It is reported that mining developer Mr Tony Sage's plan to sell the majority of a Sierra Leone iron ore venture via a AUD 430 million dollar initial public offering in London looks to be on shaky ground because of weak equity markets.
The good news for Mr Sage's Cape Lambert Resources is the strong interest shown by Chinese and other companies in the Marampa project, which could result in an outright or partial sale of the asset.
Mr Sage executive chairman of Perth based Cape Lambert said that "We've had six groups through the data room for Marampa, including Chinese interests. There are also non Chinese companies in the data room and they are already in West Africa."
Mr Sage declined to identify the parties due to confidentiality agreements.
But Perth stockbroker Patersons Securities says global miners Vale of Brazil and UK based Xstrata are two of the parties undertaking due diligence on the undeveloped iron ore asset.
Mr Alex Passmore head of research at Patersons said that "We are confident that Vale and Xstrata have been in the Marampa data room but, given they are both active in West Africa, they are probably looking at any assets that come up."
Mr Passmore of Patersons said that interest in Sierra Leone, one of several West African countries trying to establish a major iron ore export industry has increased after the country last month shipped its first iron ore shipments in 30 years, courtesy of African Minerals' Tonkolili mine.
Mr Passmore said that "Confidence in mining projects in Sierra Leone will have improved markedly given the commencement of exports, providing Cape Lambert a boost in its efforts to IPO or sell Marampa."
He said that however, due to weak market conditions, a straight sale of Marampa might only fetch roughly AUD 250 million, a 20% discount to Patersons' valuation of the asset.
Mr Sage, meanwhile, insists that his preferred option remains an IPO, despite the company delaying plans that would have seen a prospectus unveiled in October 2011. He added that "We haven't pulled anything. When the market starts to turn we will issue a prospectus and go from there."
(Sourced from www.wsj.com)
