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Yaounde, Cameroon Africa(Cameroon News) -
Sundance Resources Ltd may be asking for financial aid from China for its prestigious Mbalam Project in Cameroon.
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Sundance Resources Ltd., which proposes to set up a $4.7 billion iron ore mine, port and railroad in West Africa, may be forced to sell out more than 50 percent of its stakes in the mine, to a Chinese partner so as to put together he finances that will aid in supporting the construction.
“We are targeting to have a strategic partner selected by the end of June, so we can then move towards a final investment decision towards the end of September,” Giulio Casello, chief executive officer of the Perth-based company, said in an interview. “We are getting very strongly focused towards China.”
Chinese companies do not want to leave even the remotest corner of the world untouched, as they scout around for investments that they can get in the raw-material assets for steel which is vital to support the ever increasing focus towards development of one of the world’s fastest growing economy. A number of businesses from the country have toured the premises of the Mbalam project that lies along the border of Cameroon and Republic of Congo and another potential partner is slated to visit “shortly,” said Casello.
“They need to secure funding partners or off-take agreements,” Jamie Spiteri, head dealer at Shaw Stockbroking Ltd. in Sydney, said by phone. “Any news on them finding a strategic partner would be considered positive.”
A partner would “buy into the project level” and immediately be qualified to have a share of the sales accords, while Sundance plans to hold on to at least 50 percent of Mbalam, Casello said in Sydney. The company’s biggest shareholder presently is also from China- Sichuan Hanlong Group, which owns 17.94 percent.
Sundance share prices increased by as much as 5.8 percent in Sydney, trading at 35.5 cents at 12:30 p.m. local time, in comparison with a 0.4 percent drop in the S&P/ASX 200 Resources Index.
Rio Tinto Group and Vale SA’s are among companies who are in the process of finalizing acquisition deals in Africa. London-based Rio has taken control of Riversdale Mining Ltd., which has some coking coal projects in Mozambique.
A Good Start
Sundance just closed a study of Mbalam last month and proposes to kick start construction activities at the end of the year. It aims to commence shipping iron ore by 2014 and produce 35 million metric tons a year. In order to ensure that shipment takes place the company would need to put in place a 510-kilometer (320-mile) heavy- haulage railroad that will run through Cameroon and a deep water port for bulk iron ore carriers, Sundance said April 6.
“We’ve had our technical teams in China pretty well full- time for over three weeks now going through and explaining to the potential partners how we made up” the study budgets, said Casello. The company last year entered into an initial deal with China Harbour Engineering Co. and China Rail Construction Co. to conduct a reconnaissance study on construction of the port and rail.
Sundance may be starting talks with China Development Bank Corp. and Export- Import Bank of China to provide support for investment, considering the good relationship they share with Sichuan Hanlong, Casello said.
About Sundance Resources
Sundance Resources Limited is an international resources company which is currently involved in developing the Mbalam Iron Ore Project that is located alongside the border of the Republic of Cameroon and the Republic of Congo, in central west Africa. Sundance Resources is listed on the Australian Securities Exchange (ASX code: SDL) and also has the S&P ASX200 Index.
