Sundance Resources has taken a major step towards the development of its stalled Mbalam-Nabeba iron ore project in Cameroon, announcing an agreement with China’s Tidfore Heavy Equipment Group that sets out a framework for the funding and development of the mine.
Sundance announced to the ASX that a binding memorandum of understanding had been reached between the company, Tidfore and Cam Iron SA, a subsidiary of Sundance.
The privately-owned Tidfore is involved in a joint venture with China Civil Engineering Construction Corporation in Cameroon, which is negotiating with the Cameroon Government over an engineering, procurement and construction contract for port and rail infrastructure close to Sundance’s project.
Under that JV, Tidfore is responsible for the port construction, and CCECC the rail works, while Tidfore will also assist Cam Iron and Congo Iron, another permit-holding subsidiary of Sundance, to negotiate project loans and project financing.
Under the MOU announced today, Sundance will sell 51 per cent of its stake in Cam Iron to Tidfore for a value to be agreed upon at a later date.
The agreement hinges on Cam Iron obtaining title to the tenure over the area, and the Chinese government approving the provision of Sinosure insurance, a key step in enabling Chinese funders to consider the project.
The MOU is considered to be crucial for Sundance to obtain an extension for the Mbalam Convention, the regulatory framework between the company and the Cameroon government for developing the mine.
Sundance has until January 26 to demonstrate substantial progress on funding the project, in order for the Cameroon government to extend its approval by a further six months.
Sundance chief executive Giulio Cassello said the company was pleased to have reached agreement with Tidforth and was now awaiting the extension decision.
“Even though there is still substantial work required to obtain the funding required, the high quality, low costs and large quantity of the Mbalam-Nabeba iron ore fits well into the needs of the future of the Chinese steel industry.
“Together with our current partners we have the basics required to bring this project into production,” Mr Cassello said.
The Mbalam-Nabeba project has been stalled for several years, following the prolonged downturn in global iron ore prices.
However, China’s push for more efficiency in its steel market has rekindled prospects for the development of higher grade iron ore mines, such as Sundance’s Mbalam-Nabeba.
At close of trade today, Sundance shares had gained 75 per cent, to finish at 0.7 cents.