sundance seeks floor to hanlong offer - afr st

http://www.afr.com/p/opinion/sundance_seeks_floor_to_hanlong_EkTooCv1YNR3vfveUbHhyM

From Street Talk and written overnight. This will be in today's hard copy AFR.

Hedgies have no appetite for 40c. Hanlong is beginning to feel the heat from authorities in Beijing.

SDL has written to Hanlong demanding that it agree to "continue with the takeover at a price of no less than 50c by Monday." It is understood SDL has requested more conditions on the offer terms, including penalties for further attempts to renegotiate the price.

There's a growing consensus that Hanlong has done itself no favours in China or anywhere by having Merrill Lynch tender a price of 40c- a decrease of 30% to the original offer of 57c.

Street Talk hears that getting Hanlong back up to 50c is still on the cards. Relationships between Hanlong and SDL appear intact enough to get a deal done, but it's increasingly unlikely a deal will be done at 40c, despite
the downturn. It is also believed that one shareholder who holds >15% would not entertain an offer of 40c.

Wile Mbalam is low grade hematite (not magnetite- and AFR Street Talk corrects itself here from the error made prior), and must be beneficiated, the relatively simple process carries production prices of around $US22/tonne in the DFS, much less than the $US80/tonne touted by some magnetite projects.

China's Ministry of Commerce is said to have valued Mbalam at $15b [yes- $15b], casting doubt on representations made that a price renegotiation came from NDRC conditions.

China is said to be keen to get a deal away and consolidate its land holdings in West Africa, starting with SDL.

It is believed that Wuhan Steel also had an interest in SDL before Hanlong bought its original stake at 44c from the estate of Ken Talbot.