Gindalbie Metals' loss-making Karara magnetite project has been loaded up with more debt after signing a $US400 million ($428 million) loan facility with China Development Bank and Bank of China.
The new loan was announced this morning, just three months after Gindalbie said Karara had borrowed $US300 million from China Merchants Bank to take the magnetite project's total debt to $US2.8 billion.
Gindalbie owns 47.8 per cent of Karara and its biggest shareholder, AnSteel, has 52.2 per cent and taken over operational control.
Gindalbie said the $US400 million debt injection would provide Karara "with additional working capital support".
"Final steps for satisfaction of conditions precedent were completed today along with an initial drawdown of $US100 million," Gindalbie said.
"The new loan facility affirms the strong ongoing support Karara has received from existing relationship banks, together with the continued commitment of its shareholders AnSteel and Gindalbie."
Karara, in the Mid West, has struggled to ramp up magnetite production to its 8.8 million tonne a year nameplate capacity, requiring substantial re-engineering work. The operational problems compound the heavily-indebted Karara's revenue flow at a time of weak iron ore prices.
Shares in Gindalbie, which this month said it would wipe $640 million from the book value of its Karara stake, were down 0.2 cents to 4.8 cents.