Australian iron ore company Gindalbie Metals has signed an agreement with its JV partner Ansteel in order to restructure the ownership of $2.6bn Karara Iron Ore Project in Western Australia.

Gindalbie said that subject to few conditions, including Foreign Investment Review Board (FIRB) approvals, Chinese regulatory approvals and bank consent, the company’s stake in Karara Mining (KML) will be reduced from 50% to a minimum of 47.84%.

Under the terms of the transaction, Ansteel will provide the required bridging loan finance to KML to finance any cash shortfalls during the next 12-month period.

During this time, both companies will help KML secure a new longer-term working capital facility from China Development Bank.

This latest arrangement and funding method eliminates the need for Gindalbie to raise further equity capital to support KML’s working capital requirements, leaving Gindalbie with nearly A$35m ($33.4m) in cash and debt free.

Gindalbie managing director Tim Netscher said, "The advantage of this arrangement is it avoids the need for us to call on shareholders or the market for more funding for Karara’s ramp-up and effectively marks the beginning of a new chapter for Gindalbie."