Chinese group to buy 19.9% Cape Lambert stake

Major Chinese group Shandong Yuansheng International Trading Co Ltd is understood to have confirmed that it will take up almost 20 per cent equity in Cape Lambert Iron Ore Ltd through the purchase of securities on market.

It is believed the acquisition of up to 19.9 per cent equity, the maximum allowed without triggering a takeover bid, was a condition Cape Lambert had set as part of an agreement reached with Shandong to have "first right of refusal" to negotiate an off-take agreement at the Cape Lambert Iron Ore Project, located in the Pilbra region of Western Australia.

WA Business News understands this agreement was finalised during negotiations Cape Lambert chairman Tony Sage had with his Shandong counterparts in China last week.

Shandong had previously agreed to acquire an equity stake in Cape Lambert via the recently closed $33 million raising, but was unable to do so due to due diligence and funding arrangements not being finalised by the close date.

Negotiations between Cape Lambert and Shandong regarding an off-take agreement at the Cape Lambert Project are on-going with Cape Lambert confident of a resolution in the New Year.

It is expected the project will come on line in late 2009, with production likely to be between five and ten million tonnes per annum.

Cape Lambert has commenced planning for a bankable feasibility study. This process will commence immediately and take between 12-18 months to complete.