LOCAL COMPANY RECOVERING FROM WEST AFRICAN AIR TRAGEDY
Sydney - Monday - September 13: (RWE Aust Business News) ********************************************************
OVERVIEW ********
Ferret could see mileage in Sundance Resources, the African iron ore explorer/producer, back in July at 12c when the market seemed to lose confidence after most of its Board was killed in an air tragedy in the Congo. For a short time the shares were suspended until an interim Board had been formed. On their return, Sundance Resources's share price barely moved from its suspension level. The company believes it is significantly undervalued based on market comparables. On Friday, the shares hit 22c during the week and Ferret still sees further merit in the stock. Market interest was generated by the report mid week that Sundance Resources had signed a memorandum of understanding involving the Mbalam project with China Rail Africa through CRCC China-Africa Construction Ltd. The WA-based company announced had entered into a MOU to establish the scope, cost and delivery program for the railway track and rolling stock needed to support the Mbalam project in Cameroon and Congo. The MOU commits the parties to work together to establish the scope, cost and program for delivery of track and rolling stock sufficient to support planned output of 35mtpa of iron ore from Sundance's proposed Cameroon and Congo mines and MOU terms of EPC contract under which CAC would deliver the mine rail project. At the conclusion of that work the Parties may enter into a Delivery Contract for the Mine Rail Project. Neither party is bound to enter into the delivery contract if it is not prudent to do so. The MOU recognises that the mine rail project will be integral with the mine project itself and the Lolabe Port Development project. It also recognizes that the rail, mine and port projects are subject to a range of conditions precedent including government approvals, funding and title requirements for the rail corridor and other assets. Last month the company held its annual meeting headed by chairman George Jones. He was supported by Peter Canterbury, acting chief executive officer, Michael Blakiston, Barry Eldridge, Fiona Harris and company secretary Neil Hackett "This is a meeting I deeply wish we did not have to have," the chairman said. "The tragic circumstances giving rise to this meeting are still extremely hard to comprehend and very difficult and painful to accept. "On 19 June 2010, an air crash in the Republic of Congo tragically claimed the lives of all of the company's directors - the late Geoff Wedlock, Don Lewis CEO, Craig Oliver, Ken Talbot and John Jones - along with John Carr-Gregg, the company secretary. "They were visiting Cameroon and Congo for one purpose - to build a world class iron ore project," Mr Jones said. "As a result, the company's largest shareholder - the Talbot Group - has called this meeting to formally elect new directors to ensure compliance with the Corporations Act and the company's Constitution as to the minimum number of directors required to be appointed." Mr Eldridge told the meeting it was very difficult to find the words to convey the shock and sadness the company felt at the loss of so many vital and talented people. "Along with many other Australians and people around the world, we have taken time to mourn those friends we have lost, but at the same time, we all feel a deep resolve to continue their work and create an enduring legacy that they would be proud of," he said.
SHARE PRICE MOVEMENTS *********************
Shares of Sundance Resources slipped 2c to 20c on Friday after strong support in the market. The company has 2.7 billion shares on issue with a market cap of $541.9 million. "It has been crucial for the Company, its shareholders and for the memory of those we have lost that we have been able to rebuild Sundance quickly into a position of strength," Mr Jones continued. "I am pleased to report that your company is in very good shape. "I am also pleased to report that your company is in a very strong financial position and its business plans and strategy are in very good shape," the chairman said. Sundance retains a very solid balance sheet with over $70 million of cash reserves as at the end of July, and no debt. The project itself has very robust financials with a capital payback period of under four years and an internal rate of return in excess of 25%. These numbers make the project returns extremely robust and attractive to potential investors. After a four-week suspension as a result of the accident, drilling and exploration operations resumed as normal on July 21. As previously announced, the company recently received environmental approval for the project from the Cameroon government, representing significant de-risking of the project. The definitive feasibility study remains on schedule for completion by the end of 2010. Crucially the project continues to enjoy very strong support in the region. The chairman said that during a recent visit he and some Board members undertook, it was apparent that the Congolese government continues to show exceptional support for the project and the company. "It has become very clear to me that the recent tragic events have underlined and even strengthened the close relationship that exists between Sundance and the Governments of the Republic of Congo and the Republic of Cameroon. "Between August 8-13, we travelled extensively to meet with a number of steel mills, and rail and port construction companies to progress discussions regarding sales contracts, potential joint venture arrangements, and construction of project infrastructure," Mr Jones said.
BACKGROUND **********
Sundance Resources Ltd joined the ASX list on December 9, 1993. The company is an international iron ore company focused on mining interests in the Republic of Cameroon and the Republic of Congo in central west Africa. The company began definitive feasibility study on the Mbalam iron ore project as the basis for developing a global iron ore business. Central west Africa is considered to have the potential to develop into a significant new iron province, underpinned by the Mbalam iron ore project. Sundance is also traded on over-the-counter markets in Frankfurt, Berlin, Hamburg, Stuttgart and Munich. ENDS rx
SDL Price at posting:
20.0¢ Sentiment: Hold Disclosure: Held
