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Gindalbie Metals says it has formally signed off on new debt funding for its Karara iron ore project in the State's Mid-West.

The facilities comprise a $US336 million increase on an existing project loan facility, together with $US300 million in bank guarantees to provide security to underpin key rail upgrade agreements currently being finalised.

Gindalbie said a facility framework agreement, setting out the key terms and conditions of the two facilities, was signed in Beijing this morning by directors of Karara Mining, a joint venture between Gindalbie and China's Ansteel, and representatives of China Development Bank.

The signing ceremony was held in the Great Hall of the People in Beijing in the presence of Chinese Premier Wen Jiabao and Prime Minister Julia Gillard.

The new loans come almost one year after the original $US1.2 billion Karara project loan facility was signed in Canberra in June last year.

Gindalbie managing director Tim Netscher said the Karara project was almost in the home stretch following the recent commencement of hematite exports and the advanced stage of the magnetite development.

"The increased project loan facility will support the previously announced $430 million working capital requirements for the Karara project, for which Gindalbie raised funds last year for its equity contribution," he said.

"The $300 million bank guarantee facility is being put in place to support the upgrade of rail infrastructure between Morawa and the Geraldton port by the line's owner WestNet Rail."

However Gindalbie said the increased facility would not cover any additional funding requirements likely to arise from the latest review of the Karara project's construction cost, which was expected to be completed by mid-year.

The cost of Karara is likely to be at least $2.7 billion, compared with the original $1.65 billion budget and a revised figure of $1.97 billion announced last May, and will force Gindalbie to raise more cash to pay its share.

Gindalbie shares last changed hands for $1.06 on Thursday.

http://au.news.yahoo.com/thewest/business/a/-/wa/9260602/gindalbie-secures-extra-funding-for-karara/