China's Ansteel has grabbed the reins at Gindalbie Metals' Karara magnetite project, appointing one of its executives as managing director and taking majority control of Karara Mining's board.
The move came after the steelmaker took its ownership of the magnetite producer to 52.2 per cent under the terms of a debt for equity swap negotiated last year as Karara ran short of cash.
Karara's ramp-up problems forced it to tap Ansteel for working capital several times in 2013. Last week's half-year report showed it owed Ansteel almost $430 million at December 31.
Ansteel converted $60 million of that debt into Karara shares, diluting Gindalbie's stake down to 47.8 per cent. Further debt swaps could see Gindalbie's ownership watered down to as low as 38 per cent.
Ansteel will now appoint three of five Karara board members, though unanimous agreement would be needed on decisions on the price it pays for Karara's product. Ansteel vice-president Chen Ping has taken over as Karara's managing director, with Paul Sims to continue as acting chief executive.
Karara also appointed former IMX managing director Neil Meadows as chief operating officer. Mr Meadows was chief operating officer of Clive Palmer's Queensland Nickel until early 2011 and was operations manager at Glencore Xstrata's Murrin Murrin mine.
Gindalbie shares yesterday fell 0.4Â¢ to 7Â¢ yesterday.