THE BOURSE WHISPERER: Gindalbie Metals (ASX: GBG) has announced an approximate $62 million equity raising.
The raising comprises a $40 million fully underwritten placement to institutional and sophisticated investors and a proposed additional conditional placement of approximately $22 million to the company’s major shareholder Ansteel, maintaining its approximate 36 per cent equity interest in Gindalbie.
Gindalbie said the proceeds will strengthen its balance sheet, and may be used to fund contributions to the Karara Mining joint venture if required during commissioning of its Karara project in the Midwest region of Western Australia.
“While Karara has been delivered broadly within the revised construction budget and very close to schedule – which is a major achievement in itself – we have seen that, in recent months, unexpected volatility in Australian Dollar iron ore prices can put significant short-term pressure on Australian iron ore operations,” Gindalbie Metals managing director Tim Netscher said in the company’s announcement to the Australian Securities Exchange.
“We want to make sure that the company and the project remain in the strongest possible position during the commissioning process, with sufficient liquidity to address any unexpected events and the ability to weather any adverse developments in global markets.
“This is a large and complex plant and the commissioning process will take several months and involve a number of challenges along the way.
“I am highly confident in the team we have put together, their focus on this job, and the timeframe we have allowed ourselves, however we must be prepared for unexpected issues, and be able to move quickly and seamlessly to address these.
“We are very pleased with Ansteel’s participation in this transaction which highlights their continued and ongoing support for Gindalbie and the Karara project.”
The first magnetite concentrate has been produced at Karara and the project is now going through its commissioning and ramp-up phase with nameplate capacity of 8 million tonnes per annum expected to be achieved during June Quarter 2013.
Gindalbie indicated the proceeds will provide an additional cash buffer to address any possible increase in working capital requirements during the 6-month commissioning phase for the magnetite concentrator.
To date the Karara project has been delivered broadly in line with the revised construction budget and schedule.
Gindalbie also advised that following a review the Stage 1 production cost forecast has increased to $72 to $76 per tonne (FoB Geraldton, not including royalties) from the previous forecast of $65 to $68 per tonne.
Revised product cost guidance reflects general inflation and the impact of the Carbon Tax since the previous forecast in June 2011.
Gindalbie commenced shipments of DSO hematite from Karara in October, with production and shipments currently ramping up to a targeted annualized rate of 2Mtpa by the end of 2012.