JPMorgan sees Australia's Sundance as a top takeover target
* Five Chinese firms interested in Sundance's African project
* Sundance aims to choose partner by June 30
* May sell up to 50% stake in African iron ore project
* Cheaper to take over Sundance, JPMorgan says (Adds detail)
MELBOURNE, May 23 (Reuters) - JPMorgan added Australia's Sundance Resources to its list of top takeover targets on Monday, after Sundance's chief was quoted saying that five Chinese companies were interested in becoming strategic partners in its iron ore project in Africa.
Sundance has said it aims to choose a strategic partner by June 30, which may involve selling up to a 50 percent stake in its Mbalam iron ore project on the border of Cameroon and the Republic of Congo, in return for long-term supply of iron ore.
It is looking to line up a partner to help secure funding and construction for the first stage of the project.
Sundance Chief Executive Giulio Casello was quoted in the Australian Financial Review on Monday saying that five Chinese companies were interested in becoming a partner in the Mbalam project.
"That's just the Chinese. We still have a couple parties outside of China," the newspaper quoted him saying.
The company said last week it was aiming to make a decision by the end of June, but Casello said the deadline could be extended to accommodate the companies it was talking to, including a large Chinese company which had entered the fray.
"This big guy's just joined in. They're doing all the right things to get done by around that time. But if they don't, I'm not going to cut it off on June 30 just to make an announcement," Casello was quoted saying.
Sundance has said it does not intend to sell more than a 50 percent stake in the project.
JPMorgan's specialist sales team said it may make more sense for the Chinese to just take over Sundance to gain full control of the high quality iron ore resource it holds, rather than pay around A$2 billion for a 50 percent stake in the project.
"In fact, a Chinese party could put a A$1.3 billion offer on the table and have a decent chance of succeeding in my view," Sujit Dey, executive director Australian equities specialist sales, said in a note.
He said Sundance could become a target for major miners like Rio Tinto , Vale and Xstrata as well as Chinese companies.
"In my view, Sundance is the best asset left in West Africa that is not controlled by one of the majors," he said in the note.
Sundance shares fell 4 percent to A$0.355 on Monday, valuing the group at A$1 billion, reflecting investor caution about the challenges it faces in getting its iron ore to market.
The first stage of its Mbalam project is expected to cost $4.7 billion as its planned mine is more than 500 kilometres away from a proposed deepwater port in Cameroon. (Reporting by Sonali Paul; Editing by Balazs Koranyi)
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