(MENAFN- ProactiveInvestors)
() executive chairman Tony Sage has demonstrated his support for the company by acquiring more than 29 million shares in an off-market trade.
He paid $320663 or an average of $0.011 per share. This takes his total indirect holding up to 72766681 shares or 11.61% in the company.
Investors supported the news strongly with CFE shares ending the trading day 40% higher at $0.021.
Resources magnate Sage commented:
“I have believed in and continue to believe in Cape Lambert as an investment opportunity.
“During a time where capital markets are showing little support for resources companies I think it important I show support for the company in the most tangible of ways by buying shares.
"This acquisition of shares significantly alleviates the overhang of stock in the market which is positive for all Cape Lambert shareholders.
“Cape Lambert retains a strong cash position and together with its listed securities and current receivables in my view represents a compelling investment opportunity.
“I know all resource company executives believe their companies are undervalued but with approximately $45 million in cash receivables and investments at current market values I genuinely believe Cape Lambert is undervalued which is why I have shown this support to the company."
Cape Lambert currently has $7 million in cash and about $20 million of listed and unlisted securities.
It also has about $18 million in loans and convertible notes most of which are due to be repaid in the coming six months.
In June the company amended its royalty agreement with Timis Mining to one payable on production of 24 million tonnes at US$2 per tonne from the Marampa Iron Ore Mine in Sierra Leone.
This royalty was originally payable over a four year period with potential extensions in case of a force majeure event.
Timis’ Marampa Iron Ore Mine remains in care and maintenance due to unforeseen circumstances.
Analysis
In a show of faith in an undervalued company chairman Tony Sage has not only potentially acquired cheap stock but removed an overhang in the market.
Paying $0.011 for each share certainly seems like a bargain considering the company has the equivalent of $0.072 in cash receivables and investments at current market values.
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