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CAPE Lambert Iron Ore is close to establishing a new flagship project after its cash injection from Delong Holdings, but it won't be in the Pilbara.
Cape Lambert has welcomed the Singapore steel manufacturer's investment after it converted 12 million unlisted options worth $AU4.6 million to take a 4.4% stake in the company.
Delong plans to convert its remaining 28 million options within days to take its share of the company to 13.25%, amounting to a $14.6 million cash injection.
Cape Lambert executive director Tony Sage said there were several options for how to use the extra cash, after the bankable feasibility study on the Cape Lambert project was complete.
"The first thing we are going to do is look at a new flagship project because we are only going to be a 30 percent stakeholder in this one (Cape Lambert)," he said.
"We've sent our technical team to see two or three (potential prospects), I won't say where at the moment because we are under confidentiality.
"If we don't get that, what we might do is a capital refund to shareholders but it looks highly likely at this stage that as soon as the funds come in we'll be in a position to make an offer."
The new project will still be iron ore but not located in Western Australia's Pilbara region, where Cape Lambert was, with Sage saying the company "doesn't think there are any more elephants up there."
"That's why Ian Burston came on as executive chairman, he's got a 15-man team now working for Cape Lambert and when the Chinese come in, they've got eight of their staff so we'll be able to free up a few of our existing staff to the new project," Sage said.
"There are some very good, interesting projects that Ian Burston has worked on personally in his many years of experience.
"He's come across a couple that happen to be not tied up with anyone at the moment. As soon as we get the funds confirmed, we'll get out there and take one of these other projects on.
"We've got $4 million now, we'll get another $10 million probably within the next 10 days and we'll get the $75 million at the end of the month."
Delong chairman Ding Liguo acquired the options through a private transaction in March, before transferring the options to his publicly-listed company.
Ding will also transfer his 70% interest in the Cape Lambert project to Delong after buying the interest privately in March for $240 million in cash.
Both parties agreed the first payment of this acquisition can be deferred until the end of September. Despite initial concerns, Sage said a delay of one month was more than offset by Delong taking a significant shareholding in the company.
Shares in Cape Lambert were down 1.5c to 51.5c in morning trade after closing down 2c yesterday.
CFE Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
