Resources and investment company Cape Lambert Resources Ltd (ASX:CFE) has announced the sale of its wholly owned subsidiary DMC Mining Ltd, fetching a price of $83 million plus royalties.
Gold and base metals explorer Stirling Minerals Ltd (ASX:SMZ) will acquire DMC, on the condition that they complete a placement to raise $96 million as well as obtain shareholder approval.
Cape Lambert says it has now entered into a heads of agreement with Stirling Minerals for DMC Mining, whose principal asset is the Mayoko Iron Ore Project in the Republic of Congo.
Cape Lambert's executive chairman Tony Sage says the sale enabled the company to recover its cash investment in DMC Mining while retaining exposure to the Mayoko Project's upside through a 25 per cent equity holding in Stirling.
Cape Lambert will also retain a production royalty to provide the company with access to a future cash flow when mining operations commence.
Cape Lambert Resources posted a $72.25 million net profit in the year to 30 June 2010.
CFE Price at posting:
45.0¢ Sentiment: None Disclosure: Held
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