Cape Lambert
Chairman, Tony Sage
11 January 2012 – Australian-based Cape Lambert Resources, a mineral investment company, notes the recent announcement released by African Iron Limited advising the intention by Exxaro Australia Iron Investments Pty Ltd, a wholly owned subsidiary of Exxaro Resources Limited, a South African-based mining group, to make off-market takeover bids for the ordinary shares, and for the listed options, of African Iron. These include a controlling interest in the Mayoko Iron Ore Project in the Republic of Congo.

In terms of the offer, Exxaro will offer African Iron shareholders a consideration of A$0.51 cash for each African Iron share. Exxaro has announced that it will vary the Takeover Offer to increase the offer price to A$0.57 per African Iron share if Exxaro acquires an interest in at least 75% of African Iron. If the 75% relevant interest level is reached, all African Iron shareholders who accept the Takeover Offer will be paid A$0.57 for each African Iron share regardless of whether they accept before or after that 75% acceptance level is reached.

Cape Lambert has entered into a pre-bid acceptance agreement with Exxaro to accept the Takeover Offer in respect of 100,315,473 African Iron shares, which represent 19.99% of the issued capital of African Iron. The investment company will be entitled to receive A$0.57 per African Iron share should the Increased Offer Price under the Takeover Offer apply.

Cape Lambert acquired the interest in African Iron when it bought the company DMC Mining Limited, the holder of a then 80% interest in the Mayoko Iron Ore Project, for A$32.4-million via an off-market takeover bid in August 2010.

The Company subsequently sold DMC Mining to Stirling Minerals Limited (later renamed African Iron Limited) in January 2011 for 120,000,000 African Iron shares, which were escrowed for a period of 12 months from the date of issue and A$47-million in cash. Cape Lambert later increased this by an additional 6,700,000 African Iron shares bought on market. In terms of the deal, Cape Lambert also negotiated a royalty of A$1 per tonne of iron ore shipped from the Mayoko Project.
Commenting on the offer, Cape Lambert Chairman, Tony Sage, said: “The decision to agree to accept the Takeover Offer was not taken lightly, given our belief in the Mayoko Project, however we felt that to do so at this time would allow us to realise a significant return and at the same time generate sufficient funds to rapidly increase the exploration and development activities across our existing suite of iron ore assets in West Africa.

“We will retain an exposure to the development of the Mayoko Project through our royalty of A$1 per tonne of product shipped from the Project.”