Vancouver – Nanjinzhao has missed an Aug. 19 deadline to show Cardero Resources (CDU-T, CDY-X) a bank guarantee for the US$88 million balance of its US$100 million purchase of the Pampa de Pongo iron ore project.
To explain the missed deadline Cardero says Nanjinzhao is citing increased Chinese central government control on foreign currency and a new regulation that requires Chinese companies to seek approval of oversea investments before bestowal of bank guarantees.
Despite the kink in the schedule, however, Cardero says the Chinese company remains committed to completing the transaction.
Nanjinzhao has already paid US$12 million to Cardero for Pampa de Pongo and has incorporated a Peruvian company for the transfer of title of the property. It is also conducting an engineering drill program on the Peruvian property.
Nanjinzhao owes Cardero the US$88 million by Dec. 17 or within ten days of receiving final government approval for the purchase. Nanjinzhao, through subsidiary Hongda Mining, made the promise after securing the lowered price of US$100 million for Pampa de Pongo in May.
It had initially agreed to pay US$200 million.
Securing the letter of guarantee may be moot at this point, however, as if Nanjinzhao gets government approval of the purchase – something it would need to secure a bank guarantee – it would still be required to pay Cardero the US$88 million within ten days of the approval.
Cardero is also confident that Nanjinzhao will follow through with the purchase of Pampa de Pongo as the Chinese appetite to acquire iron ore assets to meet its industrial needs appears to remain strong.
At Pampa de Pongo Cardero has outlined a mine plan that would see production of 15 million tonnes of iron ore pellets over a 24-year mine life. Pampa de Pongo, 400-km south of Lima, has an inferred resource of 863 million tonnes grading 41.3% iron, 0.07 gram gold per tonne and 0.1% copper..
Cardero’s share price lost 10¢ to $1.08 on the news.