 million into KML shares, subject to any necessary approval of FIRB and Chinese regulatory authorities.