It has been a forgettable year for Cape Lambert shareholders and moves are afoot for a much-improved 2008.
In a year punctuated by the ability of most Perth iron ore hopefuls to achieve significant capital gains for their supporters, Cape’s shares stood out for their underperformance (down 35 per cent year-on-year) after a financing deal with obscure Chinese billionaire Liguo Ding collapsed.
Not only did the collapse of talks spell the end of Cape’s hoped-for $US192.5 million ($218.2 million) funding package for its namesake project, but it also sparked concerns among its shareholders and those of other iron ore hopefuls that these much-hyped deals with well-heeled Chinese investors are often not worth a cent.
The past four months have seen Cape take on a low profile as it completed drilling at its Cape Lambert magnetite project in the Pilbara and tried to extend its landholding.
In addition, executive chairman Ian Burston, one of WA mining’s most respected figures, has taken a more prominent role in promoting the company, swapping seats with Cape’s hitherto public face, Tony Sage.
Amid last week’s market meltdown, Cape moved a step towards regaining investor credibility with two key announcements. Neither did, or indeed should have, set Cape’s share price on fire but both were reassurances that Cape could yet make the jump from hopeful to producer. Firstly, Cape said Golder Associates was ploughing through assays from 65 drill holes and expected to complete a resource update as early as next week.
A further update, taking in drilling from late last year and this quarter, is due in June. Cape last year published an interim mineral resource estimate for the main part of its project of 977 million tonnes, grading 32.4 per cent iron.
Secondly, Cape is trying to expand its landholding by picking up another tenement, which would take the size of its continuous block along the Cape Lambert coast line to 400sqkm.
Many analysts and industry players knock magnetite, especially in the hematite-rich Pilbara.
But Mr Burston believes the grades and scale Cape is finding across its landholding could deliver saleable volumes and therefore a bankable project.
CFE Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
(20min delay)