Photo by: Reuters
PERTH (miningweekly.com) – The dismally low iron-ore price was proving no hindrance to ASX-listed Sundance Resources’ Mbalam-Nabeba project, which crosses the border between Cameroon and the Republic of Congo.
“I don’t really care what the iron-ore price is,” Sundance MD and CEO Giulio Casello told delegates at Paydirt’s Africa Downunder conference, in Perth.
“Well, I care, but what the iron-ore price is today is almost irrelevant to this project.”
The Mbalam-Nabeba project was expected to be in the first lowest quartile of producers once it comes on-stream, with Casello predicting that ore would make it to ship at around the mid-$20/t mark, and could be shipped to China for less than $50/t.
“We are seeing the iron-ore prices today fluctuate, seeing them impacted by production coming on line in the last few years, but what we are seeing today is also what sets up the success for this project in 2019,” Casello noted.
“People are not spending the money they used to and high-cost production is coming out of the market, and will come out of China. The projects that will succeed are those that are producing good quality ore at the lowest possible cost.”
The Nabeba deposit would underpin Stage 1 of the Mbalam-Nabeba project development, which was a 35-million-tonne-a-year direct shipping ore operation, which would run for a minimum of ten years.
Meanwhile, Sundance Resources on Wednesday announced a A$40-million investment from resource investor Gennadiy Bogolyubov through a subscription for convertible notes and options.
The proceeds would be used to progress debt and equity financing for the flagship Mbalam-Nabeba iron-ore project.
Bogolyubov, through his Jersey-based investment holding company Wafin, would invest the capital through three-year zero coupon unsecured convertible notes, with a conversion price of 10c each.
The conversion price represented a 19.1% premium to Sundance’s one-month volume weighted average price.
Wafin would also receive options over 260-million ordinary shares, with an exercise price of 12c each, which would expire on the earlier of 60-months from issue, or 20 business days after the project’s financial close, or a change of control event.
Sundance noted that some 50-million of these options would not be subject to shareholder approval, while the remaining 210-million options would be.
If not converted into Sundance shares, the Wafin notes would be redeemable at maturity for 130% of face value.
Meanwhile, Wafin would have the right to appoint a representative to the Sundance board once its total shareholding in the company exceeded 12.5%. Wafin would also have certain anti-dilution rights, including a right of first refusal and a top-up right where the right of first refusal did not apply.
Casello said on Wednesday that Bogolyubov’s investment in Sundance was a substantial vote of confidence in the strength of the Mbalam-Nabeba project.
Meanwhile, subject to ASX and other regulatory approvals, an investor consortium made up of Blackstone Alternative Solutions, DE Shaw Group and Senrigan Capital have agreed to replace an existing A$20-million convertible notes, which mature in November next year, with a new A$22-million two-year convertible notes expiring in November 2016.
The Wafin notes and first tranche of options would be issued under the company’s 15% replacement capacity, while the second tranche of options and replacement consortium notes or options would be subject to shareholder approval.