PERTH (miningweekly.com) – ASX-listed Gindalbie Metals has reported that its joint venture (JV) vehicle with Ansteel, Karara Mining, was on the hunt for new capital to assist with short-term working capital requirements.

Karara Mining recently completed a $44-million magnetite concentrate prepayment agreement with Ansteel, one of China's largest steelmakers and iron-ore miners, and was working to progress further repayment agreements.

The JV vehicle has also started discussions regarding a potential restructure of its debt repayment schedule.

At the end of April, Ansteel offered a A$30-million loan to Karara Mining to repay a loan on the Karara project, in Western Australia.

During the March quarter, Gindalbie and Ansteel each contributed A$50-million in interest-free loans to the JV company, to assist with short-term capital requirements. The partners subsequently also each advanced a further A$30-million loan to the JV on similar terms, with Gindalbie making its payments from existing cash reserves.

“The working capital funding issue is a frustrating reality for so many new operations,” said Gindalbie MD Tim Netscher.

“A great deal has been achieved with the construction and development of this major mining and infrastructure project. We still believe Karara has enormous value and potential. We just need to clear this final hurdle to get to full production levels and we remain committed to assisting Karara Mining to source suitable short-term funding options to try to avoid the need to call on its shareholders again,” Netscher said.

He added that commissioning and ramp-up of the Karara operation was progressing well, particularly considering the large-scale, complex nature of the concentrator.

“Importantly, all of the major components of the plant, which are the biggest risk area in terms of achieving full plant performance, have operated at up to design capacity,” Netscher added.

“The types of minor issues we have dealt with, such as the adjustment required to bring the tailings circuit to full operating capacity, are well within the parameters of what might normally be expected during the commissioning and ramp-up phase of a major project such as Karara.”

The project was on target to reach its nameplate capacity of eight-million tons a year by July.