Gindalbie Metals has finalized an Aus$534 million equity funding agreement that will see production from the Karara Iron Ore Project in Western Australia begin next year.

The signing of a subscription agreement between Gindalbie and its joint partner, Anshan Iron & Steel Group Corporation (Ansteel), completes the funding structure for the 30% combined equity component of the magnetite and hematite phases of the Aus$1.8 billion project.

The payment is the latest in a number of milestones achieved by Gindalbie that underline the advanced stage of the Karara project, including:

A substantial increase in the JORC-compliant resource base to 1.43 billion tonnes of magnetite and 27.1 million tones of hematite;

Completion of a high-quality Bankable Feasibility Study which confirmed excellent returns;

The signing of a wide-ranging Joint Venture Development Agreement with Ansteel;

A strategic direct equity investment by Ansteel, making it Gindalbie’s second-largest shareholder;

Finalization of a 15-year power supply agreement for the Karara project with Verve Energy;

Continuation of the environmental approvals process for the hematite and magnetite stages;

Commencement of an expanded regional exploration effort targeting a range of exciting new prospects, including newly identified magnetite resources in close proximity to existing hematite deposits

Consistent with the desire of Gindalbie and Ansteel to begin production of iron ore as soon as possible and the confidence each party has in the timely receipt of environmental approvals, the current equity funding contributions of Ansteel will be used to begin development of the project immediately and in particular to place orders and deposits for the supply of long lead time capital equipment.

Subject to the timely receipt of environmental approvals and financing, Karara Mining aims to begin exports of hematite ore through Geraldton in 2009 and deliver first magnetite concentrate ore from the Karara Magnetite Project by 2010.

www.gindalbie.com.au