Sundance Resources chairman George Jones says he will wait until after an emergency board meeting on Friday before deciding whether to pull the plug on its drawn-out $1.4 billion takeover, but indications were that suitor Sichuan Hanlong would be unable to meet a key financial deadline.
Sundance executives met Hanlong representatives in Perth late on Thursday to find out more details after revelations on Wednesday that billionaire Liu Han had been detained by Chinese police for unconfirmed reasons. A report by respected Chinese financial newspaper 21st Century Business Herald suggested Mr Liu had been embroiled in investigations relating to money laundering in Macau's gaming industry.
The confusion is shared by other companies worldwide with links to Hanlong. Colorado-based General Moly said talks about a $665 million loan to finance its new mine project in Nevada were suspended until more information emerges.
Australian-listed molybdenum minnow Moly Mines said it was seeking clarification from Hanlong as to "whether this event has any consequences for the company and Mr Liu's position as a director". Molybdenum is used to harden steel.
It is believed Mr Liu's right-hand man, Kang Huan Jun, dialled in via teleconference from China.
Mr Kang was also front and centre of Hanlong's response to an insider trading scandal implicating its Australian staff, which broke in 2011.
Hanlong's protracted takeover of Sundance has dragged on for 20 months, initially because of delays in obtaining regulatory approvals in Australia and China, but more substantially because of Hanlong's inability to secure financial backing, including from its main backer, China Development Bank.
After repeated extensions to the deal timetable, Hanlong is now required to produce a financial credit terms sheet by next Tuesday, under the scheme implementation agreement.
But Sundance says Hanlong has not yet finalised discussions with large Chinese partners as requested by China's National Development and Reform Commission.
"I don't have any definite proof, but it's unlikely they'll meet those timelines," Mr Jones said on Thursday.
In the absence of an agreed extension, failure by Hanlong to provide the term sheet by Tuesday will trigger a five-day, good-faith consultation period followed by a 10-day period in which either party can terminate the deal.
Sundance requested a trading halt on Tuesday and its shares have since been suspended until April 8.
Reflecting scepticism over the deal's likely success, shares in Sundance last traded at 21¢, well below Hanlong's offer price of 45¢.