China's state-owned steel and iron ore company Ansteel is ready to acquire a majority stake in the $3bn Karara magnetite iron ore mine in Western Australia following a restructure of finances.
The project, located at Mid West approximately 225km east of Geraldton Port, is a 50:50 joint venture between Gindalbie Metals and Ansteel.
Under the deal, Ansteel will offer bridging loan finance to the Perth-based firm to fund any cash deficit in the commissioning of the Karara project and its ramp-up in the next 12 months.
In return, the Chinese firm would raise its equity to 52.16%.
With the deal, Gindalbie, which has been struggling with cost over-runs in the commissioning of the project, will be able clear its debts and put away A$35m ($32.9m) in cash.
The companies will work together to secure long term credit facility for Karara project from the China Development Bank.
Gindalbie MD Tim Netscher said the new funding arrangements will eliminate the need for the company to look for funding for the project.
"The advantage of this arrangement is it avoids the need for us to call on shareholders or the market for more funding for Karara's ramp up and effectively marks the beginning of a new chapter for Gindalbie."
Image: The Karara magnetite iron ore mine is located at Mid West, approximately 225km east of Geraldton Port in Western Australia. Photo: Gindalbie Metals Ltd.