Ansteel provides a $30 million AUD convertible shareholder loan to repay a loan for working capital purposes of the Karara Iron Ore Project (Linked to Record ID#97028 and #97029)

Project narrative

Between January and March 2013, Chinese state-owned steel-maker and iron ore miner Anshan Iron & Steel Group Corporation (Ansteel) issued a subordinated interest-free $50 million AUD loan to 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 (50% equity stake) and Angang Group Investment (Australia) Pty Ltd (a wholly owned subsidiary of Ansteel) (50% equity stake) — for short-term working capital requirements during the commissioning and ramp-up phase of the Karara Iron Ore Project (KIOP). Record ID#97029 captures this Ansteel loan. In April 2013, Ansteel issued a $30 million AUD subordinated shareholder loan to KML for short-term working capital requirements of the Karara Iron Ore Project (KIOP). This loan came on similar terms to the $50 million AUD loan (interest-free). Gindalbie Metals also issued a $30 million AUD loan to KML at concurrently. Record ID#97028 captures this Ansteel loan. Additionally, in April 2013, Ansteel agreed, subject to Foreign Investment Review Board (FIRB) approval and consent by KML’s Chinese lenders, to advance to KML a second $30 million AUD shareholder loan to allow KML to repay an April 2013 $30 million AUD loan from Gindalbie. This loan carried an interest rate of 6% per annum. Ansteel granted Gindalbie an option to purchase the second $30 million AUD loan at its face value (plus interest at a rate of 6% per annum); in the event Gindalbie failed to purchase the loan within 12 months, Ansteel had the right to convert all or some of the value of the KML loans (totaling $60 million AUD) into KML shares, subject to approval from FIRB and and Chinese regulatory authorities. The conversion rate would be to the following formula: Conversion Shares = Loan Amount x (Issued Shares / Capital), with the loan amount maximum value being $60,000,000 AUD, issued shares being the 308,080,000 fully paid ordinary KML shares on issue, and capital being $1,329,145,375 AUD; if Ansteel were to convert the entire $60,000,000 AUD of the loans, then KML would issue 13,907,283 shares to Ansteel, approximately 4.51% of total issued capital. Ansteel issued the $30 million AUD issued in June 2013. Its proceeds were used to repay Gindalbie Metals loan. Record ID#97030 captures this Ansteel loan. On March 19, 2014, Ansteel converted the two $30 million AUD loans to KML into equity; this increased Ansteel's equity interest in KML to 52.16%. The Karara Iron Ore Project (KIOP) 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.