Cape Lambert Resources Ltd (ASX:CFE) has been given a major vote of confidence from its largest shareholder, who has exercised 23.5 million options with a strike price of 5 cents each.
This is a significant event for the company as not only does it provide $1.2 million in additional funding, the 5 cent exercise price is a 66.6% premium to last traded price of 3 cents.
Exercising the options at such a premium suggests a high amount of confidence in Cape Lambert’s Kipushi Cobalt-Copper Tailings Project in the Democratic Republic of Congo.
Total funding of $2.3 million combined with recent placement
The option exercise combined with the recently completed share placement results in Cape Lambert having access to an additional $2.3 million in valuable funding.
READ: Cape Lambert Resources completes $1.1 million placement
Funds will be used for exploration expenditure activities at the Kipushi project where a recent engineering study has highlighted the project’s potential value.
The study estimated future operating costs of US$64.66 per tonne and a total capital budget of $35.86 million.
With cobalt trading at US$70,000 per tonne, the study findings highlight the value of a future operation at Kipushi.
Study followed a leach test work program that confirmed high recoveries
The engineering study was undertaken following the positive results achieved from a leach test work program.
Recoveries of 90% for copper and 85% for cobalt have been achieved from laboratory scale test work undertaken to date.
READ: Cape Lambert Resources engineering study supports low-cost cobalt operation
A basic financial model was created by project operator Soludo Lambert Mining SAS, a 50:50 JV between CFE and local entity Paragon Mining SARL, to assess the financial visibility of the project.
This outlined total revenue of US$676.7 million and NPV on profits of US$216.6 million.