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Cape Lambert To Proceed With Caution
November 30th. 2007 - Australasian Investment Review – (AIR)

Cape Lambert Iron Ore (CFE) will proceed with caution when it comes to potential new interests in the business after $270 million sale agreement fell through earlier in the year, the business told its shareholders. Speaking at the annual general meeting today, chairman Ian Burston said the business will not take success for granted.

“We believe our company to be sufficiently valuable to attract continuing interest – and to appeal to the quality end of the market.” Burston said.

“It is also why, we ultimately terminated our dealings with interests who had sought to acquire a large stake in our project when those interests did not satisfy conditions to which they had agreed despite various concessions and extensions,” Burston said.

In early October, Cape Lambert terminated the proposed sale of 70% of its iron ore project to Chinese investor Ding Liguo, chairman of Delong Holdings.

Ding had entered into a $240 million sale agreement with the Australian iron ore explorer in March.
But Cape Lambert said Ding had failed to satisfy the conditions for the transaction and had breached a memorandum of understanding (MOU).

“As a shareholder, I am disappointed with the fall in the company’s share price following the termination of dealings with a potential Chinese investor,” said Burston.

On the back of the news of the termination, the market sold the stock down 12% to 44 cents. Since then, the stock has failed to recoup its previous losses, and has slid gradually, closing at 40 cents on Friday.

Gunns Takes Control Of Auspine…Finally

Tasmanian Timber Giant Gunns (GNS) has finally taken formal ownership of Auspine after a long drawn out takeover battle.

Gunns already owns more than 60% of the forestry company and had offered Auspine shareholders $7 per share (US$6.15), representing a 13.8% premium to its previous cash bid

The proposal values Auspine at $330 million.

Auspine had initially recommended its shareholders reject Gunns’ offer of $7 dollars a share, saying it “considerably undervalued” the company.

Nevertheless, Auspine managing director Adrian De Bruin, who controls 30.3% of the issued shares, sold all his shares to the timber giant for nearly $115 million.

He will leave Auspine next month but says hopes to return in an advisory capacity.

Auspine was reluctant to accept the too-low offer, saying on Tuesday that it had an unaudited profit after tax of 6.7 million dollars in the four months to October, compared with 2.2 million dollars a year earlier as high demand for softwood timber helped drive up prices.
“The earnings outlook for the balance of the year, based on current and forecasted production and sales, are very encouraging,” said Auspine’s chairman, Paul Teisseire.

But Gunns will now be reaping the benefits of this positive 2007/08 forecast as the acquisition finally puts to rest a 6 month struggle for ownership.

“The acquisition will establish Gunns as Australia’s largest privately held diversified owner and manager of hardwood and softwood forest resources,” said Gunns CEO, John Gay,

Gunns said it is expecting a range of strategic and financial benefits to come from the Auspine takeover.

These include geographic diversification, improved ability to invest in veneers and engineered wood products, cost saving via distribution efficiencies and attractive positioning for further expansion.

Shares in Gunns rose by 11 cents today to close up at $3.79.

Murchison Will Continue Chasing Midwest

At its AGM today, Murchison Metals (MMX) said that it has not ruled out offering an additional sweetener to get its all-scrip takeover bid accepted by Midwest Corporation (MIS)

Murchison Chairman Paul Kopejtka told shareholders that the takeover proposal makes sense on every level –operationally, corporately and financially.

“Our challenge is now to persuade the Midwest board and its key shareholders that combining the two companies and the two projects will be in the best interests of ALL of the shareholders in both companies.”

Murchison’s board will discuss its options in the next few days, chairman Paul Kopejtka told shareholders at the company’s annual general meeting on Friday.

He said the three options available were to wait for the bid to close on December 6, extend the offer date, or extend the offer date with a revised bid.

Murchison Metals’ had made a $1 billion-plus scrip takeover offer which Midwest’s shareholders have officially rejected.

The Midwest Board confirmed in writing earlier this months that Murchison’s current offer materially undervalues Midwest relative to Murchison.

Midwest and Murchison are both developing iron ore projects in the mid-west region of Western Australia and are in competition to develop a new deep water port at Oakajee near Geraldton and a railway to move the iron ore from mines to the port.

By acquiring Midwest, Murchison would have removed its main rival for the $3 billion development.

Murchison managing director Trevor Matthews said the combined entity remained a compelling proposition but would not be pursued at any cost.
“There is a limit to what we would be prepared to offer,” Mr Matthews said.

Mr Kopejtka said Murchison was assessing new opportunities, which could include a bid for another iron ore company or acquisition of new tenements.

Nevertheless, the Western Australian Mid West region would remain Murchison’s key area of focus.

At the AGM, Mr Kopejka also addresses the legal action taken against Murchison yesterday by minerals exploration company Chameleon Mining NL

The claim relates to Murchison and Crosslands’ alleged use of Chameleon’s funds, about $575,000, to acquire the tenements that comprise the Jack Hills iron ore project in Western Australia.

Mr Kopejtka said the claim appears to have no substance and had been designed to put maximum pressure on Murchison.

“We refuse to countenance any settlement of the claim … and will take all steps to deal with this issue as quickly as possible,” he said

Dragging some skeletons out of the closet, Mr Koptejka said a representative of Chameleon, Jeff Braysich, who approached Murchison earlier this year regarding the matter, had recently been convicted of multiple counts of market rigging.

Mr Kopejtka said Murchison is close to shipping the milestone one million tonnes of ore and with a the iron ore price predicted to grow by as much as 30%, the outlook for the company was positive.

Shares in Murchison were 12 cents higher to reach $4.01.

Midwest’s shares rose by 10 cents to close up at $4.08.

Copyright Australasian Investment Review.
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