Followings are key points extracted from the interview "Sundance Capital Raising and Project Update":
Why have you undertaken a relatively small capital raising now compared with your longer term funding requirements?
- Sundance is currently working to introduce strategic partners to the Mbalam Iron Ore Project to assist in project funding, construction and future sale of iron ore products. This capital raising will ensure that Sundance has funds in place to continue to progress Project development work through to 2010 as discussions proceed with potential partners.
- Encouraging indicators of economic recovery in the second half of 2009, particularly in China. The capital raising will therefore allow time for the Company to develop commercial arrangements with prospective partners in tandem with this anticipated economic recovery
- Priority is to secure the best possible terms for our shareholders
When do you expect to secure strategic partners? - The process of identifying and introducing appropriate strategic partners to the Mbalam Project is progressing and we are hopeful that we will be able to select preferred partners around mid year.
- On 6 April 2009, in an article titled “Sundance closes on new partner”, the Australian Financial Review speculated that Sundance could partner a Chinese group. - The article correctly reported that Sundance is “actively courting” potential investors in the Mbalam Project. - we can confirm that a number of parties have visited Cameroon to assess the Project including representatives of Chinese industry groups as well as representatives from international steel producers, trading companies and mining majors from other regions. - The Mbalam Project supports a world-scale resource which requires a strategic view of commodities markets and pricing. Recent corporate investment initiatives by Chinese steel industry groups in the resource sector shows that there continues to be recognition of value for long life, high quality projects such as the Mbalam Project.
Sundance recently announced that it had increased the Exploration Target for the Nabeba Deposit to 100 - 250 million tonnes of hematite grading 55 - 65% Fe. What is the basis of that assessment?
- The increase in the Exploration Target for the Nabeba deposit was based on recent surface mapping of high grade hematite outcrop over the deposit by Sundance geologists combined with our review of data from previous reconnaissance drilling of the deposit by Bureau de Recherches Géologiques et Minières, a French owned geological survey organization.
- The drilling data allowed estimation of the upper and lower boundaries of supergene hematite mineralisation.
- This increase in the Exploration Target indicates that the Nabeba deposit has the potential to support a resource of similar size to the Inferred Resource reported for high grade hematite on the Mbarga/Mbarga South deposits, with the Nabeba deposit appearing to be characterised by very high Fe grade and low silica content.
How significant is the Exploration Target at Nabeba?
- The Exploration Target at Nabeba is significant as it identifies the potential of a high grade hematite deposit within the landholdings controlled by Sundance that could reasonably double the tonnage of high grade hematite that has been identified at the Mbarga deposit.
- The increase in the target for the Nabeba deposit has resulted in the overall Project Exploration Target for 55 – 65% Fe hematite being increased to 340 to 510 million tonnes. A high grade resource inventory of this scale would be significant from a global perspective.
- The high grade resource inventory of the Mbalam Project is one of the key value differentiators when comparing potential of the Mbalam project with other proposed projects around the world. Very few companies hold resource tonnagesof the scale of Mbalam that includes both high grade and beneficiable grade hematite.
- The high grade 60% Fe resource is the driver of the Mbalam Project development strategy. This supports low cost production of high grade, near surface ore for the critical early years of project operations, that is, during the capital payback period.
- The high grade resource defined at Mbarga can support high margin, high grade production for the first 6 years of mine operations. This would increase to more than 10 years if the recent increase in the Project Exploration Target for high grade ore is delivered, thereby extending the duration of high margin operations before transition to itabirite concentrate production for the balance of the +20 year mine life.
SDL Price at posting:
13.0¢ Sentiment: Hold Disclosure: Held
