Gindalbie swings axe at HQ

Acting Gindalbie Metals managing director Michael O'Neill says there has been no change in strategy at the miner despite a move to cut back its head office following the transfer of former boss Dale Harris to the company's Karara Mining subsidiary.

Mr Harris stepped down from the top job at the listed company to take charge of running the troubled Karara magnetite project after joint venture partner Ansteel took a majority shareholding in the subsidiary this year.

On top of the $600,000 a year saved by Mr Harris' shift, Gindalbie said yesterday it was moving to rationalise its remaining corporate overheads, cutting positions not directly related to its finance and administrative teams.

It is believed between six and eight positions have been given the axe in recent weeks. Gindalbie is also understood to be considering moving most of its exploration team into Karara with a view to contracting work on its own tenements on an as-needs basis.

Mr O'Neill denied Gindalbie was effectively entering hibernation. He said the company was committed to making Karara work but the technical personnel to make that happen were best employed directly by Karara.

With Gindalbie effectively in limbo until Karara's $124 million plan to re-engineer its plant to meet some production issues is complete, Mr O'Neill said the company's board had made the decision to cut costs until it had more operational clarity.

Gindalbie had $45.1 million in cash at the end of March, according to yesterday's quarterly report, with the vast majority of Karara's ongoing funding coming from credit lines organised by 52.2 per cent shareholder Ansteel.

If existing credit lines worth $US230 million are also converted to Karara equity, the Chinese steelmaker could emerge with a stake of up to 62 per cent in the mine under existing agreements.

Mr O'Neill said there had been no discussion about selling down Gindalbie's remaining stake in the project and Ansteel had indicated it was comfortable with its holding in Karara.

Gindalbie said Karara was now capable of producing magnetite concentrate at about 75 per cent of its 8.8 million tonne name- plate capacity, with 911,000 tonnes shipped during the March quarter.

Gindalbie's share price slipped 0.1¢, or 1.7 per cent, yesterday to 5.7¢.

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