China’s Ansteel has informed Gindalbie Metals that its $25 million purchase of the company is final, allowing the iron ore company to demerge from subsidiary Coda Minerals.
Ansteel told Gindalbie that it is “supportive of proceeding with the transaction in accordance with the currently proposed scheme of arrangement and demerger.”
“We agree with the independent expert’s opinion as well as your independent board’s view of the transaction, both of which are stated in the relevant scheme booklet,” an Ansteel statement said.
Gindalbie has struggled to deliver a profit at its Karara magnetite iron project in Western Australia and had outstanding debts of $231 million at the end of 2018.
The company’s demerger of Coda is intended to allow the subsidiary to benefit from exploration opportunities at the Mt Gunston copper-cobalt project in South Australia.
Ansteel told Gindalbie that the current transaction was the only structure that could be achieved under Ansteel’s regulatory approval conditions and as such, the current proposal was final.
Gindalbie released a statement saying its independent directors remained “strongly supportive” of the transaction as the best way for shareholders to receive value for their shares and retain exposure to potential upside in Coda Minerals.
The Perth-based company also recommended that shareholders vote in favour of the transaction given that if it was not implemented, the trading price of Gindalbie shares would fall.
Gindalbie’s Karara mine, 200 kilometres east of Geraldton in Western Australia, was purchased at the height of the iron ore boom in 2007 as a join venture project between Ansteel (52 per cent) and Gindalbie (48 per cent).
The project has a reserve of more than two billion tonnes of ore, but its failure to turn a profit led to Gindalbie declaring a write down in 2014.
Ansteel, which is already a shareholder in the company, will purchase the remaining 64.11 per cent it does not already own of Gindalbie for 2.6 cents a share.