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Gindalbie's A$200 million (US$127.04 million) in cash reserves will grow to about A$450 million early next year.
The junior iron ore explorer's balance sheet will be boosted in part by A$162.1 million from AnSteel in return for new shares that will lift its 12.6 per cent stake to 36.28 per cent.
The move was requested by AnSteel earlier this month as an alternative to arranging debt financing for Gindalbie.
Chairman George Jones defended the issue of new shares to China's second largest steel mill at the annual general meeting in Perth on Thursday.
"I think its fair to say that none of us anticipated that both debt and equity markets would come under such pressure ... making the terms and conditions for a A$162 million loan highly unattractive to us from a corporate risk perspective," Mr Jones said.
"I do acknowledge shareholders concerns regarding the dilution that occurs with share placements.
"But I firmly believe that having AnSteel has both a partner and big shareholder will give Gindalbie a greater opportunity to grow into a significant resources group."
Gindalbie's cash reserves will also be boosted by AnSteel's final equity payment of A$143.7 million towards a 50 per cent stake in the explorer's A$1.8 billion Karara project in Western Australia.
Gindalbie shares were down two cents, or 5.48 per cent, at 34.5 cents at 1200 AEDT.
(AAP)
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