Following a joint formal signing ceremony today, Western Australian iron ore company Gindalbie Metals Limited is pleased to announce that it has executed a wide-ranging Joint Venture Development Agreement with leading Chinese steel and iron ore company, Anshan Iron & Steel Group Corporation (Ansteel), to proceed with development of the Karara Magnetite Project and Mungada Hematite Projects in Western Australia.
The announcement follows the delivery earlier this week of positive Bankable Feasibility Studies for both iron ore projects, which are located 225km east of Geraldton in the Mid West region of Western Australia. The projects will involve a total combined investment of up to A$1.8 billion in new mining and processing facilities and associated infrastructure both in Western Australia and China.
The Agreement was signed in Sydney by the President of Ansteel, Dr Zhang Xiaogang, and the Chairman of Gindalbie, Mr George Jones in the presence of the President of The Peoples Republic of China, Mr Hu Jintao, and Australia’s Prime Minister, Mr John Howard, reflecting the importance of the Agreement to both Gindalbie and Ansteel and to the continued development of Australia’s iron ore industry.
Under the terms of the Development Agreement, Gindalbie and Ansteel have agreed to develop both the Karara and Mungada Projects subject to the following conditions:
- the signing of an Equity Joint Venture agreement for the Joint Venture Pellet Plant in north eastern China;
- finalisation of the approval for the decision to mine within two months;
- finalisation of off-take and financing arrangements; and
- environmental approvals being received for both the Australian and China Projects.
The financing terms of the Development Agreement are generally consistent with the original Karara Joint Venture Feasibility Study Agreement with the Project proposed to be funded on a 70/30 debt to equity ratio. For the equity component of the Project, Ansteel will contribute A$105 million plus 50% of the required equity whilst Gindalbie will contribute the balance of equity funding which equates to approximately 25% of the total equity funding requirement. The Project is now to be developed under an incorporated structure.
Earlier this week Gindalbie completed a previously announced A$39 million share placement to Ansteel, giving it a 12.78% interest in the Company.
The Development Agreement covers both the production of hematite lump and fines (with shipments targeted to commence in the first quarter of 2009) and magnetite concentrate in Australia and pellets in China (with production scheduled to commence in 2010).
On Monday, Gindalbie announced positive Bankable Feasibility Studies (BFS) confirming the technical and economic viability of a proposed A$1.6 billion development of the Karara Magnetite Project and a A$94 million development of the nearby Mungada Hematite Project. The Studies have been accepted by the Boards of both Gindalbie and Ansteel, clearing the way for development of the projects to proceed.
Commenting on the signing of the Development Agreement, Gindalbie’s Chairman, Mr George Jones, said: “Today represents a historic day for Gindalbie and Ansteel, marking the culmination of 18 months of feasibility work which has laid the foundations not just for a successful and profitable new iron ore venture in Western Australia but which has also cemented a strong and cooperative relationship between our two organizations.
“It was with great pleasure today that I was able to sign this Joint Venture Development Agreement with President Zhang Xiaogang, which clears the way for development of both the hematite and magnetite phases of our project to proceed,” Mr Jones continued. “This will bring a very significant investment to the Mid West region of Western Australia, and will make a very significant contribution to the region and the State through the development of infrastructure, long-term employment and business opportunities plus the payment of substantial royalties.
“We view this as the beginning of a long-term association based on a shared vision and common goals which will deliver substantial benefits for both parties and make a major contribution towards unlocking the mineral wealth of the Mid West region – which is one of the fastest growing new mining regions in Australia,” he added. “Karara and Mungada are the foundation projects upon which Gindalbie intends to build a major resource company.”
Ansteel’s President and Chairman of the China Iron and Steel Association, Dr Zhang Xiaogang, said: “Ansteel is very pleased to commit to the development of these important new Australian iron ore projects through the formal signing of our Joint Venture Development Agreement with Gindalbie today. It is also an important step for Ansteel as part of its long term and sustainable development strategy. The high-quality iron products produced at Karara represent a key input to our long-term growth plans, and we would like to see production from Karara expand in the future to meet the growth requirements of our new steel-making facilities.
“We look forward to continuing to work closely with Gindalbie towards the timely and efficient implementation of these substantial projects as the basis for a profitable and mutually beneficial long-term business relationship,” Dr Zhang added. Subject to the timely receipt of environmental approvals and financing, the Karara Joint Venture is aiming to commence exports of hematite ore through Geraldton in the first Quarter of 2009 and deliver first ore from the Karara Magnetite Project by the first Quarter of 2010.