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Business
No lament for Hanlong exit as Sundance deal teeters
511 words
6 April 2013
The West Australian
TWAU
First
7
English
(c) 2013, West Australian Newspapers Limited

The end game for Hanlong Mining’s laborious and more recently, farcical, takeover bid for Sundance Resources is at hand.

With Monday marking the start of a 10-day exit period, a frustrated Sundance can be expected to bail from the $1.37 billion agreement sooner rather than later.

The company hinted yesterday its withdrawal is already in train, saying the “outcomes” of a five-day “good faith” consultation period were being drafted in preparation for ratification by both parties.

With the 20-month deal terminated, the WA iron ore hopeful won’t waste any time sounding out China’s National Development and Reform Commission for a replacement Chinese partner for the development of Sundance’s Mbalam project in West Africa.

Sundance chairman George Jones, a notable supporter of Chinese investment in Australian companies and projects, won’t doubt he can do another deal.

The company believes China Inc’s appetite for new alternative sources of lower-cost iron ore is undiminished.

Mbalam has been promoted as the spearhead of a potential new major iron ore region.

But with the world heading into what could be at least five years of oversupply of the steelmaking material, its value is less commercial and more strategic, with China making no secret of its desire to diversify its supplies further beyond the likes of industry heavyweights Vale, Rio Tinto and BHP Billiton.

Sundance’s belief in China’s sustained interest in Mbalam has kept it engaged with Hanlong even as the bid faltered and then began to fall apart. Hanlong’s failure to hit its latest deadlines for a $5 million payment and the delivery of a credit-approved term sheet, together with the unrelated arrest of Hanlong’s chairman, have proved terminal, destroying any residual confidence in the transaction.

Little wonder Sundance and Jones won’t be lamenting Hanlong’s departure but instead looking forward to a new start.