sundance resources wins $us3.5bn iron ore supp

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Sundance Resources wins $US3.5bn iron ore supply deal


Brett Cole
Business Spectator
March 25, 2014 5:09PM


SUNDANCE Resources, which plans to mine iron ore in central-west Africa, has signed a 10-year supply agreement with Asia’s biggest commodities trader by sales, Noble Group, in a deal worth as much as US$3.5 billion a year.

Noble has agreed to take up to 100 per cent of the iron ore mined at the Mbalam-Nabeba iron ore project in Cameroon and the Republic of Congo.

The Mbalam-Nabeba project is forecast to be able to produce 35 million tonnes a year for 25 years, beginning in the fourth quarter 2017.

“This is a very significant transaction,” George Jones, Sundance’s chairman, told DataRoom in an interview. “Noble are showing their fundamental faith in the project.”

Shares in Perth-based Sundance rose 1c, or 11 per cent, to 9.9c.

Mr Jones said the agreement between Sundance and Noble at today’s iron ore prices is worth about US$3.5 billion based on a sales price of $US100 a tonne after costs.

Noble will buy the iron ore and then sell the ore, 62.6 per cent iron content, to steel mills around the world.

The cost of constructing mines in Cameroon and Congo, 580 kilometres of rail lines and a port at Lolabe in Cameroon is forecast at $4.6 billion, according to Sundance.

Mr Jones says Sundance has received two indicative financing offers, one Chinese and one non-Chinese, for its African iron ore project.

He declined to disclose the names of the banks, citing confidentiality agreements.