Cameroon Diamond Mining Industry - South Korea CK Mining develop Diamond Mine Yakadouma

Yaounde, Cameroon Africa(Cameroon News) – China and its explorers seem to be having genuine interests in sharing the wealth of Africa as more and more businesses from the country are being integral parts of African ventures.

China’s mining explorer Hanlong was in the limelight last week’s or having placed a bid of $145 million for Namibia uranium developer Bannerman Resources. Now it hogs the limelight once again this time for placing a $1.3 billion bid at Sundance, for its prestigious Mbalam iron ore project.

Sundance’s 2.3 billion tonne Mbalam haematite project, which lies along the borders of Congo and Cameroon, produces a total output of 35 million tonnes annually, all ready for direct-shipping. But these projects are not as inexpensive as they seem to be, especially when they have connectivity issues that mandate the construction of a 510km railway network and deep sea water port. The feasibility study, whose results were made official in April, looked towards a budget of $US4.6bn ($4.3bn) for the first stage alone.

The Sundance board yesterday exercised extreme caution as they revealed the news of Hanlong’s 50c-a-share offer “not providing adequate value or certainty”, while also being quite open about the fact that they were quite taken in by the offer of the 18 per cent holder. As Sundance lost all the members of its board to a plane crash around the same time last year, the revamped management has been doing a great job in getting the base and the money for the prestigious project together. But the money to set off the project in no joke. Investors would need to rely heavily on the assumption that the management can squeeze out the maximum benefits out of an agreed deal.

HANLONG’S latest venture has sent ripples all across the junior West Africa sector, with African Iron benefitting the most from a 7 per cent hike. African Iron’s Mayoko project in Congo is showcased as a 10mtpa operation: primarily a 5mtpa direct-shipping venture for the richer part of the ore and then an additional 5mtpa of beneficiated ore. Foster Stockbroking estimates it to have a value of 80c. Cape Lambert holds 25 per cent, while Equatorial Resources (EQX, $2.86) as per the records holds a 19.9 per cent.

Equatorial alone has expressed a lot of interest for its two haematite projects in Congo: Mayoko-Moussondji (2.3 billion to 3.9 billion tonne “exploration target”) and Badondo (1.3 billion to 2.2 billion tonnes).

Joining the bandwagon, Legend Mining (LEG, 4.3c) yesterday came up with “encouraging grades” and thickness at its Ngovayang magnetite project in Cameroon, and Waratah Resources (WGO, 30c) not one to lag behind came up earlier this month with results that indicates that it had placed two rigs to drill out its Youkou iron ore project in Congo. Rock chip samples point towards a 65 per cent-plus haematite resource. Another addition to the list is Nemex Resources (NXR, 23c) with the success of its Telimele project in Guinea, which was determined on the basis of chip samples at this level. Equatorial and African Iron come under the category of speculative buys but Legend and Waratah, will probably not show up in the list for the time being.

Similar to Hanlong, 20.9 per cent Eastern Star holder Santos had been taking some extra time finalizing the strategic stake in its latest deal. ESG owns the biggest gas acreage in NSW, but low commercialization and a reduced interest in coal-seam gas assets is irritating investors. Santos took control of its primary 19.99 per cent ESG stake from Hillgrove Resources for $1 per share in mid-2009, which at that point of time was just the right time for the vendor to concentrate on its Kanmantoo copper project.

ESG presently owns the biggest gas reserves in NSW, by way of its 65 per cent share of the Narrabri Gas Project in the Gunnedah Basin. The permit has 2797 petajoules of 3P gas, but is facing a lot of disadvantages owing to its remote location.

Santos chief David Knox yesterday was keeping his options open, and also mentioned vaguely of a possibility that the gas could be routed towards the north in a bid to ramp up Santos’s Gladstone LNG export venture.

As Santos is disposing 20 per cent of the ESG permits to generator and retailer TruEnergy for $284m, they are also looking at satisfying the eastern seaboard gas demand which seems to be never ending. Gas is carbon-friendly, so the federal carbon tax comes in as an added bonus.

Santos has a lot on its plate now at Gladstone, and rumors indicate that ESG’s flagship Newcastle-based LNG proposal is likely to be taken out. The offer is rumored to be at a 51 per cent premium to Friday’s close of 59.5c, but some ESG investors opine that the deal is being shelved prematurely. However developing and completing the project is a different ball game altogether. ESG investors should not let go on the Santos scrip. Santos shares dipped 49c yesterday, but it doesn’t look to be carrying any benefits for ESG’s gas.

On broker JPMorgan’s opinions, Santos is shelling out 50c a gigajoule of 3P reserves, compared with the median 71c. But interest has cooled since AGL spent a whopping $3.17 for Sydney Gas in late 2008.Yet another performer is Metgasco (MEL, 29c), which has a lavish NSW resource and is rumored to be thinking about an offshore LNG facility.