Sundance shares poised to soar as high as 21c amid countdown to development of iron ore project, say top broking firms
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With its shares trading at just 8.3c, leading analysts predict the stock is set to rocket by up to 150% as the company finalises funding and key contracts for its world-class projectLeading analysts are recommending investors buy shares in Sundance Resources, saying the stock is poised to soar by up to 150 per cent as the company closes in on funding and development of its massive African iron ore project.In a research note just hot off the press, top broking firm Patersons says Sundance shares, which last traded at 8.3c, are set to rise as high as 21c.Patersons’ highly regarded analyst Rob Brierley says there are several key catalysts for Sundance’s Mbalam-Nabeba iron ore project which will drive up the share price. “Sundance is steadily progressing to financial close,” Brierley says in his report.“We rate the management of the Company highly and believe that they can get the Mbalam-Nabeba Iron Ore Project into production in a timely and capital efficient manner, thereby unlocking significant value. Accordingly, we rate the stock a buy.”Brierley also says that he believes a near-term fund raising “will be a positive” and notes that Sundance has previously sourced money from “strategic investors”.Among the scenarios he canvasses is that the rail and port infrastructure, which accounts for the lion’s share of the project’s total capital cost, is sold to a third party which then allows Sundance to use it for a fee.“The Company has several funding options which may negate the need for an equity raising which include a Build, Own, Operate and Transfer (BOOT) model for the port and rail infrastructure or the sale of project/asset equity which we believe will be the most likely option,” Brierley says.He says Sundance is “clearing milestones one by one”. This includes the appointment of construction giant Mota-Engil Africa to build the infrastructure. “The support of an internationally renowned company such as Mota-Engil is a strong sign of confidence stakeholders within the market have in the Project,” Brierley writes.“Discussions are well advanced with a wide variety of potential debt funding partners including export credit agencies, development funds and commercial banks.”Brierley’s bullishness towards Sundance is shared by Macquarie Securities analyst Hayden Bairstow, who has set a 12c price target and says the stock is set to outperform.“Sundance owns the largest iron-ore development project outside of the majors with its Mbalam-Nabeba project potentially able to produce at 35mtpa for over 20 years,” Bairstow says in his latest research report. “Sundance has also appointed Standard Bank as financial adviser and mandated lead debt arranger for the project. Discussions with export credit agencies, development funds and commercial banks are well advanced.”Sundance has stated it is targeting mid-2015 to reach financial close for the project.Read these latest research reports and more about the world-class Mbalam-Nabeba Iron OreProject at www.sundanceresources.com.au
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SDL Price at posting:
8.3¢ Sentiment: Buy Disclosure: Held
