Cape Lambert hoses down Essar agreement speculation

Leederville-based iron ore company Cape Lambert Iron Ore Ltd has moved to hose down speculation of an agreement with Indian steel giant Essar Group, saying the company remained in negotiations with other parties.

A company announcement said it was too early to say any agreement was imminent, despite labelling the talks "robust and detailed".

The company has pre-existing agreements with three Chinese companies, but had continued negotiations with other international companies, including Essar.

"(Cape Lambert) remains in negotatiations with other major Chinese and Indian groups and will continue to review all off-take opportunties, with the view to selecting a partner that is not only committed to take the ore, but also the development of the Cape Lambert Iron Ore Project," the announcement said.

According to Indian media reports on Friday, Essar was looking to take a stake in Cape Lambert and build a pellet plant at the company's project site.

Ironically, Cape Lambert chairman Ian Burston had ruled out the construction of a pellet plant at a briefing in August, citing the added cost would put a big question mark on project economics.

The Cape Lambert share price had risen 1.6 per cent to 32c at 10:30 WST.

The full text of a company announcement is pasted below

Following a request by the Australian Stock Exchange earlier today, the Board of Cape Lambert Iron Ore Ltd would like to make the following statement regarding an article that appeared in the Indian press late last week:

The Company is aware of the article on Friday relating to negotiations between the Company and Indian steel giant Essar Group.

As previously reported, CFE has non-binding non-excluve memorandum of understandings with three Chinese groups relating to negotiations for equity and off-take agreements. CFE has however continued negotiations with a number of parties looking to either invest in the Cape Lambert Iron Ore Project or to enter into an off-take agreement. These discussions have included the Essar Group of India.

The Company has been in talks with Essar about their potential involvement in the Cape Lambert Iron Ore project for seven months and representatives of Essar Group have flown to WA to meet with the CFE Board.

While the talks have been "very robust and detailed" it is still too early to say any agreement is imminent.

CFE remains in negotatiations with other major Chinese and Indian groups and will continue to review all off-take opportunties, with the view to selecting a partner that is not only committed to take the ore, but also the development of the Cape Lambert Iron Ore Project.