JOHANNESBURG (miningweekly.com) – ASX-listed Sundance Resources has entered into a transition agreement with the Cameroon government that would see the government fund the port and rail infrastructure required for the Mbalam-Nabeba iron-ore project in that country.
The Mbalam-Nabeba project, which included the Mbarga and Nabeba mines, was on the border of Cameroon and the Republic of Congo.
Under the terms of the transition agreement, the Cameroon government had committed to funding the development of the port and rail infrastructure in Cameroon through a loan from China or other “friendly countries”.
The government had started a process to select an engineering, procurement and construction contractor to develop the rail and port infrastructure to support its application for a loan from financial institutions.
It would likely take the government 6 to 12 months to secure the required funding.
The Cameroon government would own 98% of the port and rail infrastructure entities, while Sundance subsidiary Cam Iron would own the remaining 2%, in recognition of the capital it had already invested in that infrastructure.
“The execution of the transition agreement will allow Sundance to focus on funding, constructing and operating the mines at Mbarga and Nabeba. We believe this is the best outcome for our shareholders as the mines will be globally competitive, low-cost producers of high-quality iron-ore.
“This will ensure the economic viability of the overall project through a broad range of iron-ore prices,” said Sundance CEO Giulio Casello.
The company would, however, be obligated to secure financing for the development of the mines within nine months after the Cameroon government achieved its financing commitment for the port and rail infrastructure.
If this was not achieved, Cam Iron could, at the request of the Cameroon government, be required to transfer exploration licence 92, which had been extended to July 24, 2017, to a nominee of the government for no consideration.
Meanwhile, under the terms of the agreement, Cam Iron and fellow Sundance subsidiary Congo Iron would enter into take-or-pay agreements incorporating a commercial tariff for each tonne transported and loaded using the port and rail infrastructure.