China Merchants Bank (Hong Kong Branch) extends the maturity period by one year to seven years in 2020 for a $300 million USD loan for the Karara Iron Ore Project's working capital requirements and debt repayment purposes

Project narrative

In May 2014, the Hong Kong Branch of China Merchants Bank entered into a $300 million USD (RMB 1,987,500,000; $415 million AUD) fixed term loan facility with Karara Mining Limited (KML or 卡拉拉矿业公司 or 卡拉拉矿业有限公司) — a special purpose vehicle (SPV) and joint venture of Australian mining company Gindalbie Metals Limited (47.84% equity stake) and Angang Group Investment (Australia) Pty Ltd (a wholly owned subsidiary of Chinese state-owned steel-maker and iron ore miner Anshan Iron & Steel Group Corporation (Ansteel)) (52.16% equity stake) — for working capital and debt repayment purposes. This loan carried an interest rate of 3-month LIBOR plus a margin of 0.8% and had repayments due quarterly, a maturity date of April 2017, and a maturity period of three years. Gindlabie provided a shareholder guarantee to Ansteel for this term loan. The borrower used the facility for a combination of scheduled debt and interest repayments, capital expenditure to address plant bottlenecks, and working capital requirements. The first drawdown occurred on May 13, 2014. It was fully drawn as of June 30, 2014. As of December 31, 2018, funds under this facility were still outstanding for KML. On or around April 12, 2017, China Merchants Bank entered into an agreement with KML to extend the maturity period of the loan by 12 months (to four years), with a new final maturity date of April 2018. Gindalbie did not consent to extend its shareholder guarantee over the extension, and ceased to provide a shareholder guarantee to Ansteel for this loan. Record ID#97005 captures this extension. In or around April 2018, China Merchants Bank entered into an another agreement to extend the maturity period by 12 months (to five years), with a new final maturity date in April 2019 (see STAFF_NOTE 4). Record ID#97006 captures this extension. On or around April 20, 2019, China Merchants Bank entered into an agreement with KML to extend the maturity period of this loan by 12 months (to six years), with the new maturity date falling on April 20, 2020. Record ID#97007 captures this extension. In 2020, China Merchants Bank entered into another agreement with KML to extend the maturity period of this loan by one year (to seven years). Record ID#97008 captures this extension. The Karara Iron Ore Project (KIOP), which sought to construct and operate a magnetite mining and processing operation located in the Mid-West region of Western Australia, located approximately 225 kilometers east-southeast of Geraldton and 320 kilometers north-northeast of Perth. It consisted of an open cut mining pit, a beneficiation processing plant, a waste rock dump (WRD), tailings storage facilities (TSF), rail loading facilities, accommodation facilities, an airstrip, and a Linear Infrastructure Corridor (LIC) containing a water pipeline and access road. Stage 1 of KIOP sought was to be construct infrastructure to produce 3 million tons per annum of hematite and 8 millions tons per annum of magnetite concentrate, to be sold by Ansteel for its 6.5 million tons per annum Bayuquan steel mill in China. The Karara mine contained approximately 1.4 billion metric tons of recoverable reserves and over two billion tons of estimated reserves, with an estimated 60-year lifespan at an initial production rate of 8 million tons per annum. In addition to the mine, the KIOP consisted of the following supporting infrastructure: a 80-kilometer Karara rail spur, connecting KIOP to the common-user rail system at Tilley Siding, near Morawa; a 180-kilometer long 330 kV powerline from Eneabba to Karara, connecting the project site to Western Australia's South West power grid; a 145-kilometer water pipeline, supplying process water from a bore field near Mingenew to Karara; and the Karara Export Terminal (KET) at the Port of Geraldton, with a capacity of 16 million tons per annum of magnetite concentrate or hematite direct shipping, consisting of a dedicated fourth railway line inside the port, a twin-car rotary dumper (train unloader), a 297-meter long storage facility with a 255,000 tons capacity, a dedicated berth, Berth 7, capable of accommodating Panamax vessels; and a 5,000 ton-per-hour ship-loader. The ground-breaking ceremony and the start of construction began on November 2009. The Karara Export Terminal officially opened on September 18, 2012. The project first produced magnetite concentrate in November 2012. The project was officially opened in April 2013. The project first produced 68% Fe concentrate were later in August 2013.