Vancouver – For Cardero Resources (CDU-T) getting a final US$88 million payment for its Pampa de Pongo iron ore project in Peru from Chinese-buyer Nanjinzhao has been an uphill battle.
Nanjinzhao was a tough customer. It haggled hard over the ultimate price of Pampa de Pongo, eventually getting it for half what it originally said it would pay; it blamed payment delays on the Chinese central government; and, most recently, it failed to provide a promised bank guarantee for US$88 million, the final tranche of Pampa de Pongo’s US$100 million price tag.
For outsiders holding faith in the depth of Nanjinzhao’s pocket was not easy.
But, while at times Cardero management sounded a bit weary, they nonetheless stuck to their guns throughout protracted negotiations, which began just over a year ago, and calmly maintained the money would come.
So no doubt celebrations were raucous the evening of Dec. 17, 2009, the day Nanjinzhao finally let Cardero know the money was in the bank. Cardero reports Nanjinzhao paid it US$58 million and that a final US$30 million payment is forthcoming Dec. 31, 2009.
Market response was upbeat. Cardero’s shareprice gained about 15% or 19¢ to $1.49 on news of the final sale. Cardero, once the full payment is in the bank, will have slightly more cash than its market capitalization of about $87 million.
As Cardero notes in its press release outlining the Pampa de Pongo payment, the cash pool will allow it to advance its other properties in Peru, Mexico and the U.S. Among several properties in Mexico, Cardero’s current portfolio includes the Pampa El Toro iron sands project in Peru, and the Longnose titanium project in Minnesota.
Cardero also hinted at possible acquisition of “significantly more advanced projects”.
What those might be has yet to be announced. But one thing is certain. If Cardero ever decides to deal with the Chinese again, it will be an old dog on that hard road.