karara update

just out - taken from Commsec - http://imagesignal.commsec.com.au/docserver/01502447.pdf

Gindalbie Metals Limited (ASX: GBG – “Gindalbie”) advises that its joint venture partner, Ansteel, has exercised its
right to convert two shareholder loans of A$60 million in total to new shares in Karara Mining Limited (KML). This
will result in Ansteel increasing its ownership of KML from 50% to 52.16%, with Gindalbie owning 47.84%.

In line with the previously agreed conversion formula, Ansteel will be issued with a total of 13,907,283 new KML
shares at an issue price of $4.31 per share. Once the new shares are issued, KML will have a total of 321,987,284
shares on issue with Gindalbie holding 154,040,000 shares and Ansteel the balance.

Ansteel also has the right to subscribe for new equity in KML to provide KML, if required, with sufficient funds to
repay additional bank debt and concentrate presales agreements totaling US$230 million. This debt-to-equity
conversion, if exercised, would increase Ansteel’s stake in KML to approximately 62% with Gindalbie retaining
approximately 38%.

Karara Joint Development Agreement and Management Changes

In recognition of the change of ownership structure at KML, Ansteel and Gindalbie have previously agreed to
amend various terms of the Karara Joint Development Agreement. While these amendments have yet to be
formalized, it has been agreed that:

1. The KML Board will be increased in number from 4 to 5 Directors – 3 from Ansteel and 2 from Gindalbie
2. The Chairman of KML will be one of the three Directors appointed by Ansteel and will have a casting vote
at KML Board meetings;
3. All Board decisions are to be made by ordinary resolution of the Board apart from decisions concerning
the pricing and quality of product sold by KML to Ansteel, concerning any amendment to existing offtake
sales agreements and concerning the pricing policy of KML product. These matters require unanimous
resolution of the Directors of KML.

Mr Chen Ping, a Gindalbie non-executive Director, an Ansteel nominee Director of KML and current Chairman of
the KML Board, has been appointed as Managing Director of KML.

In addition, KML has recently appointed Mr Neil Meadows as Chief Operating Officer of KML. Mr Meadows has
over 30 years of mining industry experience in a range of senior operational roles.