Just days after shareholders in Cape Lambert Iron Ore Ltd voted to sell the namesake iron ore project, new owner MCC has sold a majority stake in the project to Russian steel making giant Evraz Group S.A.
Just days after shareholders in Cape Lambert Iron Ore Ltd voted to sell the namesake iron ore project, new owner MCC has sold a majority stake in the project to Russian steel making giant Evraz Group S.A.
Evraz and MCC, China Metallurgical Group Corporation, will jointly invest in the development of the 1.56 billion tonne project with Evraz taking a 75 per cent interest.
In a statement today, Evraz said it is anticipated that all of the Cape Lambert North project's iron ore will be shipped to China while MCC will be entitled to sign an offtake agreement for up to 60 per cent of the ore.
Evraz must gain approval from the Foreign Investment Review Board to participate in the joint venture.
Earlier this week Cape Lambert cleared the last hurdle in the $400 million sale of the project with a shareholders vote held earlier this week.
Before the shareholder meeting however, speculation was rampant that Evraz could derail the sale by launching a takeover bid for Cape Lambert, after it was revealed that the Russian company had around a 19 per cent stake in the company.
Cape Lambert director Tony Sage also talked up the prospect of a takeover bid for the company by Evraz, saying he expects an offer in the coming months.
Mr Sage said he expected Evraz to be busy looking at ways to control the board, lifting its stake to over 19 per cent because Cape Lambert was now cashed up with a "fantastic deposit" at the Cape Lambert South project.
Below is the announcement
Evraz Group S.A.(LSE: EVR) ("Evraz") today announced the signing of a Co-operation Agreement with China Metallurgical Group Corporation ("MCC") for the joint development of the Cape Lambert Iron Ore Project ("the Project") located in the Northern coastal Pilbara region of Western Australia.
The Project comprises a 1.56 billion tonne JORC compliant magnetite iron ore resource with a projected annual output of 15 million tonnes of magnetite concentrate and is at feasibility stage.
Evraz and MCC will jointly invest in the development of the Project with Evraz having a 75% and MCC a 25% economic interest in the Project. It is anticipated that all of the Project's iron ore will be shipped to China to meet the requirements of Chinese mills, while MCC will be entitled to sign an off-take agreement for up to 60% of the iron ore volumes.
The new Joint Venture will benefit from a combination of the extensive magnetite mining and production expertise and financial resources of the two parent companies, Evraz and MCC. Evraz has considerable experience in processing magnetite ore to make significant volumes of pellets and fines. MCC will bring its expertise in EPC (provision of engineering design services, procurement and construction), based on its access to the best engineering processes, technologies and equipment in China and worldwide.
Evraz's participation in the Joint Venture is subject to FIRB approval in Australia.
Merrill Lynch is acting as financial adviser and Blake Dawson is acting as legal adviser to Evraz.
