PERTH (miningweekly.com) – Iron-ore hopeful Sundance Resources has inked a new agreement with ASX-listed AustSino and its noteholders, as uncertainty around the reinstatement of the Mbalam Convention with the Cameroon government, remains.
Under a previous agreement struck between the Parties, AustSino originally agreed to invest A$58-million into Sundance in return for a 50.8% interest in the company, and effective control over Sundance.
As part of the transaction, some A$132-million in noteholder loans would have been extinguished in return for a A$50-million cash payment, and a share and option package for the noteholders, with A$8-million to have been retained by Sundance for working capital and to progress the Mbalam-Nabeba iron-ore project, in the republics of Cameroon and Congo.
The original agreement was subject to a number of conditions precedent, including shareholder and regulatory approval, and the reinstatement of the Mbalam Convention, which lapsed in September of last year.
While the Cameroon government has initially reiterated its intention to see the development of the Mbalam-Nabeba project, the government has not yet made a decision to reinstate the Mbalam Convention.
With the uncertainty around the Mbalam Convention remaining, Sundance and AustSino have now reached a new agreement, which did not have the reinstatement of the Mbalam Convention as a condition precedent.
Under the terms of the new agreement, Sundance would issue AustSino with more than 11.15-billion ordinary shares at an issue price of 0.26 each, along with the grant of 11.15-billion unlisted options at an exercise price of 2c each and an expiry date of five years after the date of issue.
The cash payable by AustSino has now decreased from the original A$58-million to A$25-million, of which A$25-million will be paid to the noteholders and A$4-million will be retained by Sundance.
AustSino will hold a 50.2% interest in Sundance at the end of the transaction.
In exchange for the cancellation of the existing convertible notes in Sundance held by the noteholders, and in addition to the cash payment to the noteholders, Sundance would also issue two-billion shares at a deemed price of 0.4c each and five-billion unlisted options at an exercise price of 2c each and an expiry date of five years after the date of issue.
The cancellation of the convertible notes will leave Sundance debt free.
Sundance and AustSino on Monday said that while the reinstatement of the Mbalam Convention was not a condition precedent for the completion of the new agreement, the parties would still continue to explore the reinstatement of the convention, as well as other development opportunities if the convention is ultimately not achieved, or would be significantly delayed.