Sundance soars with Congo approval
SHARES in Sundance Resources soared in the last trading day of 2012 amid expectations that its long-awaited takeover by a significant shareholder will go ahead in early 2013.
Sundance shares closed 5¢, or 15.6 per cent, higher at 37¢ on Monday after the company told the sharemarket that the ministerial council for the Republic of Congo had approved its application to develop its Nabeba iron ore deposit.
The approval was a key hurdle in Hanlong Group's $1.3 billion offer for Sundance.
Investors were also heartened by reports in Chinese media that Sundance's suitor, the privately held Hanlong, expects to complete the takeover by the start of March, after it lodges documents with the Australian Securities and Investments Commission.
Hanlong already owns about 17 per cent of Sundance and wants the iron ore explorer for its $4.7 billion Mbalam mine in West Africa, on the border of the republics of Congo and Cameroon. The Mbalam project, which includes building a 510-kilometre rail line and a deep-water port, is expected to produce 35 million tonnes a year of iron ore.
Monday's share price rise trims Sundance's fall for the year to 6 per cent, but the company's shares continue to trade well south of Hanlong's 45¢-a-share offer. Hanlong's offer was revised down last year from 57¢ a share, amid falling world iron ore prices.
It is believed the takeover move would give China a stronger role in setting global iron ore prices.
Chinese news agency Xinhua has also reported that Hanlong was "in talks with leading state companies to jointly develop" the project in Mbalam.
Sundance managing director and chief executive Giulio Casello thanked the Congo government for its support over the years.
The approval helped pave the way for "work to start on what will be a world-class iron ore operation once financing is confirmed", the company said on Monday. "It will bring with it significant economic, financial and social benefits for the people of the Republic of Congo."
The prospect of a takeover appeared remote last month following news that Hanlong wanted to delay the bid because it could not secure funding by December 13.
Hanlong pushed back the funding date to January 31.
In December, Sundance reported that Hanlong had secured $US438 million from the China Development Bank to fund the acquisition of Sundance.
But the market has persistently priced the stock below its takeover price, so there were continuing doubts about the viability of the deal.
The deal has been approved by the Foreign Investment Review Board.