Sundance shortlists partners for $4.6B iron ore project

Jun 29, 2011 2:04am GMT

* Talks continue with potential partners
* Aims to start construction before end 2011
* Shares up 3.2 pct after early jump (Adds details)

MELBOURNE, June 29 (Reuters) - Sundance Resources has shortlisted potential partners for its $4.6 billion iron ore project in West Africa, it said on Wednesday, sending its shares up as much as 6 percent.

The company, which did not name the shortlisted companies, had been talking to Chinese steel mills, South Korean steel maker POSCO and others, as potential partners, over a deal that may involve selling up to a 50 percent stake in the project and agreements for long-term supply of iron ore.

"Sundance has shortlisted the preferred potential partners and has entered into commercial negotiations," it said in a statement to the Australian Securities Exchange before its self imposed June 30 deadline.

It said it aims to make a final investment decision on the Mbalam iron ore project, which is developing deposits in Cameroon and the Republic of Congo, in time to begin rail and port works before the end of 2011.

That appeared to be a slight change on previous statements, where it said it aimed to make a final investment decision by the end of September.

Stage one of the project is due to produce 35 million tonnes a year, starting in late 2014, with stage two designed to double that capacity, with higher quality product.

Sundance Managing Director Giulio Casello was not immediately available to comment on how many parties were on the shortlist.

Chinese mills want to secure long term supplies of iron ore to reduce their dependence on the major iron producers, Vale , Rio Tinto and BHP Billiton , Casello told Reuters in March.

The company said potential partners and several Chinese banking institutions had visited Sundance's operations in Cameroon and the Republic of Congo to finalise due diligence, and it is in talks with the two governments to finalise mining conventions.

"The governments involved have shown strong support and are eager for the completion of talks so that construction may commence as soon as possible," it said.

Sundance's biggest shareholder is private Chinese company Sichuan Hanlong Group, with a 19 percent stake.

Sundance's shares rose to a high of A$0.335 and last traded up 3.2 percent at A$0.325. (Reporting by Sonali Paul; Editing by Balazs Koranyi, Thomson Reuters)