Cape Lambert lifts stake in African iron

Cape Lambert Resources has announced a $65 million cash and scrip deal to increase its stake in Africa-focused iron ore explorer Pinnacle Group Assets to over 90 per cent, and has made an additional offer to the remaining shareholders to acquire their interests.

The Perth-based minerals explorer announced today it would add an additional 42.8 per cent interest in Pinnacle to its current stake of 47.4 per cent, in return for $65.3 million in cash and Cape Lambert shares.

Cape Lambert said it had also made an offer to the remaining 9.8 per cent of Pinnacle shareholders of $1.10 per share

If Cape Lambert's offer of for the remaining 9.8 per cent stake is accepted, the total price of the acquisition will be $80 million, split into three tranches.

On settlement of the deal, $40 million through the issue of 67 million Cape Lambert shares and $20 million cash will be paid to the vendors, with $20 million payable in cash on or before December 31.

Pinnacle owns the Kukuna iron ore project in Sierra Leone, and the Sandenia iron ore proejcet in the Republic of Guinea.

Cape Lambert executive chairman Tony Sage said: "this acquisition will deliver greater than 90 per cent ownership of two potentially large scale iron ore projects in the emerging West African iron ore province, and will expose Cape Lambert shareholders to a conceivably significant value uplift with drilling planned to commence at both Kukuna (June 2011) and Sandenia (September 2011 quarter) in the near term".

In early trade this morning Cape Lambert had gained 3.2 per cent, to trade at $0.48.