SYDNEY (Reuters) - Shares of Australia’s Sundance Resources Ltd (SDL.AX) surged more than 17 percent on Monday after the Republic of Congo granted it a key mining permit and following reports China’s Hanlong Group plans to complete its long-delayed $1.4 billion takeover by March.
The West Africa-focused iron ore explorer said the government of Congo had approved the development and mining of the Nabeba iron ore deposit, a pivotal part of Sundance’s $4.7 billion Mbalam project on the border of Cameroon and the Republic of Congo.
The Mbalam project, a new source of iron ore that could help trim China’s dependence on the big three iron ore producers, Vale SA (VALE5.SA), Rio Tinto PLC (RIO.AX) and BHP Billiton Ltd (BHP.AX), was the main attraction for Hanlong at Sundance and the government approval completes the conditions of its takeover bid.
Sundance, meanwhile, needs a large partner like Hanlong to fund the project.
Australian media quoted China’s official Xinhua News Agency as saying over the weekend that Hanlong plans to complete the purchase at the agreed 45 cents per share by March 1 and begin operations in 2014.
Hanlong is seeking a partnership with Chinese state-owned companies and investing about $5 billion develop Mbalam and build a 550-kilometre railway and a shipping port, the reports added.
Hanlong launched its offer for Sundance more than a year ago in October 2011, but earlier this year cut its offer price by more than a fifth to 45 cents per share after Chinese regulators raised concerns about the cost following a slide in iron ore prices.
Sundance agreed to the revised price in August, but the takeover has dragged on amid China Development Bank’s reluctance to sign off on a loan for the deal. The state bank eventually agreed in October to provide a debt facility of up to $1.022 billion, subject to credit approval processes. Hanlong also received a loan commitment from Bank of Deyang Co Ltd for the remainder.
Sundance shares were up 15.6 percent at A$0.37 at 2327 GMT, having risen as high as A$0.375.
Reporting by Jane Wardell; Editing by John Mair and Matt Driskill