Ann: Scheme of Arrangement and Demerger, page-67

OriginallypostedbyTheMole

Thatwouldalsoapplytothepowerlineswhichwereinstalledandalsothewatermains.
Nowthatopensupamajorissue.
Asaquantitysurveyor,thatwouldbealargetasktoassess,butitispossibletogothroughthesupplierandsubcontractorinvoicestoseparatethecosts.
IamcurrentlyworkingonajobwhereIamdealingwithover40,000invoices.
AllIwouldneedisthedrawingswithdemarcationoftheextraoverforstage2,theinvoicesandthecomputerprintoutofcosts.
Butthisisnotgoingtobedonebeforethevote,buthastobeincludedinare-adjustmentofthesharepriceoffer.
ItappearsthattheshareholdershavebeendudedbytheBoard.

I have located 2 SECURITIES EXCHANGE ANNOUNCEMENTS related to additional infrastructure capacity to support production levels of 14-36Mtpa.

1. SECURITIES EXCHANGE ANNOUNCEMENT & MEDIA RELEASE 5 May 2010.
GINDALBIE ANNOUNCES UPDATED KARARA CONSTRUCTION COST ESTIMATE

The following paragraphs of the announcement indicated the pre-payments on subsequent expansion phases by encompassing additional infrastructure capacity to support production levels of 14-36Mtpa.

"The revised Project Construction cost estimate of $1.975 billion covers all construction costs for the Stage 1 production level of 8Mtpa of magnetite concentrate and up to 3Mtpa of hematite, as well as effective pre-payments on subsequent expansion phases

by encompassing additional infrastructure capacity to support production levels of 14-36Mtpa.

The updated Project Construction Cost schedule is summarised below:

2010 Karara Project Construction Cost Estimate

Item Cost A$ m

Mine Development and Magnetite Concentrator 905
Infrastructure Rail (spur line +36Mtpa) and Port (16Mtpa) 275
Power transmission (+36Mtpa) 242
Other (incl water (16Mtpa), camp, airstrip, roads etc) 263
Project Management, Engineering & Other 290
-------
TOTAL CONSTRUCTION COST 1,975

The revised Project Construction Cost estimate compares directly with the $1.648 billion capital cost estimate in the 2007 Bankable Feasibility Study (BFS) for the hematite and magnetite phases of the Karara Project (excluding the China Joint Venture Pellet Plant) This represents an increase of approximately 20% or since the BFS, which was completed in September 2007. "

2. SECURITIES EXCHANGE ANNOUNCEMENT & MEDIA RELEASE 16 March 2011
UPDATED KARARA PROJECT CONSTRUCTION COST ESTIMATE

" Scope expansions relating to port and power line are expected to account for $125 million of the increase in forecast capital cost, which sets the project up for its first expansion phase A portion of the overall construction cost includes investment in the provision
of additional infrastructure capacity for an ultimately larger project at Karara. This up-front investment in infrastructure is expected
to result in substantial cost savings over the long term as the Project increases production from an initial 8Mtpa of concentrate to
its longterm potential of +30Mtpa.

At this stage, in addition to this scope expansion, it is anticipated that the Karara construction cost is likely to increase in the region
of 30 per cent. “All projects in Western Australia are currently subject to significant cost escalations and this situation is almost
certainly going to get worse as the resources boom strengthens, pushing up the price of both labour and materials,”
Gindalbie Chairman George Jones said."

Based on these 2 announcements, the additional infrastructure capacity cost could be in the region of A$425 millions (A$325 x 130%) and the GBG portion is A$212.5m.

This is very substantial and equivalent to about A$0.14 per share.