China's Hanlong to acquire Australia's Sundance Resources for $1.57 bn
04 October 2011
Australia's Sundance Resources today said that it had agreed to be bought by its majority shareholder Hanlong Mining Investment after the Chinese company sweetened its takeover offer to A$1.65 billion ($1.57 billion).
Hanlong, a subsidiary of the Sichuan Hanlong Group, one of China's largest private conglomerates, had in July offered to buy the remaining 81.4 per cent stake that it does not already own in Sundance, for A$1.4 billion ($1.5 billion) in cash. (See: China's Hanlong Mining to buy Australia's Sundance Resources for A$1.4 bn)
Hanlong has now offered A$0.57 in cash per Sundance share, valuing the Australian miner at A$1.65 billion. The offer represents a premium of 42.5-per cent to the closing price of Sundance shares on 15 July 2011, the last trading day prior to Hanlong's initial proposal
"The board of Sundance has unanimously recommended the offer in the absence of a superior proposal and subject to an independent expert's report," Chengdu-based Hanlong said in a statement.
Central West Africa-focused Sundance owns a big iron ore deposit on the border of the Republics of Cameroon and Congo. Listed on the Australian Stock Exchange and with a market capitalisation of more than A$1 billion, Sundance is developing its flagship $4.7-billion Mbalam Iron Ore mine that straddles the borders of the Republics of Cameroon and Congo.
Perth-based Sundance has been talking to Chinese investors for funding the Mbalam iron ore project, which requires billion of dollars on investment for building of new 500-600km of rail lines, a new multi-user port at Lolabé on the Atlantic coast and other infrastructure.
Once fully developed, the Mbalam project could produce 35 million tonnes a year starting in late 2014 with stage two designed to double that capacity, with higher quality product.
Liu Han, chairman of Hanlong's parent company Sichuan Hanlong Group, said, "Today's agreement will also bring great benefits to the people of the Republic of Cameroon and the Republic of Congo through the additional certainty it brings to the development of the Mbalam and Nabeba projects."
Hanlong is an active acquirer having made substantial investments in commodities such as molybdenum, iron ore and uranium in Australia, the US, Cameroon, Namibia and within China.
In November 2010, Hanlong signed a co-operation agreement with the Export-Import Bank of China for a $1.5 billion loan to fund its overseas expansion.
Apart from owning 25 mining projects in China, including gold, iron ore, copper, molybdenum, lithium, rare earths and zinc / lead, it has invested over $500 million across four overseas mining companies over the last two years.
In Australia, Hanlong also holds a 57 per cent interest in Moly Mines and 11.5 per cent of uranium explorer Marenica Energy. In the US, Hanlong holds a 12.5 per cent interest in General Moly.