Investors sell off Sundance shares as stock returns from trading halt

SHARES in Sundance Resources fell after the iron ore explorer emerged from a month-long trading halt called after the death of its entire board in a plane crash in Africa.

By InvestSMART · 20 Jul 2010

By InvestSMART ·
20 Jul 2010

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SHARES in Sundance Resources fell after the iron ore explorer emerged from a month-long trading halt called after the death of its entire board in a plane crash in Africa.

Sundance shares closed down 1?, or 7.69 per cent, at 12? after hitting a low of 10.5? in intraday trade, with 65.8 million shares changing hands, making it the most traded stock by volume yesterday.

But analysts were expecting a bigger drop.

"The drop wasn't too bad in the context of a falling market," the IG Markets strategist Ben Potter said.

A research analyst with Shaw Stockbroking, Geoff Mures, said Sundance had held up quite well given iron ore mining stocks had been weak in the past month amid softer spot prices for the bulk commodity. The broker StoneBridge Securities last month set a "buy" recommendation and a 12-month target price of 66? on Sundance.

Mr Mures said Sundance could be seen as a takeover target and therefore a buying opportunity. "Someone may seek to take advantage of the [share price] weakness and rather than do a [joint venture] deal, take over the company."

The shares were suspended after the Sundance board's plane went missing on the way to Mbalam on June 19 and the news of their deaths broke on June 22, when the wreckage was found in the Republic of Congo.

Shareholders will vote on August 16 on whether to appoint as board members: George Jones, the reinstated Sundance chairman; Michael Blakiston, a commercial lawyer; Adam Rankine-Wilson, an investment banker; Barry Eldridge, a mining industry figure; and Fiona Harris, a former KPMG partner.

Sundance said on Friday that it was in talks with potential strategic partners with an interest in building, operating and financing key project infrastructure.

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Frequently Asked Questions about this Article…

Why did Sundance Resources shares fall when trading resumed?

Sundance shares fell after the company emerged from a month-long trading halt that followed the death of its entire board in a plane crash. When trading resumed the stock closed down 7.69% and had earlier hit an intraday low of 10.5, as investors reacted to the sudden corporate shock.

What prompted the month-long trading halt for Sundance Resources?

Trading was suspended after the Sundance board's plane went missing on June 19; the deaths of board members were confirmed when wreckage was found in the Republic of Congo on June 22, prompting the month-long halt.

How actively did Sundance stock trade when it returned to the market?

Trading was heavy: 65.8 million Sundance shares changed hands when the stock resumed trading, making it the most traded stock by volume that day.

What did analysts say about the share price movement and outlook?

Analysts were guarded: IG Markets strategist Ben Potter said the drop "wasn't too bad" given a falling market, while Shaw Stockbroking's Geoff Mures noted Sundance had held up well despite weak iron ore stocks. Broker StoneBridge Securities had earlier issued a "buy" recommendation and a 12-month target price on the stock.

Could Sundance be a takeover target after the board tragedy?

According to the article, Geoff Mures suggested Sundance could be seen as a takeover target and therefore a buying opportunity, saying someone might try to take advantage of the share price weakness rather than do a joint-venture deal.

Who are the proposed new members of the Sundance board and when will shareholders vote?

Shareholders are scheduled to vote on August 16 on appointing George Jones (the reinstated Sundance chairman), Michael Blakiston (commercial lawyer), Adam Rankine-Wilson (investment banker), Barry Eldridge (mining industry figure) and Fiona Harris (former KPMG partner) as board members.

Is Sundance talking to potential partners about the project after the board changes?

Yes. Sundance said it was in talks with potential strategic partners interested in building, operating and financing key project infrastructure, according to the article.

What should everyday investors watch next in relation to Sundance Resources?

Investors should watch the August 16 shareholder vote on new board appointments, any updates on strategic partner talks or infrastructure financing, and how broader iron ore spot prices and market sentiment affect the stock—these are the main developments highlighted in the article.