Cardero Resource Corp. said yesterday the price it will be paid for its Pampa de Pongo iron ore property in Peru has been cut in half to US$100 million.
The reduction came after the Chinese firm buying the property told the Vancouver-based company it would not proceed with the purchase unless the $200-million price tag was cut.
"The board firmly believes that accepting the offer of US$100 million is in the best interests of the company and our shareholders, given the current long term projections for the global iron ore markets," Cardero president and chief executive Henk Van Alphen said.
"The revised agreement will provide us with very significant amount of near term capital that may potentially be employed in new and strategic opportunities - instead of waiting an indeterminate amount of time for commodity prices to improve and hope to sell for higher price in the future."
Shares in the company, which had fallen sharply this week when the deal was in doubt, were up 24 cents of about 24% at $1.25 on the Toronto Stock Exchange.
Cardero said Zibo Hongda Mining Co., Ltd., a subsidiary of Nanjinzhao Group Co. Ltd., has paid the required $10 million deposit in addition to $2 million that was paid earlier.
The balance of the purchase price is due 10 days after Hongda receives the necessary Chinese governmental approvals to proceed with the purchase or Dec. 17, whichever comes first.
Cardero holds assets in the Marcona District of southern Peru, the Baja district of Mexico and in Minnesota.
Source: London Free Press, Canada
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