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DJ MARKET TALK: Mid-West Iron Miners Rise After QR Moots Move

 

 

0022 GMT [Dow Jones] Shares in Australia's Mid-West iron ore miners are up strongly early Wednesday after QR National (QRN.AU) mooted involvement in the delayed Oakajee port and rail project. Oakajee developer Murchison (MMX.AU) was up 4.5% at 69 cents after the open before falling back to 68 cents last while Gindalbie (GBG.AU), which hopes to use the project for its longer-term expansion plans, surged 5.3% to 90 cents before dropping to 88 cents. Development of the Mid-West iron ore province hinges on the multi-user rail project, eventually tipped to carry 100 million metric tons/year, but rising costs and delays have raised doubts whether Murchison is up to the job. QRN CEO Lance Hockridge said the company would be ready to take a stake to aid the project, in an interview with Dow Jones Newswires published late Tuesday.

http://www.morningstar.co.uk/uk/markets/ne...146256521463187

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GINDALBIE STATEMENT ON OAKAJEE PORT

 

A statement by Mr Tim Netscher, the Managing Director of Gindalbie Metals Limited (ASX: GBG ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ "Gindalbie") regarding Oakajee Port.

 

"The Karara Iron Ore Project is investing more than $200 million on infrastructure at Geraldton Port to enable capacity of approximately 16Mtpa. This capacity is suitable for the Stage 1 production level of 10Mtpa and the anticipated Stage 2 expansion to 16Mtpa."

 

"For production beyond 16Mtpa Karara requires the development of Oakajee Port and has signed an MOU as a foundation customer of the project. We continue to support the development of Oakajee and continue to be engaged in constructive negotiations with all parties involved."

 

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The ongoing construction of the Karara Project is underpinned by the existing US$1.2 billion Karara Project Loan Facility, which is currently drawn down to US$676 million, as well as the equity payments already made to Karara Mining Limited (KML) by Gindalbie and its partner Ansteel.

 

To cover its share of the estimated increased construction cost Gindalbie is considering equity alternatives that would give shareholders the opportunity to participate on an equitable basis. The Company is expected to be in a position to make a decision on the funding strategy for Stage One of the Karara Project in a few weeks time.

 

Gindalbie's major shareholder, Ansteel, has indicated its commitment to support any equity raising, continuing its long-standing support of the Karara Project development.

 

As announced in April KML have signed a framework agreement for an additional US$336 million working capital facility to fund non-construction related working capital and financing expenses to be incurred prior to the emergence of positive cash flows, from the sale of magnetite concentrate during the second half of 2012.

 

 

 

 

The review of forecast operating costs for the Karara Project is nearing completion, subject to finalisation of key rail, port and mining contracts. Current indications are that forecast average cash operating costs will be in the range of A$65-68/t for production of 10Mtpa (8Mtpa magnetite concentrate and 2Mtpa hematite DSO) loaded onto a vessel at Geraldton Port, not including royalties.

It is anticipated that average cash costs for production of 16Mtpa would be in the order of A$55-60/t.

 

 

 

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  • 3 weeks later...

I'm not sure that this is particularly significant at this stage. The biggie hinges on whether or not Oakajee port development proceeds as originally proposed. Without this, GBG's future expansion plans are severely compromised, to say the least.

 

:unsure:

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http://au.legalbusinessonline.com/deals/ka...efinancing/2933

 

Karara Iron Ore Project refinancing A$420.92m...........Got to be something in the figures getting bandied around i'd say.

 

 

Gindalbie Metals May Raise Up to A$450 Million, RBS Says

http://www.bloomberg.com/news/2011-07-14/g...bs-says-1-.html

 

 

Gindalbie Metals Ltd. (GBG), an Australian iron ore developer, may raise as much as A$450 million ($484 million) in a share sale to finish building its A$2.6 billion Karara project, Royal Bank of Scotland Group Plc analysts said. The sale may range between A$150 million and A$250 million, with a "worst case scenario" of A$450 million if no debt is secured, RBS analysts led by Todd Scott said in a note yesterday. A share sale "could be imminent," they said.

"To cover its share of the estimated increased construction cost, Gindalbie is considering equity alternatives," Michael Weir, a spokesman for Perth-based Gindalbie said in an e-mail. "The company is expected to be in a position to make a decision on the funding strategy for stage one of the Karara project soon."

Gindalbie, which is developing the mine with Anshan Iron & Steel Group of China, may get help from its partner in obtaining loans from Chinese banks, Scott said. An estimated A$1.3 billion already has been spent on the project, he said.

Gindalbie rose 0.7 percent to 75.5 cents at 2:52 p.m. in Sydney trading, trimming its decline this year to 46 percent.

The company on June 29 announced a cost overrun of about A$600 million for the project in Western Australia's Mid-West region.

 

This was in Murchisons letter to holders yesty and would have delayed the above finalisation i would say.

OPR has identified three foundation customers ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ the Gindalbie / Ansteel Karara Mining joint venture, our own Murchison / Mitsubishi joint venture (Crosslands) and Sinosteel Midwest Corporation (SMC).

OPR has executed preliminary memoranda of understanding with these three potential customers; however, an agreement on the commercial terms of the supply chain agreements has not yet been reached.

 

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