Signing of US$1.2 billion Karara loan facility

The loan facility will underpin development of Gindalbie’s US$2 billion Karara Iron Ore Project in Western Australia.
Gindalbie and its joint venture partner, Ansteel, said the landmark debt facility was a major achievement in the current uncertain political and economic climate which reflected the quality of the Karara Project.
The agreement was signed in Canberra on June 21st by Gindalbie’s managing director, Garret Dixon, Chen Yuan, the chairman of China Development Bank.
It is the second time the Karara Project has attracted the support of the highest levels of the Chinese Government after the original joint venture development agreement between Gindalbie and Ansteel was signed in the presence of President Hu Jintao in 2007.
Garret Dixon said the completion of final ancillary banking documents and obtaining Chinese regulatory approval for Ansteel’s parent company guarantee in coming weeks were the key final requirements to allow drawdown of the Loan Facility to proceed on schedule from July.
“This is a major milestone,” Dixon said, “Securing such a large project debt facility, which was arranged under the previous taxation regime, against the current backdrop of massive uncertainty arising from the proposed Resources Super Profits Tax is a considerable achievement.”
He said that if the project was only at the concept stage he is “sure that it would be proceeding”.
“It would more likely have been put on hold until the issues raised by the proposed new tax on the resources industry were sorted out,” said Dixon.
“Karara is a new-generation magnetite mine that is taking low grade iron ore, turning it a premium iron ore product and creating a new market for our natural resources. Along the way we are making enormous investments in common-user infrastructure, supporting communities, creating jobs and paying taxes and royalties.”
The 12-year Karara Project Loan Facility is being provided on competitive commercial terms principally by the China Development Bank and Bank of China with Ansteel providing a 100 per cent parent company guarantee.