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Australian miner Cape Lambert Iron Ore Ltd. (CFE.AU) said Monday it has concluded a major deal relating to its key iron ore project.
Chief executive Tony Sage said the company has closed a major deal with a Chinese entity and an announcement will be made to the stock exchange Tuesday morning.
“We did complete a deal and the shareholders have a right to know as quickly as possible,” Sage told Dow Jones Newswires in an interview.
“We have just flown back in from Beijing with the documents and we are getting ourlawyers to go through it and we are just awaiting a payment to solidify a deal.”
Cape Lambert Friday said it is in discussions with a third party which could lead topart sale of its iron ore project in Western Australia, leading to speculation a major Chinese company will sign an offtake deal and take a controlling equity stake.
Prior to speculation about a deal Cape Lambert had a market capitalization of about A$80 million, and Sage said the transaction was about four times that size.
“The market will get a bit of a shock tomorrow,” Sage added.
Cape Lambert shares last traded at 46.5 cents, valuing the company at about A$115 million.
Sage confirmed the deal relates to the company’s magnetite iron ore project in the Pilbara region of Western Australia and will require shareholder approval.
“Shareholders have to approve it because it is our major asset, but 48% of the stock is concentrated with four people who have been very instrumental in getting the deal done,” he said.
With its key Pilbara project having a resource of 2.5 billion tons of magnetite iron ore, Cape Lambert has been in talks with Chinese steel major SinoSteel for eight monthsbut Sage would not confirm the identity of the entity involved or details of the deal.
The Perth-based company has said a project with annual output of five million to seven million tons could be up and running in late 2009.
Chinese steel makers have been keen to sign offtake agreements with Australian juniors developing new iron ore projects.
Soaring contract prices and the dominance of three major suppliers are driving the Chinese to look to lock in new sources of supply for their booming steel industry.
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