HANLONG Group will finalise its long-running $1.3 billion bid for Sundance Resources in the next two months, a step that China hopes will allow it to become a major player in swaying prices in the global iron ore market.
The privately held Chinese company revealed on the weekend that it would soon lodge documents with the Australian Securities & Investments Commission (ASIC) to press ahead with the bid which began in November last year.
Hanlong initially offered the Australian-listed Sundance Resources 57c per share, but was forced to cut the price to 45c by Chinese authorities after the iron ore price slumped in the middle of the year.
The bid has been backed by Sundance's board which itself has been struggling to develop the $5bn Mbalam mine in West Africa.
China's official news agency, Xinhua, reported on the weekend that Hanlong had flagged the bid would be finalised by early March.
The acquisition will start on February 26 and end on March 1, after documents are submitted with ASIC officials, the privately held Hanlong Group said," Xinhua reported.
In a statement, Hanlong also said that it would seek joint venture partners, most likely Chinese firms, to help develop the mine and the infrastructure needed to transport the iron ore.
"Hanlong is investing $US5 billion to develop its first mining project in Mbalam as well as build a 550km railway and shipping port," the report said.
"It is slated to start operating in 2014. Hanlong executives have disclosed that the company is in talks with leading state firms to jointly develop the mine."
Sundance managing director Giulio Casello said he hoped the statements from Hanlong would reduce market scepticism that the merger would go ahead.
"It's very good news. It confirms the timetable we have of a March 1 end date," Mr Casello said.
Sundance shares closed at 32.5c on Friday, showing the market is unconvinced the long-running transaction will close at the latest 45c-per-share agreed price.
There was concern this month that Hanlong would struggle to secure funding for the deal, but the company has assured investors it has firm financing.
"I would hope it reduces the scepticism but it will depend on how people read this information out of a Chinese news source," Mr Casello said.
"It does seem to make it a lot more public in China about the timing and achieving this end date.
"Shareholders obviously aren't convinced the deal is going to get done. If they were, the share price would be a lot higher."
The deal has already been approved by China's National Development and Reform Commission (NDRC) and Australia's Foreign Investment Review Board. The bid has been seen as a move by China to play a bigger role in dictating global iron prices.
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