Sundance Resources will resume trading on Tuesday after finally terminating a scheme of arrangement that would have seen privately held Chinese company Sichuan Hanlong Group acquire it in a $1.3 billion deal.
The Australian Financial Review understands Hanlong’s 17 per cent holding in Sundance, which it bought from the estate of former Sundance director Ken Talbot for 44¢ a share, could be recalled by Chinese banks.
The stake is about $120 million under water at today’s share price. Hanlong has asked that the provisional National Development and Reform Commission approval be withdrawn, allowing other Chinese companies to partner with or buy the project.
Market sources said Hanlong’s debt-fuelled acquisitions were being looked at closely by China’s banks, including its controlling stake in ASX-listed molybdenum company Moly Mines. It is believed China’s Export Import Bank may already have repossessed Hanlong’s holding in Moly Mines.
Hanlong arrived in Australia in 2010 when it offered Moly Mines a lifeline with a $500 million funding package to help it buy equipment ordered before the global financial crisis. It later renegotiated the promised funding down to $200 million, including a $50 million debt facility that would be forgiven if payment was not delivered.
It lists a number of directors on the Perth-based miner’s board, including its now-jailed founder Liu Han.
Sundance chairman George Jones confirmed he would stay on at the company until a new deal was signed.
It said it is in discussions with both Chinese and non-Chinese parties. It is understood Sundance is considering a partnership, another takeover or farming out the most costly part of its development – $4 billion in port and rail infrastructure. It also remains in talks with nearby Core Mining over sharing infrastructure development costs.
Mr Jones said he did not expect any “drastic” movement in the share price, which is sitting at just 21¢, when trading resumes on Tuesday.
“We’re not starting from scratch, one positive thing we can say about the Hanlong experience is that they helped us to get the mining convention in Cameroon and the mining licence in Congo,” he said.
Securing the right to mine the Mbalam and Nabeeba deposits took some time, with both African countries insistent that Sundance prove it had the financial power to develop the deposits.
SDL Price at posting:
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