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Gindalbie stock tumbles on A$640m Karara impairment

Gindalbie stock tumbles on A$640m Karara impairment

Photo by Bloomberg

11th August 2014

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – The share price of iron-ore miner Gindalbie Metals dropped nearly 19% on Monday after the company announced an impairment of A$640-million on the carrying value of its Karara asset, in the Pilbara.

The review of the carrying asset was conducted as part of the company’s asset evaluation for the year ended June, and incorporated the lower-than-forecast production levels at Karara, as well as the current capacity restrictions, lower-than-forecast iron-ore prices, and the higher-than-anticipated Australian dollar exchange rate.

The Karara mine has yet to meet its nameplate capacity, and earlier this year, Gindalbie was forced to secure a $300-million loan facility from China Merchant Bank to meet a funding shortfall to bring the project to capacity.

At the end of March, Gindalbie reported that a technical review into the project had identified the need for an additional 55-m-diameter tailings thickener, the construction of a second wet tailings storage facility and the installation of dewatering cyclones after the rougher magnetic separation stage.

The additional debottlenecking work was expected to allow the Karara project to reach its nameplate capacity of 8.8-million tonnes a year.

Trading in Gindalbie’s shares resumed on Monday, after having been suspended at the end of July. By late in the afternoon, the company’s stock changed hands at A$0.047 a share, compared with the July 31 closing price of A$0.058 a share.

Edited by Mariaan Webb
Creamer Media Contract Publishing Editor

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