Gindalbie Metals has received conditional approval from one of China's biggest banks to borrow up to $US1.2 billion ($1.8 billion) for its Karara iron ore project in Western Australia.
The approval follows due diligence on Karara by the China Development Bank and takes the project a step further after Gindalbie agreed in November to give its state-owned Chinese partner AnSteel a bigger stake in the company in return for cash to pay its equity contribution.
"The financial strength of AnSteel, which is owned by the Chinese Government, underpins this debt structure, which is being provided by China's most important bank," Gindalbie chairman George Jones said.
Final loan approval is subject to environmental approvals, the finalisation of equity contributions, a confirming valuation report and successful detailed term sheet negotiations.
AnSteel and Gindalbie are each due to make final equity payments of $143.68 million this half. Gindalbie's contribution is being funded by a $162 million share placement to AnSteel that will give the Chinese steel maker a 36 per cent stake in Gindalbie.
Shareholders are due to vote on the issue on February 4.
Gindalbie said the Karara joint venture would have a combined $400 million in cash after the share placement.
SourcE: The Australian
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