The fluctuating global iron ore price will have no bearing at all on the success of Sundance Resources’ Mbalam-Nabeba iron ore project in central Africa, its Managing Director and CEO, Giulio Casello, said at the three day Paydirt 2014 Africa Down Under Conference. Casello said Mbalam was a mid-$20/t output iron ore project and the company could get ore into China at $50/t. “The fluctuations in iron ore price – past or current – literally have no impact on this single project as it is in the lowest quartile of iron ore mines globally,” Casello said. “Its economics are not affected by movements in the iron ore price in the current $85 to $120/t price range as we are witnessing,” he said. “Significantly, it will also not be impacted by market pressures being brought about by the gradual withdrawal of high cost loss making ore from the market.
“This is such a low cost operation that drops in price do not affect its bottom-line cost structure, and this is why Mbalam-Nabeba in Cameroon will be a secure operation right through to 2029 and beyond.”
Global resources investor Gennadiy Bogolyubov has agreed to invest A$40 million into the Sundance through a subscription for convertible notes and options. Bogolyubov is the ultimate beneficial owner of Consolidated Minerals Ltd, a major manganese ore producer with operations in Western Australia and Ghana.
The proceeds to be received by Sundance from this will be used to progress the debt and equity financing of the Mbalam-Nabeba project. In particular the proceeds will be for the following purposes:
- To support and oversee Mota-Engil as it mobilises procurement, design and construction teams for the project
- Front End Engineering and Design (FEED) contracts for the mine plant and associated infrastructure
- Appointment of independent technical experts to satisfy lenders requirements, which will include upgrading the Environmental Impact Assessment to the latest Equator Three Principles
- Negotiation and detailed term sheet documentation of a comprehensive debt and equity funding package for the project
- Continue pre-construction activities in-country
- Ongoing corporate working capital.
Casello: “We are delighted that a global investor with the skills and experience of Mr Bogolyubov has identified Sundance and our Project as having such a strong future. Sundance is a strong strategic fit for Mr Bogolyubov’s portfolio across the ferroalloy chain and complements his group’s existing manganese ore production projects.”
“A bankable off-take agreement with Noble, the EPC contract for the port and rail with Mota-Engil, the port and rail concessions with the Cameroon Government, and most recently the signing of the Nabeba Convention with the Republic of the Congo, confirm that we are on the path towards development.
“We will continue to drive the project forward, addressing the requirements to prepare the project for financing and construction by issuing contracts for the FEED for the mine plant and associated infrastructure, and upgrading the environmental assessments. All of this sets the foundation for financing and developing our project.”
Bogolyubov said: “I am delighted to have been able to make this initial investment in Sundance. I am very impressed with the quality of both the Mbalam-Nabeba iron ore project as well as Sundance’s management team – and so the opportunity to support the project’s development is very exciting.
“We have had, and continue to have, great experiences operating in Ghana, West Africa, and I am sure that the Republic of Cameroon and the Republic of Congo will be equally fulfilling.
“We aim to use our extensive experience to make a significant contribution to the development of Mbalam-Nabeba and look forward to developing a long-term relationship with Sundance.”