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PERTH, Oct 4 AAP - China's Hanlong Mining has pledged to keep investing in Australian miners after Sundance Resources capitulated to its largest shareholder's improved $1.65 billion takeover offer. Confirmation early on Tuesday that Sundance had accepted the all-cash bid, which had been sweetened by 14 per cent, sent the iron ore explorer's shares up nearly 10 per cent in early trade.
By 1454 AEST, Sundance shares were up 2.5 cents, or 5.81 per cent, at 45.5 cents. Sundance said its board had unanimously backed the proposal, affirming media reports on Monday that Chengdu-based Hanlong had won the support of the Africa-focused company by raising the offer to 57 cents a share from 50 cents. Liu Han, chairman of Hanlong parent entity Sichuan Hanlong Group, said in a statement that the private company remained committed to ongoing investment in Australia and Australian resources companies as it sought to build a global, diversified mining company.
Armed with a multi-billion dollar war chest, Hanlong began snapping up interests in Australian miners last year, taking a majority stake in Perth-based iron ore producer and molybdenum mining hopeful Moly Mines. Hanlong, which plans to become "the fourth force in iron ore", has also bid $144 million for Perth-based Bannerman Resources, a Namibia-focused uranium explorer. Mr Liu said Sundance and Hanlong hoped to complete the transaction as soon as possible. The deal could be completed by May if Sundance shareholders vote in favour of the transaction in April. Sundance chairman George Jones said a key condition of Hanlong's offer - the granting of mining consents in the republics of Cameroon and Congo, where Sundance holds its flagship Mbalam iron ore project - would be met within the next eight weeks. These were to be granted once Sundance had demonstrated it could pay for the first stage of the Mbalam project, costing $4.6 billion, a figure Hanlong could manage. Sundance had been seeking a strategic partner to help pay for Mbalam when it was approached by Hanlong. Mr Jones said it was not without regret that he had agreed to back the improved bid, but he believed it satisfied the board's obligations to shareholders, staff, the West African nations in which it operates and the bidder. "I believe this deal looks after them all," he told AAP on Tuesday. "It's not so good that the shareholders are winning at everybody else's expense: the staff will be looked after, the countries will be looked after.
But John Robertson of Melbourne-based equity fund manager E.I.M.Capital Managers said the Hanlong deal "does no favours for shareholders". "Hanlong has effectively agreed to buy the company after it has been de-risked first," Mr Robertson said. "That leaves existing shareholders carrying the can until Hanlong has more certainty. "Meanwhile, any other bidder has been squeezed out of contention." The deal requires approval from Australia's Foreign Investment Review Board and regulators in China.