criterion rates cfe as a spec buy

Tony Sage defies critics to seal copper mine salel
Tim Boreham, Criterion From: The Australian June 02, 2010 12:00AM Increase Text Size Decrease Text Size Print Email Share Add to Digg Add to del.icio.us Add to Facebook Add to Kwoff Add to Myspace Add to Newsvine What are these?
TONY Sage and his eclectic mining investment house may stretch credibility from time to time, but yesterday they defied the sceptics by completing the sale of the Lady Annie copper mine to Hong Kong interests for at least $132 million.

Given that Cape Lambert paid $85m for the mine as part of its purchase of the assets of the failed CopperCo 12 months ago, it's been a nice year's work. Holders will be rewarded with a partially franked special dividend, with analysts suggesting 8-10c a share. Given the proceeds are worth around 20c a share, that would leave funding for further work on Cape Lambert's fully owned Marampa iron ore project in Sierra Leone.

Earlier on, Cape Lambert flipped $28m of other CopperCo assets, but those remaining (notably 25 per cent of the Lady Loretta lead/zinc/silver project in partnership with Xstrata) are still worth around $70m.

Even on the most sceptical appraisal, Cape Lambert's sum of the parts is worth far more than its $240m market cap. The outfit deserves to trade at a discount because of its messy spread of minority holdings and Sage's links with controversial businessman Frank Timis. Still, management once again has proved itself capable of nifty wheeling and dealing and we ascribe a speculative buy -- but it's not for the faint-hearted.