RUSSIAN steelmaker Evraz is looking for a seat on Cape Lambert’s board, just weeks after acquiring a 19.9% stake in the iron ore junior and signing a joint venture deal with a Chinese company over Cape Lambert’s freshly-sold namesake project
Evraz has written to the iron ore explorer asking to be given an executive seat on the company’s board.
The Russian steelmaker – which is controlled by Russian billionaire Roman Abramovich, best known as the owner of the Chelsea football club – is looking to become a “strategic” investor in the cashed-up iron ore junior.
Evraz’s request comes just weeks after the Russian company bought a 19.9% stake in Cape Lambert, and the sale of the Cape Lambert magnetite project by its namesake company.
The project was purchased by Chinese steelmaker China Metallurgical Group (MCC) for $A400 million, and just three days later, Evraz and MCC revealed a joint venture over the project’s development.
Under the JV deal, Evraz will acquire a 75% interest in the Pilbara magnetite project, with MCC owning the remaining 25%.
The project’s iron ore will still be shipped to China, while MCC will be entitled to sign an offtake deal for 60% of production.
Before the sale of the 1.56 billion tonne, 31.2% iron resource was finalised, there were rumours Evraz might make a takeover bid for Cape Lambert.
A spokesperson from Evraz told MiningNews.net the company’s experience in mining operations and developing new projects would be of benefit to all Cape Lambert shareholders.
As yet Evraz has had no response from Cape Lambert about the request, nor has the company identified who it would like to see appointed to the board, which currently includes Tony Sage as executive chairman along with non-executive directors Brian Maher and Peter Landau, and non-executive director and company secretary Tim Tuner.
The letter from the Russian steel play comes after well-known industry figure Ian Burston resigned from Cape Lambert’s executive chairman role.
Cape Lambert executive chairman Tony Sage has labelled the move from Evraz “very strange” and suggested Evraz’s move of informing the press of the letter was a strategy to take the request public, and could be a pre-cursor to a takeover bid.
Sage told MNn the letter contained additional requests, which included asking Cape Lambert not to pay its planned $100 million return to shareholders.
“The indication in the letter is that they do not want our shareholders to get the payment that we voted on and they voted on,” he said.
“One thing we’re adamant on is that we made a commitment to our shareholders that we would pay back $100 million and we want to honour that commitment, and in that letter they’re asking that we don’t do that.”
The letter – which MNn has not seen – also requested that Cape Lambert not make a $38 million payment to the adviser that had brokered the MCC sale. However, Sage said the payment had already been made.
The company received the letter only this morning and Sage said Cape Lambert’s board would consider Evraz’s requests at the company’s next board meeting on September 23.
If Evraz does make a takeover bid for Cape Lambert, Sage said he believed it could be worth investigation by Australia’s corporate regulators.
“But at this stage, I think it’s just a strange request, not illegal,” he added.
Evraz is involved in a takeover bid for Hong Kong-based Delong, which also holds shares in Cape Lambert.
Evraz’s spokesperson told MNn the company was “under no obligation” to make a takeover bid for Cape Lambert.
The company would not comment on any additional details about the letter sent to Cape Lambert.
Shares in Cape Lambert ended the day up 3c to 53.5c
CFE Price at posting:
0.0¢ Sentiment: None Disclosure: Held
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