Gindalbie Metals, the company that discovered the Lodestone iron ore deposit, has put up for sale the 1.5-billion tonne magnetite resource, a report by Deal Journal Australia said.
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Specifically, Gindalbie Metals wants to offload the iron ore project raise funds for its other mines as well as concentrate on the development of its Karara project, which is located just 45 kilometres away, the report said, quoting an unidentified person familiar with the matter, noting the Karara project "has a clear route to market."
The Karara project will involve a two-part construction stage that will churn out up to 16 million tonnes per year of iron ore.
Gindalbie Metals, however, has yet to finalizs discussions with China Development Bank for an additional debt facility for the Karara project. Karara is part owned by Ansteel, China's second-largest steelmaker after Hebei Iron and Steel Group.
Should additional funds be approved, Gindalbie Metals will share the needed mine infrastructure, including power supply and a rail line, to support the development of Karara.
But observers remain wary the divestment will ever take off, or if it does, it will not be an easy persuasion to potential buyers.
The Lodestone iron ore deposit is mainly more magnetite than hematite enriched.
Magnetite, more expensive to produce than hematite, often only has below 50 per cent iron content compared with hematite which has more than 60 per cent. What's more, hematite can be used directly in blast furnaces when making steel, while magnetite needs to be processed first.
PwC has been appointed to sell off the project.
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