Hanlong to buy out Sundance
By Richard Fu |
July 19, 2011, Tuesday
|
Print Edition
Print Edition
CHINA'S Sichuan Hanlong Group has offered A$1.2 billion (US$1.3 billion) to buy the remaining shares it does not own in Australia's Sundance Resources Ltd, a west Africa-focused iron ore explorer, but the Australian firm has advised shareholders not to take any action yet.
Hanlong, which is already Sundance's majority shareholder with a 18.6 percent stake, offered 50 Australian cents for each share it doesn't own, valuing the company at A$1.44 billion, Sundance said yesterday.
Sundance is seeking investors to help finance its US$4.7 billion Mbalam iron ore, rail and port project on the borders of Cameroon and the Republic of Congo in west Africa. Sundance hopes to produce 35 million tons of iron ore annually when operation starts.
"The Hanlong offer highlights the strategic value of quality assets in west Africa to the Chinese," said Andreas Kouremenos, a mining analyst at Foster Stockbroking. "We believe consolidation will remain an ongoing theme in the region, with majors like Xstrata/Glencore and the Chinese to feature heavily given the significant capital expenditure required to get many projects to the market."
But Sundance's board of directors has advised shareholders to take no action, saying the offer doesn't provide adequate value and it will talk further with Hanlong.
Xiao Hui, managing director of Hanlong Mining Investment, a subsidiary of Hanlong Group, said he looks forward to discussing Hanlong's proposal with Sundance further.
Hanlong's offer represents a 25 percent premium to Sundance's close of 40 Australian cents last Friday. Sundance yesterday rose 23 percent to 49 Australian cents in Sydney, suggesting investors expect Hanlong may have to sweeten its offer.
Hanlong has been on a global buying spree for mining and mineral assets in recent years. Last week, Hanlong offered A$143 million to buy Australia's Bannerman Resources Ltd, which is mining uranium in Namibia in south Africa.
Hanlong, which is already Sundance's majority shareholder with a 18.6 percent stake, offered 50 Australian cents for each share it doesn't own, valuing the company at A$1.44 billion, Sundance said yesterday.
Sundance is seeking investors to help finance its US$4.7 billion Mbalam iron ore, rail and port project on the borders of Cameroon and the Republic of Congo in west Africa. Sundance hopes to produce 35 million tons of iron ore annually when operation starts.
"The Hanlong offer highlights the strategic value of quality assets in west Africa to the Chinese," said Andreas Kouremenos, a mining analyst at Foster Stockbroking. "We believe consolidation will remain an ongoing theme in the region, with majors like Xstrata/Glencore and the Chinese to feature heavily given the significant capital expenditure required to get many projects to the market."
But Sundance's board of directors has advised shareholders to take no action, saying the offer doesn't provide adequate value and it will talk further with Hanlong.
Xiao Hui, managing director of Hanlong Mining Investment, a subsidiary of Hanlong Group, said he looks forward to discussing Hanlong's proposal with Sundance further.
Hanlong's offer represents a 25 percent premium to Sundance's close of 40 Australian cents last Friday. Sundance yesterday rose 23 percent to 49 Australian cents in Sydney, suggesting investors expect Hanlong may have to sweeten its offer.
Hanlong has been on a global buying spree for mining and mineral assets in recent years. Last week, Hanlong offered A$143 million to buy Australia's Bannerman Resources Ltd, which is mining uranium in Namibia in south Africa.
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