News

August 14, 2008

Roman Abramovitch Steps Into The Picture As $240 Million Rolls Into The Coffers Of Cape Lambert

By Our Man in Oz

The Bird’s Nest stadium in Beijing has nothing on the “Bird in the Hand” display last week from Cape Lambert Iron Ore. While billions of viewers gawked at the remarkable opening of the Olympics in the world’s most remarkable stadium, the small Australian iron ore explorer was performing its own magic in the form of a big, fat, Chinese pay day. On the way into Cape Lambert’s bank account was a cheque for A$230 million which, when added to an existing A$10 million deposit on the sale of iron ore tenements, and A$16 million that was already in the bank, took Cape Lambert’s cash balance to around A$256 million. Minesite readers might find this interest in cash somewhat boring, but they should take the time to follow what’s happened (and remember that A$256 million) because it’s an example of how a mining company can extract a profit for shareholders without waiting a decade, or two.

The key to Cape Lambert Iron Ore is that management realised very early in the life of the company that it lacked the financial muscle to develop its 1.6 billion tonne Cape Lambert orebody, which lies adjacent to one of Rio Tinto’s ports on the north-west coast of Australia. That decision initially led Cape Lambert up a blind alley when the first offer from a Chinese investor collapsed, creating a mood of uncertainty among investors and sense of deep annoyance for Cape Lambert’s seasoned...