News: Cape Lambert plans London listing , page-13

FD,

You're really way off this time.

Marampa, regardless of what it ultimately goes for, is easily the company's biggest asset and CFE's fortunes in the short term are very much tied to success or failure with Marampa.

If Timis had no faith in the project, it follows that he would have sold for cash only and definitely not have accepted the all scrip deal.

According to Comsec, Timis increased his holding (18/01/2011) by 3,860,277 shares, which took him to 19.98%. This is the limit in the absence of a take over bid, I believe. I don't know African Mineral's cash position but I expect Timis would need all they've got to get Tonkilili up & running without having to dilute and so on. They could make a bid, but I don't see it as likely.

Also, there's no way in the world Sage would accept a .70c takeover offer, valuing CFE at around 400m. With or without the 80m from MCC, the cash, listed equiities and other assets could easily be liquidated for a lot more than that. Why would he accept .70c? Doesn't make sense as evidenced by the fact that he didn't offload any during the buyback and indeed increased his holdings at around .46c - .52c. Pretty big risk if had designs on selling at .70c. No chance. Zip, squat, zero.

I have no idea what Marampa might fetch, but I'd be more than happy with 250-300m, a royalty and a 25% retained stake. It's true that Fe prices are expected to pull back to around $80 per tonne around 2015 as new projects come on line. This is why those such as Marampa that are the first to market will have a huge advantage over the rest. If CFE can get the opex down to around $50-$60 per tonne, all the better.

It's not a great time to be attempting a float but I wouldn't be too unhappy if CFE changed tack and went into production perhaps with a significant cornerstone Chinese investment. It still gives a few years of high prices for the lower cost, higher grade ore. I doubt this will happen. However, who knows, that may be what's needed to get the SP moving, especially when you look at the MC's of others going into production.

Peter