Australian resources and investment company Cape Lambert Resources Limited’s (ASX: CFE) shares tumbled 16.667 percent on ASX after announcing that it is going to secure an Engineering, Procurement, Construction and Financing (EPCF) provider for funding and developing the Kipushi Cobalt-Copper Tailings Project which is located in the Democratic Republic of Congo (DRC).
Cape Lambert has appointed Kobu Capital (Kobu) to secure EFCR provider for the Kipushi Cobalt-Copper Tailings Project. Kobu Capital is a venture investment platform which can offer a more economic development and financing process for the Kipushi Project through partnering with its Chinese strategic partners. The purpose of an EPCF provider is for self-funding of the design and building of the process plant, with the repayment of the financing coming from future revenues of the Project.
Kobu Capital already received an offer from the suitable international EPCF provider that is capable of funding, designing and building the process plant facility at the Project. It is expected that Kobu with its partner will arrive on site on 6 January 2018. The company is going to undertake the negotiations directly with the EPCF provider with regards to the terms and conditions of an EPCF contract. As per the terms of the mandate, a success fee of 7.5 percent on the value of the EPCF contract will be payable to Kobu Capital. The payment will be done in eight equal installments payable from earnings of the Project, and the first payment will get due within two months of the first shipment of product, with the balance of the seven payments each six weeks thereafter.
After signing a contract with an EPCF provider, the company is going to appoint Ipilot Australia Pty Ltd as a Project Management Consultant to assist in managing the development of Kipushi Cobalt-Copper Tailings Project. After commissioning the project, the company will negotiate with Ipilot Australia Pty Ltd to provide additional services to ensure the effective operation of the Project.
As per the company’s chairman Mr. Tony Sage, it is a fantastic solution to pay Kobu capital from the future revenues of the Project as it will reduce the risk of the shareholders for the company’s shareholders and it will allow the company’s cash reserves to be deployed on other projects.
As at 30 September 2018, the company was having net cash used in operating activities of $2.698 million, net cash used in investing activities of $89k and net cash from financing activities of $2.59 million. At the end of the September quarter, the company was having cash and cash equivalent of $841k. In FY 2018, the company earned a revenue of $0.368 million. Further, the company incurred a net loss of $0.828 million and basic and diluted loss per share of 0.07 cents in FY 2018.
Meanwhile, in the last six months, the share price of CFE decreased by 37.93 percent as on 17 December 2018. CFE’s shares traded at $0.015 with a market capitalization of circa $18.21 million as on 18 December 2018 (AEST 3:31 PM).
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