6 August 2012

Cameroon: Mbalam Iron Ore Project, Provisional Approval to Acquire Sundance

China's National Development and Reform Commission (NDRC), a macroeconomic management agency under the Chinese State Council with administrative and planning control over the Chinese economy, has granted provisional approval for Hanlong Group to acquire Australia's Sundance Resources Limited. Sundance Resources Limited whose shares are expected to be acquired by the Chinese firm, is the mother structure whose Cameroon subsidiary, Cam Iron, is responsible for the mining of iron ore in Mbalam, East Region.

According to the release, NDRC has stipulated a number of conditions to be met in order for

Hanlong to receive final approval. These include a reasonable acquisition price, Hanlong securing equity and debt funding from relevant banks, Hanlong securing Sundance's Cameroon Mbalam mining development right and related port and railway development rights as well as Hanlong securing Sundance's Congo Nabeba mining development right and related railway.

The release further states that the Sundance board considers that trading in Sundance securities should remain suspended until Sundance is in a position to confirm the outcome of the discussions. It says the receipt of NDRC provisional approval is an essential step towards achieving all necessary Chinese regulatory approvals, which in turn is a condition precedent to the completion of the Scheme. "All other regulatory approvals, including final NDRC approval, the sign-off of the Mbalam convention agreed terms by the Cameroon Head of Government, and the issuing of the Congo Mining Permit, are required by the second court date which is scheduled for early November 2012. The scheme remains on target to be implemented by mid-November 2012," the release specifies.

The exploration of iron ore reserves in Mbalam by Cam Iron recently received a boost with a FCFA 40 million dollars (about FCFA 20.8 billion) additional funding from Sundance Resources Limited raised through a placement with a 0.345 dollars interest rate per share. The money was to be used to assist Sundance Resource Limited to undertake early works at the port and rail areas to help maintain the construction timeline, continue drilling on the previously announced exploration targets as well as help to provide general working capital for the company.

The expected 100 per cent acquisition of Sundance's shares by Hanlong, experts say, would greatly boost the Mbalam project that promises to be a catalyst to the country's socio-economic development. Information from Cam Iron says the Mbalam Iron Ore Project will produce 35 million tonnes of iron ore per annum. Cam Iron will construct a 510-km rail line for the transport of iron ore from the Mbarga Mine to the Cameroon coast with a 70-km rail spur line to connect to the Nabeba Mine in Congo. It will also build a deep water iron ore export terminal in Lolabe- Kribi capable of taking bulk "China Max" iron ore carriers.

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