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25-03-2014, 11:07 PM
Sundance strikes supply deal with Noble
BARRY FITZGERALD THE AUSTRALIAN MARCH 26, 2014 12:00AM
ASX-listed Sundance has secured a critical supply deal with global commodities trader Noble for its planned $US4.7 billion ($5.1bn) central African iron ore project.
The offtake deal, under which Noble would buy all of the planned mine's annual production of 35 million tonnes for 10 years, is expected to assist in Sundance's debt funding plans for the project.
It also means that Sundance is sticking to its aggressive timetable under which first high-grade production from the Mbalam-Nabeba project could be possible in the last quarter of 2017.
Mbalam-Nabeba straddles Cameroon and the Republic of Congo in central Africa, and was the scene for the 2010 tragedy in which 11 people, including all six Sundance board members, were killed when a chartered plane crashed on its way to the project.
It is expected to be the lowest-cost hematite iron ore producer in the world (at about $US21 per tonne) in its first stage of production, setting it apart from other would-be developments over which the recent decline in iron ore prices has raised question marks.
Sundance shares closed 1c up at 9.9c in response to news of the support for Mbalam-Nabeba from Noble, taking its market capitalisation to $304m.
Sundance stopped well short of describing the agreement with Noble as binding. Rather, it described it as sufficiently "firm" to "give financiers the comfort they need to provide debt funding."
Sundance is seeking equity partners in the project and it is a feature of the Noble agreement that equity participants could buy up to 50 per cent of the planned production.
Sundance continues to run an engineering and construction tender for the project's rail and port, and a separate tender for the mining operation.
It has received two bids for the project's infrastructure needs, one from Europe and one from China. It also has two financing offers.
Sundance chairman George Jones said certainty around offtake for Mbalam-Nabeba's output was a "building block" in financing of the project.
"From this we hope to get firm bids," he said, adding that the process should be completed by June. "Once we have finalised the price for the infrastructure we can then finalise what the finance package will look like."
Mr Jones said that because of the project's high grade and other qualities of the iron ore, the product would be keenly sought.
His view is that despite recent weakness in prices, iron ore will continue to trade within a $US110-$US130 band. "Prices will dip below that sometimes, and sometimes it will spike above it."
BARRY FITZGERALD THE AUSTRALIAN MARCH 26, 2014 12:00AM
ASX-listed Sundance has secured a critical supply deal with global commodities trader Noble for its planned $US4.7 billion ($5.1bn) central African iron ore project.
The offtake deal, under which Noble would buy all of the planned mine's annual production of 35 million tonnes for 10 years, is expected to assist in Sundance's debt funding plans for the project.
It also means that Sundance is sticking to its aggressive timetable under which first high-grade production from the Mbalam-Nabeba project could be possible in the last quarter of 2017.
Mbalam-Nabeba straddles Cameroon and the Republic of Congo in central Africa, and was the scene for the 2010 tragedy in which 11 people, including all six Sundance board members, were killed when a chartered plane crashed on its way to the project.
It is expected to be the lowest-cost hematite iron ore producer in the world (at about $US21 per tonne) in its first stage of production, setting it apart from other would-be developments over which the recent decline in iron ore prices has raised question marks.
Sundance shares closed 1c up at 9.9c in response to news of the support for Mbalam-Nabeba from Noble, taking its market capitalisation to $304m.
Sundance stopped well short of describing the agreement with Noble as binding. Rather, it described it as sufficiently "firm" to "give financiers the comfort they need to provide debt funding."
Sundance is seeking equity partners in the project and it is a feature of the Noble agreement that equity participants could buy up to 50 per cent of the planned production.
Sundance continues to run an engineering and construction tender for the project's rail and port, and a separate tender for the mining operation.
It has received two bids for the project's infrastructure needs, one from Europe and one from China. It also has two financing offers.
Sundance chairman George Jones said certainty around offtake for Mbalam-Nabeba's output was a "building block" in financing of the project.
"From this we hope to get firm bids," he said, adding that the process should be completed by June. "Once we have finalised the price for the infrastructure we can then finalise what the finance package will look like."
Mr Jones said that because of the project's high grade and other qualities of the iron ore, the product would be keenly sought.
His view is that despite recent weakness in prices, iron ore will continue to trade within a $US110-$US130 band. "Prices will dip below that sometimes, and sometimes it will spike above it."