China’s AnSteel to Invest in Gindalbie Iron Ore Group

Western Australian iron ore group Gindalbie Metals Ltd. announced that it has reached agreement with its joint venture partner in the Karara iron ore project, Chinese steel and iron ore company Anshan Iron & Steel Group Corp. (AnSteel), for AnSteel to take a strategic equity position in Gindalbie.

Under an agreement signed with AnSteel, Gindalbie will issue 65 million shares at A$0.60 each to AnSteel’s Hong Kong investment vehicle, Angang Group Hong Kong Co. Ltd., to raise A$39 million. Following completion of the share placement, AnSteel will become Gindalbie’s second largest shareholder with a 12.94% interest.

The agreement is conditional upon AnSteel receiving approval and sign-off from Chinese regulatory authorities, which are expected to be received within two months. After completion of the placement, AnSteel will be invited to nominate a representative to join Gindalbie’s board, with the timing of this appointment to be jointly determined by Gindalbie and AnSteel.

The funds raised through the placement to AnSteel will be applied to the continued development of both the Karara magnetite project and the Mungada hematite project, both of which are being developed through the existing 50:50 joint venture between Gindalbie and AnSteel.

Following completion of the placement, Gindalbie said it would have cash reserves in excess of $60 million, providing funding to commence development of the Mungada project this year and to complete the bankable feasibility study on the Karara project, which is scheduled to be finalized by the end of August 2007. Development of the Mungada project is scheduled to commence in the second half of 2007, at an initial production rate of 2 million mt/y in 2008.

AnSteel and Gindalbie said they would make a final decision to proceed with the Karara project following completion and delivery of the bankable feasibility study in August 2007, with the overall project targeted to begin production at the rate of 8 million mt/y of blast furnace quality pellets and concentrate by early 2010.