Gindalbie, Ansteel in iron ore mine funding pact

SYDNEY, Feb 12 (Reuters) - Gindalbie Metals Ltd (GBG.AX: Quote, Profile, Research, Stock Buzz) said on Tuesday it had completed a A$534 million ($481 million) funding agreement with China's Anshan Iron & Steel Group Corp (0347.HK: Quote, Profile, Research, Stock Buzz) (Ansteel) to help pay for an iron ore mine in Australia and a iron factory in China.

The overall cost of developing the Kara mine in Western Australia's midwest region, which Gindalbie hopes to have running next year, and a pellet-making plant in northeastern China, is projected to cost A$1.8 billion.

Gindalbie stock leapt more than 13 percent to peak at A$0.865 a share on Tuesday, before recoiling to around A$0.82.

Ansteel has made an initial A$50 million payment and is set to make three more payments this year totalling A$322.1 million. Gindalbie said.

Gindalbie said it was committed to providing A$162 million in funding.

Ansteel has also agreed to fully underwrite the debt component of the funding structure if required, Gindalbie said.

Ansteel, which produces around 16 million tonnes of crude steel a year and is one of China's largest iron ore miners, relies almost solely on domestic ore to feed its mills. As is the case with a number of China's steel mills, it is looking to overseas deposits to augment its ore supplies.

Global miners Rio Tinto Ltd./Plc. (RIO.AX: Quote, Profile, Research, Stock Buzz)(RIO.L: Quote, Profile, Research, Stock Buzz) and BHP Billiton Ltd./Plc. (BHP.AX: Quote, Profile, Research, Stock Buzz)(BLT.L: Quote, Profile, Research, Stock Buzz), each are spending billions of dollars to expand production in the iron ore-rich Pilbara region near the midwest.

BHP has launched a hostile takeover offer for Rio, in large part to combine both companies' iron ore mines in Australia, where profits have been climbing in step with rising ore prices.