clsa asia-pacific markets (“clsa”) note on gbg

Gindalbie Metals1 GBG AU 12 month target:0.19

Gindalbie Metals (GBG AU– SELL). Gindalbie’s 50% owned $3bn Karara
mining project remains unfunded to completion despite planning first
magnetite shipments in the September 2012 quarter. Current debt levels of
around US$1.5bn appear unsustainable given its estimated cash operating
costs of A$70/t FOB Geraldton. Lower mid-term iron-ore prices are expected
to severely diminish its medium term returns and commissioning risk remains
for the 8mtpa project.