ape Lambert signs MOU with Chinese conglomerate

Iron ore exploration and development company, Cape Lambert Iron Ore Ltd...

Iron ore exploration and development company, Cape Lambert Iron Ore Ltd has signed an MoU with Chinese conglomerate, China Metallurgical Group Corporation (MCC), for the sale of Cape Lambert’s namesake iron ore project located in the Pilbara region of Western Australia.Under the terms of the MoU, MCC has secured an exclusive right (until April 30, 2008) to conduct due diligence for the acquisition of the project.MCC has paid a deposit of $10 million, with $5 million of this being non-refundable if MCC withdraws. The entire deposit will be offset from the sale consideration when MCC complete the acquisition of the Project.The key terms of the proposed sale have largely been agreed. MCC will purchase the company’s entire project land package (Exploration Licenses 47/1462, 47/1271, 47/1248 and 47/1233), other than Exploration License Application 47/1493, for a total consideration of $400 million. MCC has total assets of approximately US$20 billion and in 2007 the revenue and total profit of the group totalled approximately US$18 billion and US$1 billion respectively. It has completed design and construction assignments for approximately two thirds of the iron ore projects in China and undertaken design and construction work for more than 90% of the steel mills in China. Its stated objective is to become a Fortune 500 company by 2010.In Australia, MCC owns 20% of Citic Pacific Mining’s $5.2 billion Sino Iron Project, located near Cape Preston, approximately 120km south west of the Cape Lambert iron ore project. MCC has also been awarded the EPC construction contract at the Sino Iron Project.Cape Lambert Chairman Ian Burston said: “Our commitment has at all times focussed on the development of what we believe is a world-class iron ore project at Cape Lambert. However, this opportunity has the potential to deliver significant upfront value to shareholders and it was therefore incumbent on us to look at it.”“MCC as a substantial, vertically integrated conglomerate clearly has the technical and financial capacity to develop the Cape Lambert iron ore project. Importantly, MCC has a good understanding of large, Australian iron ore projects through its investment and construction involvement in the Sino Iron Project.”The proposed sale is subject to the successful completion of due diligence by MCC, approvals by Cape Lambert shareholders, FIRB, the Chinese government and any other necessary approvals.