Saw this in the Australian Beijing tightens grip as Gindalbie...

Saw this in the Australian



Beijing tightens grip as Gindalbie reconsiders

• THE AUSTRALIAN
• AUGUST 02, 2014 12:00AM

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Sarah-Jane Tasker

Reporter
Sydney
https://plus.google.com/109975179297660562731/
CHINA could take full ownership of another Australian magnetite iron ore mine after Gindalbie Metals flagged it might sell its interest in the struggling Karara project.
Gindalbie’s future in the operation, a joint venture with Chinese steel giant Ansteel, was thrown into doubt after the company revealed in its quarterly report that it was reviewing the value of its shareholding.
The Perth-based company has a 47.84 per cent interest, which is expected to fall to 38 per cent when Ansteel exercises its right to subscribe for new equity in Karara to provide funds for debt and pre-sale repayments.
Gindalbie acting managing director Michael O’Neill told The Weekend Australianyesterday that the company might consider selling its interest in the troubled project.
“All strategies are up for discussion but we might try and monetise it (the Karara stake), and China has pre-emptive rights if someone comes along and says, ‘I think your 38 per cent is an excellent option on the future of iron ore prices,’ ” Mr O’Neill said.
“It would probably be a cheap option on 40-year iron ore prices.”
Magnetite iron ore attracts a higher premium than the widely produced hematite ore from Western Australia’s Pilbara region but it has a higher cost because it involves more processing.
If China does eventually take full control of Karara, the Chinese will be in charge of all three of Australia’s producing magnetite mines. Production from the Karara project, 200km east of Geraldton in Western Australia, has been limited by current capacity restrictions in the crusher and concentrator.
“We were planning on the project being at seven million tonnes by now but we are not because of the ore difficulties, the crusher difficulties and the concentrator difficulties,” Mr O’Neill said.
Gindalbie suspended trading in its shares as it awaits the outcome of a review of the value of its shareholding in Karara.
“In light of recent developments, including lower than forecast iron ore price, higher than anticipated Australian dollar exchange rate and current capacity restrictions at Karara, the company has commissioned an independent review of the value of its shareholding in Karara,” Gindalbie said in its quarterly report.
Gindalbie also outlined in its report that given the ongoing work to assess and improve the production capacity and performance of the Karara operation, its board was not in a position to provide accurate production guidance or forecast when the project will achieve positive cashflow.
Shares in Gindalbie were frozen at 5.8c.
UBS analyst Glyn Lawcock has a “sell” on the Gindalbie stock, with a 2c target price.
Mr Lawcock warned in a client note that if the value of Karara was negative, Gindalbie’s viability would be in question."


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