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Evraz, the Russian steel giant part-owned by Roman Abramovich, has emerged as a 19 per cent shareholder in Cape Lambert Iron Ore, the Aussie iron ore miner which is close to finalising the A$400m (£195m) sale of its Western Australia iron ore project to Chinese conglomerate China Metallurgical Group (MCC).
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The MCC deal currently requires just the approval of Cape Lambert shareholders at the 29 July extraordinary meeting, although Evraz, which recently met with Cape Lambert management, now holds a large enough stake to disrupt completion.
Broker Collins Stewart estimates that an acquirer of Cape Lambert's shares, as opposed to its principal asset, could save A$125m in transaction costs. On top of that, recent long-term sales agreements struck by the likes of Rio Tinto and BHP Billiton have been at prices substantially higher than those prevailing when MCC and Cape Lambert agreed terms in February.
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Cape Lambert's shares jumped nearly six per cent to 40p on the news - that's a gain of 73 per cent since our 'speculative buy' advice exactly four months ago. The company asserts that Evraz hasn't made a formal offer, although any counter bidding scenario could see the shares climb higher still, and they remain a speculative buy.
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
