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  • Cape Lambert Resources To Bank $51.6M From MCC Settlement 0 comments
    Jul 14, 2014 9:18 PM

    Cape Lambert Resources (ASX:CFE) will bank $51.6 million after reaching a settlement with Metallurgical Corporation of China (NYSE:MCC) over the final payment from the sale of the Cape Lambert magnetite iron ore project.

    Importantly for shareholders, the company's board will meet in two weeks to approve a dividend and/or return of capital.

    This will ratchet up its cash, receivables and listed securities to an impressive cash pile of circa $100 million and unrestricted cash to $70 million.

    It also increases its cash backing to 1.45x its current market cap. of circa $49 million.

    "The company is very happy to see a resolution of this matter," executive chairman Tony Sage said.

    "This is a good outcome for all parties involved, I am grateful for the co-operation shown by MCC in reaching settlement."

    MCC will receive the remaining $30 million of the disputed $80 million payment.

    Analysis

    The outcome is significant as it puts to bed the dispute finally removing "litigation risk" overhanging the stock.

    Importantly, it provides a bonanza for Cape Lambert shareholders, through an expected payment of a dividend and or a return of capital.

    The onset of cash also serves to highlight the current mis-pricing of the stock at $0.074 and market cap of $49 million versus the (unrestricted) cash level of $70 million, equal to $0.104 per share.

    Add in a US$1/t royalty on the Mayoko iron ore project which could be producing 5Mtpa as early as second half of 2015 and the under-valuation becomes even more evident. Cape Lambert has indicated its intention to sell the royalty, which could inject US$30-US$50 million.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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