HomeBase MetalsUS$3.2 billion iron ore project for Cameroon

US$3.2 billion iron ore project for Cameroon

Drilling at Mbarga,
in Cameroon
Perth, Australia — MININGREVIEW.COM — 15 January 2009 – Sundance Resources Limited – an international iron ore company based in Perth and listed on the Australian Securities Exchange – says its operating subsidiary Cam Iron SA and the government of Cameroon have agreed in principle on the terms of development for the multi-billion-dollar Mbalam iron ore project in the West African country.

A media release issued here confirmed that the framework agreement would form the basis for the Mbalam Convention, which was expected to be ratified by the parliament of Cameroon on completion of the project feasibility study.

Sundance chairman George Jones, said: “Agreement of these terms is of great significance to the Mbalam Project. This is a very important milestone both for the Republic of Cameroon and the company, as the Mbalam project is expected to become the largest mining project undertaken in Cameroon and its first major iron ore project.”

“The Mbalam project is expected to place Cameroon in the top ten iron ore exporting nations in the world with projected production of up to 50 million tonnes per annum commencing in 2012,” he added. “Development of the Mbalam project is likely to attract further investment in exploration and mining in this resource-rich nation, with Sundance already looking at other potential value-adding opportunities in country.”

CEO Don Lewis, commented: “Given the scale of the project and its potential to transform the Cameroon economy, the government has agreed to provide tax concessions, investment incentives and equity support to ensure that the project is internationally competitive.”

“The Cameroon Mining Code already provides specific incentives to promote resources development in the country. The Framework Agreement provides the mechanism for the Government to grant additional incentives such as accelerated depreciation and reduced rates of corporate taxation to ensure that the investment return from the Mbalam project is competitive with similar, large-scale iron ore export projects elsewhere in the world.”

Cam Iron has recently announced completion of it’s the first stage of drilling at Mbalam in December 2008. Following execution of the framework agreement, the company will focus its attention on securing strategic off-take and financing partners for the project. This will facilitate completion of necessary development studies, government approvals and commercial arrangements required for project financing in 2009.

A pre-feasibility study completed by WorleyParsons in January 2008 estimated a total capital cost of US$3.27 billion (R33 billion) for developing the start-up DSO Operation. This includes the mine, crushing and screening plant, stockpiling facilities, 490-km railway system, and a port capable of handling 250 000 DWT cape size vessels.

Development of the project is being progressed on a fast-track schedule. Sundance is progressing definitive studies to define iron ore reserves and complete detailed planning for project construction and operations with target commencement of operations in 2012.

Sundance aims to secure iron ore sales contracts with the world’s major steel producers. This will include mills in Europe – which are strategically located for supply from the Mbalam project – as well as in China, India and the Middle East.