Cape Lambert switches game plan to become a managed resource investment portfolio
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Cape Lambert (ASX:CFE) has had to come up with a new game plan after being unable to lock in financing for its Kipushi cobalt and copper project in the Democratic Republic of Congo.
The junior explorer has made the decision to become a listed and actively managed portfolio with a focus on mining and resource investments.
It’s not that much of a leap for Cape Lambert because it already has investments in lithium explorer European Lithium (ASX:EUR), FE Limited (ASX:FEL) – which has iron ore, gold, lithium and base metals projects – uranium explorer Cauldron Energy (ASX:CXU) and gold play International Goldfields (ASX:IGS).
Up until this week, Cape Lambert had been trying to secure project financing for the Kipushi project but said yesterday that after an “exhaustive effort”, it had been unsuccessful.
Cape Lambert believes it was mainly due to the failing economics of the project in the current environment.
“When the project was first introduced the cobalt price was approximately $US95,000 per tonne, but now trades at less than $US40,000 per tonne,” the company said.
“Together with the challenging security situation and the yet to be controlled Ebola outbreak, it has made the DRC a very difficult jurisdiction for the company to work in.”
So Cape Lambert made the decision to turn its focus to its Marampa iron ore project in Sierra Leone.
The company noted that the steadily rising iron ore price had prompted interest from third parties in the Marampa project, and it would pursue the interested parties in the hope of striking a deal to progress the project to development.
And with the help of Frankfurt-based consultancy DGWA, Cape Lambert will offer a listed portfolio that is professionally managed just like a traditional investment fund.
But DGWA said it would be managed at a lower cost and with significantly greater flexibility in a sector that was so strongly underrepresented in Europe.
DGWA CEO Stefan Müller, who is a non-executive director of Cape Lambert, said the changes to the company’s portfolio were simply a “consistent adjustment and advancement of the investment structure”.
“Being a multi asset company gives Cape Lambert the advantage to be flexible regarding the kind of minerals, the location, the development stage of the projects they can invest in,” he told Stockhead.
“They may also develop projects themselves or let others do it. This all won’t change but the whole process will be institutionalised and more dynamic.
“With continued improvement and professionalisation of this approach, Cape Lambert should be able to grow its investor (shareholder) base significantly, especially in Europe.”
Müller said investors required these visible structures and wanted to know what the investment rules and criteria were.
“They like the idea to participate in a portfolio managed by experts but need to see that there is a structure behind it,” he said.
“The main idea is to set up a transparent due diligence, investment process and risk management structure to fulfil the requirements of investors in these days.”
About 30 per cent of Cape Lambert’s shareholder base is from Europe.
“Partnering with DGWA gives CFE a great opportunity of attracting high quality European investors into our existing diversified mineral investment portfolio,” Cape Lambert executive chairman Tony Sage said.
DGWA has helped a number of Aussie small caps, including Artemis Resources (ASX:ARV), tap European investors and find profitable projects, among other things.
Müller told Stockhead previously that European investors were “desperately” looking for battery industry and mobility related investments – the next “mega trend” in the market.
The continuing “gold boom” is also drawing increased interest from European investors.
DGWA revealed last month that it was expanding into the African mining space because European investors really wanted to inject cash into resources.