Cash-strapped Gindalbie extends Karara debt

Iron ore miner Gindalbie Metals has extended its finance facility for its Karara magnetite project in the Mid West by three years and an additional $US400 million ($428 million).

The facililty extension, from China Development Bank and Bank of China, follows the news earlier in the month of a $640 million hit to its balance sheet due to a revaluing of its investment in the issue-plagued Karara mine

Gindalbie holds a 47.8 per cent stake in the mine's operator, Karara mining, with the remainder held by South Korean steel giant AnSteel.

In a review of its assets, Gindalbie said Karara had been hit by capacity restrictions, a low iron ore price and a higher than anticipated Australian dollar, which led to the impairment.

Gindalbie said the finance facility extension, of which it had already drawn down $US100 million, would boost general working capital.

Ansteel provided a $60 million loan to Karara last year and retains an option to extend its stake in the project to 62 per cent if it provides $230 million in working capital.

Gindalbie's share price fell 2 per cent to 4.9 cents per share at 11:35am.