Wednesday, September 08, 2010Sundance Resources (SDL) - MOU...

Wednesday, September 08, 2010
Sundance Resources (SDL) - MOU Signed With China Rail

The 20% jump in the share price of Sundance Resources (SDL) is something that was probably lost to likes of Australia's now re-elected Treasurer Wayne Swan, but not for those who follow the market. On a day when most stocks fell, with the ASX200 losing 36 points the day after it became known that the Labor Government had won the election. It wasn't just the much derided mining tax that spooked investors but also there was the prospect of living with a Labor Government that is now reliant and supported by the anti mining Greens Party and various independent ministers.

Over the past few days we have seen a number of ASX listed stocks with African based projects suddenly come to life with investors shifting their money away from the Australian based explorers. That movement of money worked in Sundance's favour today but the big news was the signing of an MOU for the development of a rail track and rolling stock to support the development of Sundances Mbalam Project.

The market has ignored Sundance Resources for a number of years and the main reason was the prohibitive cost required to develop their project. Today's MOU changed all that and although the Memorandum Of Understanding still just an expressed intention, it was a signal that the market was looking for.

The associated political risk in Australia also contributed to the 20% jump in Sundance's favour as it did with a number of other resources explorers with projects located overseas. The above chart shows the share price breaking through two major resistance lines and closing at the day's high of 18.5c. I think we will see Sundance's share price continue higher in the short term.