The plunge in the price of iron ore looks set to claim another casualty with Gindalbie Metals Ltd. questioning its future, as partner Anshan Iron and Steel Group Corp. considers withdrawing funds for their $2 billion mine.
Anshan engaged a third party to assess the viability of its Karara iron ore mine in Western Australia amid the steel making material’s price collapse, according to a statement from Gindalbie.
Shares in the Perth-based company slumped 57 percent to a record low of 0.9 cents in Sydney, giving it a market value of A$13.5 million ($9.4 million) compared with A$780 million at the end of the 2011 fiscal year.
The study into Karara, located about 200 kilometers (124 miles) east of Geraldton, “could cast doubt on Gindalbie’s ability to continue as a going concern,” the Australian producer said Tuesday in the statement.
A decision “to withdraw funding support could lead to claims under various operating and financing guarantees against Gindalbie.”
Iron ore’s 39 percent slump in 2015 to a third straight annual loss has forced iron ore operations from Sweden to Canada to closeas demand growth falters in China and the lowest-cost exporters squeeze rivals by raising output.
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