Gindalbie Metals : Half Yearly Report and Accounts

Microsoft Word - Dec 2015 Interim Draft

ABN 24 060 857 614

GINDALBIE METALS LTD

INTERIM FINANCIAL REPORT 31 DECEMBER 2015

The directors present their report together with the financial report for the half-year ended 31 December 2015 and the auditor's review report thereon.

DIRECTORS

The Directors of the Company during or since the end of the half-year are:

Name & Qualifications	Period of Directorship
Mr Keith F Jones B.Bus, FCA, FAICD Non-Executive Chairman	Director since March 2013 Appointed as Chairman April 2013
Mr Michael J O'Neill Dip Bus Admin, SFFin, FAICD Independent Non-Executive Director Acting Managing Director	Director since April 2006 Acting Managing Director April 2014 Resigned October 2015
Mr Chen Ping B.Eng Non-Executive Director	Director since June 2009 Resigned November 2015
Mr Andrew R Marshall I. Eng, MAICD Independent Non-Executive Director	Director since December 2010
Mr Paul D Hallam BE (Hons) Mining, Grad Cert Mineral Economics, FAICD, FAUSIMM Independent Non-Executive Director	Director since December 2011
Mr Shao Anlin PHD Mining Non-Executive Director	Director since March 2015
Mr Li Ge B.Fin Non-Executive Director	Director since March 2015

REVIEW OF OPERATIONS

Key events for the half year ended 31 December 2015:

• Production from the Karara Project ("Project") for the six months ended 31 December 2015 totalled 3.684 million wet metric tonne (wmt) of magnetite concentrate and 0.882 million wmt of DSO hematite shipped.

  
  

• A total of 79 shipments were completed through the Karara Export Terminal in Geraldton.

  
  

• Mr Li Ge and Mr Anlin Shao were elected as Directors of the Company. Mr Chen Ping retired as Director and Vice Chairman of the Company at the Company's Annual General Meeting that was held on 27 November 2015. Resolutions one to four were passed by shareholders at this meeting.

  
  

• Gindalbie sort shareholder approval for variations to security arrangements for the Karara Project. At the Company's Annual General Meeting the resolution to the Variation was not approved and the mortgage will remain with a limited recourse guarantee.

  
  

• Mr Michael O'Neill passed away in October 2015. The Directors of Gindalbie and the management team acknowledge Mr O'Neill's enormous contribution to the development of Gindalbie over the past 9 years.

  
  

• The leadership of KML has transitioned to Ansteel Mining during the reporting period. As such Mr. Dale Harris has left KML and was succeeded as CEO of KML by Mr Zhang Zhao Yuan. Mr Paul Smith left KML during the period and was succeeded as CFO by Mr Li Shuwang.

  
  

• Gindalbie has continued to reduce operating costs to a minimum and is now in a position to leverage the cash we hold and focus on new opportunities in the resource market.

  
  

• At 31 December 2015, Gindalbie Metals Ltd had cash reserves of $973 thousand and $38.5 million in term deposits.

RESULTS OF OPERATIONS

The net loss for the six months ended 31 December 2015 was $5.39 million, compared with a net loss of

$3.2 million for the six months ended 31 December 2014.

KARARA PROJECT (Ansteel 52.16%, Gindalbie 47.84%)

The Karara Project, which is located 200km east of Geraldton in Western Australia, is owned and operated by Karara Mining Limited ("KML", "Karara"), which is a joint venture between Gindalbie Metals Ltd ("Gindalbie") and Anshan Iron and Steel Group Corporation (Ansteel), one of the largest steel- makers and the biggest iron ore producer in China. The Karara Project consists of a long-life, magnetite concentrate operation with a smaller-scale supporting hematite Direct Shipping Ore ("DSO") operation.

Karara has significantly increased production and at times operated in excess of the design capacity during this reporting period.

In light of the current market conditions, Ansteel is reviewing their strategy and investment options in relation to Karara. The primarily focus is on strengthening management practices and reporting, as well as continued cost cutting efforts across key operational areas. The CEO of KML has also stated in an

email to KML staff that Ansteel is unable to continue to provide funding support to KML due to the economic and industry downturn.

Production

A total of 79 shipments were made during the half year totalling 4.566 million wet metric tonnes (wmt) of combined magnetite concentrate and hematite Direct Shipping Ore ("DSO").

Karara Magnetite
Unit '000 wmt	Sep-15 Qtr	Dec-15 Qtr	Total
Ore mined	4,394	4,941	9,335
Concentrate Produced	1,845	1,839	3,684
Concentrate Shipped	1,820	1,858	3,678

Hematite DSO production finished in December 2015.

Karara Hematite DSO
Unit '000 wmt	Sep-15 Qtr	Dec-15 Qtr	Total
Ore Mined:	559	323	882
High Grade
Medium Grade	0	0	0
Low Grade	0	0	0
Total Mined	559	323	882
DSO Shipped	751	424	1,175

GINDALBIE REGIONAL EXPLORATION

Exploration during the reporting period comprised annual statutory technical reporting and review work on project targets. Exploration activities during the period focused on completing statutory reporting on tenure and project target work.

CORPORATE

Mr Chris Stevens has been appointed as Business Development Manager and due to the passing of Mr Michael O'Neill, Mr Stevens has assumed the role of Acting CEO effective from 23 November 2015 for an initial six month contract.

Mr Christopher Gerrard resigned as Company Secretary and General Counsel and has transferred to Karara Mining Limited as General Counsel and Company Secretary. Ms Rebecca Moylan has been appointed as Company Secretary in addition to her Chief Financial Officer duties.

Cash Reserves

At 31 December 2015, Gindalbie Metals Ltd had cash reserves of $973 thousand and $38.5 million in term deposits.