Company agrees to revise final sale price of Peru property to US$100 million
Shares of Cardero Resource Corp. (TSX: T.CDU, Stock Forum) surged more than 25% to $1.27, after the company announced Thursday afternoon that it has reached a deal with a subsidiary of Nanjinzhao Group Co. Ltd. to amend an October agreement for the subsidiary’s purchase of the Pampa de Pongo Iron Deposit in Peru.
As reported last October, Cardero entered into an agreement to sell the Pampa de Pongo Iron Property to integrated iron and steel conglomerate Nanjinzhao Group for US$200 million.
Earlier this week, the company reported that Nanjinzhao’s subsidiary had requested a price reduction due to difficult global economic conditions that have significantly adversely impacted iron ore prices.
“Following extensive negotiations, Cardero has agreed to revise the final sale price to USD 100 million,” of which US$2 million has already been paid, says the company. The subsidiary has also paid a US$10 million deposit to Cardero Peru.
"The Board firmly believes that accepting the offer of USD 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. 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," said Henk Van Alphen, the company’s president & CEO.
"To take Pampa de Pongo to the next level (feasibility) would result in massive dilution to the shareholders in the current challenging market, and there is no guarantee that by doing so the Company would be able to attract a significantly higher purchase price (taking into account the additional investment by Cardero), than Hongda is prepared to pay now," added Van Alphen.
On the company’s Bullboard, casey13 “1/2 the original amount but twice our current market cap. I think they have done the right thing[sic].”
