Cape Lambert Iron Ore Ltd has today completed settlement of the $400 million sale of its namesake project to China Metallurgical Group Corp as it receives the first payment of $240 million.
Cape Lambert Iron Ore Ltd has today completed settlement of the $400 million sale of its namesake project to China Metallurgical Group Corp as it receives the first payment of $240 million.
The payment, made through CMGC's subsidiary MCC Mining (Western Australia) Pty Ltd, has boosted Cape Lamber's cash reserves to over $270 million.
Cape Lambert said it will now proceed with the reduction of capital via a return to shareholders as approved at a meeting held last month.
A further payment by MCC of $80 million is expected to be paid on or before September 15 this year.
The project is located in the Pilbara region and contains a 1.56 billion tonne resource of low grade magnetite iron ore.
MCC has formed a partnership with Evraz Group SA, Russia's second largest steelmaker, to develop the project.
Evraz holds a 19 per cent stake in Cape Lambert Iron Ore.
Below is the full announcement:
Cape Lambert Iron Ore Limited ("Cape Lambert" or the "Company") (ASX: CFE, AIM: CLIO) and MCC Mining (Western Australia) Pty Ltd, a wholly owned subsidiary of China Metallurgical Group Corporation ("MCC") have today completed settlement of the AUD$400 million sale of the Cape Lambert Iron Ore Project, located in the Pilbara region of Western Australia.
As a result of settlement being completed, Cape Lambert has received the first substantive cash payment of AUD$240 million, comprising a payment of AUD$230 million, and the AUD$10 million deposit.
A further cash payment of AUD$80 million is to be paid to the Company on or before 15 September 2008. The final payment of AUD$80 million is to be paid on the grant of a mining lease and related construction approvals in respect of the Cape Lambert Iron Ore Project.
With settlement now complete and the Company holding in excess of AUD$270 million in cash reserves, the Board of Cape Lambert will proceed with the reduction of capital by way of a return to shareholders, as approved by shareholders at the 28 July 2008 general meeting.
The Company will make an announcement containing details of the reduction of capital, including the timetable applicable to the reduction of capital, on the later of receipt of the 2008 audited accounts or the AUD$80 million second payment from MCC.
The Company will continue to investigate and progress opportunities associated with the acquisition of projects and companies that meet the Board's investment criteria. Exploration Licence Application 47/1493 remains on schedule to be granted in August, which will enable drilling to commence at the Cape Lambert South Project in September/October 2008.
Cape Lambert Chairman, Ian Burston, said "This is a landmark day for the Company. We have significant cash reserves, a highly prospective exploration target and a number of projects and companies that we are running the ruler over at present."
"Our shareholders will receive a return through the capital reduction, and we feel we are well positioned to complete acquisitions that will provide long-term growth to shareholders."
