Perth, Australia — 02 January 2013 – Sundance Resources shares have jumped the most in 18 months after the Australian-based company received approval from the Congolese government to proceed with its flagship Mbalam iron ore project.
Revealing this in a report here, national newspaper “The Australian” went on to say that long-time suitor, China’s Hanlong Mining, said it hoped to have its US$1.3 billion cash takeover deal of the company wrapped up in March.
But despite the gains, market scepticism remains over whether Chinese approval for the takeover, which was agreed to by Hanlong and Sundance in March 2011, will eventuate.
Sundance shares yesterday rose 5c, or 16%, to 37c in their biggest one-day jump since July 2011.
But the stock remains below the reduced 45c per share bid price from privately held Hanlong, which was renegotiated down from 57c in August.
The stock has also not climbed back to its late November levels of 39c, where it sat before Hanlong said it could not meet a mid-December deadline in relation to funding for the acquisition from China Development Bank.
“The Australian” adds that approval from the Congolese government for the Nabeba iron ore deposit paves the way for Sundance, or whoever acquires it, to start construction on the US$4.7 billion Mbalam-Nabeba iron ore project that straddles the Cameroon/Congo border.
It also ticks off the final box on the list of conditions Sundance needs to fulfil its side of the Hanlong bargain.
The two major remaining conditions, apart from Sundance shareholder approval, are a term sheet for financing Mbalam from the China Development bank “’ which is expected this month “’ and Chinese National Development Reform Commission approval.
Sundance will be hoping that the Congolese approval will draw out any potential rival offers, of which to date there has been no sign.
If there are any bidders waiting in the wings, Sundance’s mining approvals in both Cameroon and Congo, along with iron prices sitting at 19-month highs, should be the catalyst to drive a better offer before a February 1 shareholder vote on the Hanlong deal.
Iron ore prices closed last week at $US139.40 a tonne, up 60 per cent from the two-year lows of $US86.70 hit in early September.
The first stage of the high-grade Mbalam project is targeting exports of 35Mtpa of iron ore that does not need processing, with the potential to rise to 50Mtpa.
Source: Sundance Resources. For more information, click here.