Sundance aims for JV or takeover by end 2011 Published 6:05 PM, 3 Aug 2011 Last update 6:05 PM, 3 Aug 2011 ________________________________________ QUICK SUMMARY | FULL STORY | RESOURCES & ENERGY APP Sundance Resources, developing a $US4.6 billion (A$4.3 billion) iron ore project, is aiming to secure a joint venture or bow to a takeover offer by the end of 2011, Sundance's chairman said today. Sundance received an offer from its biggest shareholder, private Chinese firm Sichuan Hanlong, two weeks ago, valuing the group at $US1.5 billion, but the two sides are at a stalemate. Hanlong is waiting for the governments of Cameroon and Congo to approve conventions for Sundance's Mbalam project before moving forward with a bid, while at the same time those conventions hinge on Sundance securing financing. Sundance Chairman George Jones said he expected those issues to be addressed relatively soon, which could help clear the way for a deal. "I hope to enjoy my Christmas holidays," Jones told reporters. The company had been in talks with at least five companies to sell a strategic stake in the Mbalam project before Hanlong unveiled its takeover offer for the company. Jones said talks were continuing with those parties as well as Hanlong. Sundance is holding out for 20 per cent more than the A$0.50 a share that Hanlong has offered, according to a source familiar with the talks. Jones declined to comment on what price he would consider acceptable. Hanlong's valuation on Sundance is lower than Sundance's view as the Chinese group expects development costs for Sundance's Mbalam iron ore project in West Africa will be 30 per cent higher than its $US4.6 billion plan. "The comments by Hanlong potentially, I'd suggest, are negotiating tactics," Jones told reporters at the Diggers & Dealers conference, adding there was "plenty of margin" in Sundance's cost estimate. Hanlong also argues project delays could result in Mbalam iron ore hitting the market just as a flood of new supplies come online from Rio Tinto and BHP Billiton , further depressing its value. With Hanlong holding 18.9 per cent of Sundance, it would be hard for anyone else to top its offer, so Sundance shareholders could face a sharp fall in share price if Hanlong refuses to raise its offer. Its shares last traded down 1 per cent at A$0.51, 2 per cent above Hanlong's offer, in a sharply weaker market. Jones did not expect Hanlong to go hostile with its offer because Hanlong and others looking at the Mbalam project want to keep the technical expertise that Sundance has. He said any outcome would have to satisfy shareholders, employees and the Cameroon and Republic of Congo governments. "It's a complex set of discussions we're having about this, and I'm confident that now this offer from Hanlong is on the table, the game is on." There has been speculation no Chinese party would top Hanlong's offer because Hanlong has secured government-backed financing, and the Chinese government typically would not back another bidder pitting one Chinese firm against another. Jones rebuffed that view. "I can see how all sorts of options may evolve....It's much more complex than that." He said some deal needs to happen because Sundance cannot afford to develop Mbalam on its own, and expects Hanlong to be involved whatever happens. "They're an 18 per cent shareholder and shareholders are going to decide where this deal goes, whether it's a joint venture or an acceptable bid." "They got their foot in the door and they spent a lot of money to do it...That's putting your money where your mouth is," Jones told reporters.
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