CFE Cape Lambert Resources Limited

Australia's Cape Lambert Resources Ltd. (CFE.AU) said Wednesday it has started a A$500 million sale process for its Marampa iron ore project in Sierra Leone.

"We start the (sale) process now and we have two groups going on site in February," said Tony Sage, executive chairman of Cape Lambert.

"We expect the sale to be complete by June 30," Sage told reporters at a briefing, adding that he believes the project has a "minimum" value of A$500 million.

Although unwilling to identify the two prospective buyers about to visit Marampa, Sage described them as a Korean steel making group and a "consortium of steel mills out of China".

Earlier visitors included two Chinese entities--the Shandong group and MCC, he said.

The Australian company is considering a 100% "trade sale" of the venture, although Sage said he is leaning more towards an initial public offering in which Cape Lambert would retain an interest.

The IPO would potentially raise US$400 million-US$500 million, he said.

"We'd probably list it in London or Hong Kong," he said.

On top of the sale price, the buyer would face a cost of roughly A$600 million to bring Marampa into production at a rate of 5 million metric tons a year, he said.

Cape Lambert recently concluded a deal with African Minerals Ltd. to gain access on commercial terms to a nearby railway and port.

Under the deal, Cape Lambert's Marampa project secured 5 million tons a year of transport capacity.

Sierra Leone is one of several countries emerging as potential iron ore exporters in West Africa, which has attracted investments recently from China, along with diversified majors Rio Tinto Ltd. (RTP), BHP Billiton Ltd. (BHP.AU) and Brazil's Vale SA (VALE).

-By Stephen Bell, contributing to Dow Jones Newswires; 61-8-9244-4243; sgbell@bigpond.com

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