Monday, 9 February 2009Charlotte DudleyCAPE Lambert Iron Ore...

Monday, 9 February 2009
Charlotte Dudley

CAPE Lambert Iron Ore says its decision to acquire the secured debt of failed copper miner CopperCo will reap benefits for its shareholders.
Perth-based Cape Lambert paid around $72.7 million to take on the outstanding secured debt CopperCo owed to the Macquarie Bank and LinQ Capital.

A $15 million deferred payment is due in late July.

CopperCo slid into administration in November after failing to resolve its financial problems.

Its assets include the Lady Annie copper mine in Queensland.

Cape Lambert executive chairman Tony Sage said the decision to take on the debt was motivated by the opportunity for low-risk investment, rather than by a desire to acquire CopperCo’s assets.

“We think the asset base is well in excess of our secured debt so instead of earning three-and-a-half per cent in a bank, we can earn 12 per cent doing this deal,” he told MiningNews.net.

“That’s the number one priority for us, for our shareholders. We know we’re going to recover it all and the recovery is only going to be within two or three months.”

Sage said it was unlikely that Cape Lambert would look to acquire CopperCo’s assets, however if anything of interest was identified, the company would have to place a bid with the liquidator.

He added it was unfortunate that CopperCo was unable to secure funding to remain afloat, and predicted the global market would witness more debt-driven asset sales.

News of the deal pushed Cape Lambert stocks up nearly 6% to 27c in Monday morning trade. Shares have since cooled slightly to 26.5c.

Following the transaction, Gary Doran and David Lombe of Deloitte Touche Tohmatsu Australia have been appointed new joint receivers and managers of CopperCo.