Gindalbie Metals Ltd
(ASX:GBG) says its Karara iron ore project will go ahead despite the uncertainty surrounding the federal government’s proposed mining tax.
AAP reports that in a letter to shareholders, the iron ore miner said the project would proceed with the full support of the company’s Chinese partner, Ansteel, as it needs concentrates for its steel mills.
But Chairman Geoff Wedlock admitted that the tax would reduce returns and put planned and possible expansions at risk if implemented as proposed in 2012.
The Karara project aims to generate $1 billion annually in export revenues, increasing to $3 billion as it develops.
Gindalbie says the project is set to generate about $55 million a year in government royalties on start-up when the existing rules are applied.
The royalty payments are in addition to corporate and other taxes the company is obligated to pay.
A number of Australia’s miners have threatened to withdraw or delay projects if the proposed tax on resource profits goes ahead, but to date none have officially cancelled any.
Gindalbie Metals posted a profit of $26.22 million for fiscal 2009.
