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“sundance did not welcome that bid from hanlon

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    Sundance issues tenders for African iron ore mine

    Dale Granger in Kalgoorlie
    PerthNow
    August 07, 2013 10:08AM

    Sundance Managing Director Giulio Casello

    Sundance Resources CEO Giulio Casello says tenders issued for the financing and infrastructure construction for its Mbalam-Nabeba Iron Ore Project in Central Africa. Picture: Marie Nirme Source: PerthNow

    SUNDANCE Resources says its $5 billion tender release relating to its Central African project is perfectly timed.

    The company today announced it was issuing tender documents for the financing and construction of its Mbalam-Babeba iron ore project in Central Africa at Kalgoorlie’s Diggers & Dealers conference.

    That’s despite of recent setbacks, including the collapsed takeover deal with China’s Hanlong Mining and a lawsuit from the family of a man killed in the air crash that wiped out the company’s entire board in 2010.

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    Sundance managing director Giulio Casello today hinted strongly at a potential Chinese suitor for the company’s planned 35 million tonne (mt) operation that it hopes to sign off within the calendar year.

    The previous $1.3 billion takeover bid by Hanlong collapsed in April, plunging the Perth company’s share price by more than 55 per cent to a four year low of 9.3 cents.

    Last month Sundance revealed it faced a $10 million lawsuit in the UK from the family of James Cassley, an investment banker among the 11 fatalities in the West African plane crash in 2010.

    Sundance Chairman George Jones said the collapsed Hanlong deal was a blessing in disguise as it enabled the company to complete the licensing process for Mbalam-Nabeba.

    “Sundance did not welcome that bid from Hanlong, but after they made it we decided to work with them, getting through all the approvals, because all the people we had been talking to wanted us to have those licences,” he said.

    “They’ve seen what happened in Guinea with not having a licence … they come back and say, ‘well another five or seven hundred million please’.

    “So we were determined to get those licences before we concluded a deal with anybody and now we have achieved that. So Hanlong had its plusses.”

    Mr Jones was optimistic Sundance was not facing stormy seas in the threat of lawsuits from the plane crash in 2010.

    “We can’t go into details, but one confidential report I have seen I believe indicated there will be no liability, no fault of ours and is an insurance matter," he said.

    “We were involved in a number of claims that have dropped away.

    “They’ve been taken care of by a separate team and are no distraction to us at all,” he said.

    Sundance are targeting a start date in late 2017 for the project, which saddles the border of Cameroon and the Congo, and believe the high-grade quality of its iron ore will surpass that of those found in the WA’s North-West.

    “It is as good as anything coming out of the Pilbara and is probably going to be better around (2017) as people deplete high grade reserves and there are not that many projects around.

    “We are in great shape and ready to move forward and develop it,” Mr Casello said.

    Sundance estimates Mbalam-Nabeba contains reserves of 436mt of iron ore.

    It plans to use 80 per cent of the capital raised to fund the port and export terminal at Kribi, on the Cameroon coast, which is planned to have capacity for bulk iron ore carriers of up to 300,000 dead weight tonnes.

    The planned rail development includes a 510km rail line from the Mbarga mine in Cameroon and a 70km rail spur line connecting the Nabeba mine in the Congo to Kribi.

    Sundance is also bullish on the price of iron ore, while emphasizing the long-term objectives of the project.

    “What is bearish is the share market, in respect of iron ore, the market is very strong,” Mr Jones said.

    “China has made it very public that they want ownership of new production. They are happy to have partners, but China wants 50 per cent in the next five years.”

    At current iron ore prices, of $131 a tonne, Sundance would be able to repay its capital outlay in 18 months having calculated free onboard prices at $70 a tonne.

    Mr Casello said if more than 60 per cent of the project’s infrastructure was built by Chinese companies, the project would be able to source debt financing from China export banks and the development bank.

    “That is where debt financing comes from. The equity comes from them buying into the project, and potentially us raising our own equity, so it is a mix of those sorts of things,” he said.

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