LONDON (Dow Jones)--Chinese Investor to acquire 70% of Cape Lambert Iron Ore Project for US$192.5 million (approx AUD$250 million cash)
* Chinese investor to acquire a 70% stake in the Cape Lambert Iron Ore Project for AUD$250 million cash (values project at approx AUD$350 million)
* AUD$2 million deposit paid (AUD$750,000 non refundable)
* Conditional on proving a 300 million tonne indicated resource (expected Q2, 2007), shareholder and regulatory approvals
* CFE technical team to continue to manage the project development
Iron ore exploration and development company Cape Lambert Iron Ore Limited Monday announced it has signed a binding agreement with Best Decade Limited, a company associated with Liguo Ding, the Chairman of Singapore listed steel manufacturing and trading group Delong Holdings Limited, for the sale of 70% of the Cape Lambert Project, for AUD$250 million.
The Cape Lambert Project is located in the Pilbara region of Western Australia and is presently subject to various drilling programs, metallurgical, engineering, infrastructure, and environmental studies with the objective of preparing a Bankable Feasibility Study (BFS).
The 2007 drilling campaign, as previously planned, is scheduled to commence in mid-April.
Under the terms of the binding agreement, the purchaser has paid Cape Lambert a AUD $2 million deposit of which AUD $750,000 is non-refundable.
Best Decade Limited, owns 78% of Delong Holdings Ltd which is listed on the Singapore stock exchange and is headquartered in Beijing.
Its flagship business, Delong Steel, is located 430km southwest of Beijing in the industrial city of Xingtai (Hebei Province), near raw material sources and an extensive client base encircled by the Bohai Economic Zone. The group operates in China, Singapore, South Korea, Vietnam and Indonesia.
Cape Lambert Director Tony Sage said the agreement with Best Decade Limited would not only provide the company and its shareholders with a continued exposure to the project, but also allow it to fund its 30% share of the expected development expenditure of the project from cash reserves and therefore not dilute the capital of the company.
"The company will retain a significant equity holding in the asset and now have significant cash reserves that will allow us to evaluate and possibly acquire other projects. We are in the unique position of having sufficient cash reserves that will allow us to run the ruler over a number of seriously exciting projects."
This agreement is conditional on Cape Lambert providing the purchasers with an independent geological report confirming an indicated JORC compliant resource of 300 million tonnes.
The Directors expect the report to be completed in Q2, 2007.
The agreement is also subject to the company obtaining all necessary shareholder and regulatory approvals.
The purchaser will pay Cape Lambert 30% of the sale price (approx AUD $75 million) at settlement of the transaction with a further 55% (approx AUD $138 million) of the sale price being paid three months after that date.
The final installment, being 15% will be paid on completion of the BFS and commencement of construction.
In addition Sage said "that whilst the ownership structure of the Project would now change, at a management level all current work programs and studies would continue as if there had been no change in ownership.
This includes various metallurgical and engineering studies that are currently underway and the recommencement of drilling in mid-April".
What's everyone's thoughts on why this has appeared to have fallen short of expectations?
Agree with the valuation of 75c per share, which doesn't allow for any further exploration upside, or future possibilities for the company, so todays share price action would appear slightly disappointing (if a 90% rise in the space of a week or so can be called disappointing!).
Is it the hurdles yet to be reached of JORC-resource thresh-holds, or a "show me the money" cynicism? I tend not to get caught up in hysteria, but this genuinely appears to have missed the mark somewhere....or what is it I've missed?
A pretty lame market reaction to the announcement, I thought.
Somebody buys 70% in a deal that values the shares at $1.40 (leaving out the options), and CFE is, as I write, selling for $0.51 cents.
I took the opportunity to top up, thank you everyone who rushed in to give away their shares (albeit probably making a tidy profit).
I tell all my friends to buy PNN when Sinosteel pay good money (that time) for 60% of the SA uranium interest. It implied PNN at 75c+ for that deal only. But the share is traded at 55c-65c for quite a few weeks before it took off.Well I took a profit on my FOX resources and I'm onboard these now.
"Chinese Investor to acquire 70% of Cape Lambert Iron Ore Project for US$192.5 million (approx AUD$250 million cash)"
CFE - 247,576,062 (Market Cap (Undiluted): 126,263,792 )
CFEO - 136,511,800
Exercise Price (cents): 27.7
Expiry Date: 31/10/2008
The oppies will bring them an additonal 38 million.
Fully diluted market cap at 52 cents is just under 200 million.
They are getting 250 million in the deal and are retaining a 30% interest~! Add the money from the options..I see this as easy money. Can anyone else shed light to why the SP hasn't moved yet? Is the market just slow??
Any ideas on the sell-off ???
Was interested in some other viewpoints.
Either you did not want it, or you were happy to own it, why not now? Relax....
I bought this week at 52c. I just cannot understand why the price is falling and to-day quite weak. It is down 6.7% in London at the moment.
There must be something I am missing.
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