Sundance raises A$16.5m for Africa iron-ore mine development

PERTH (miningweekly.com) – Iron-ore developer Sundance Resources on Wednesday announced plans to raise up to A$16.5-million through an entitlement offer to fund a number of company activities.

The ASX-listed company would undertake a one-for-one entitlement offer, priced at 0.5c, to raise the capital. For every one new share subscribed, Sundance would also issue one free new option, which would be exercisable at 0.6c each, on or before the end of August 2017.

The company pointed out that the entitlement offer price represented a 29% discount to the closing price on January 29, and a 17% discount to the theoretical ex-rights price of 0.6c a share.

A maximum of about 3.3-million new shares and 3.3-million new options would be issued under the offer, which has been partially underwritten by Pattersons Securities for an amount of A$13.25-million.

The funds raised would be used to maintain relationships with the governments of Cameroon and the Republic of Congo (RoC), where Sundance was developing its flagship Mbalam-Nabeba iron-ore project.

Sundance CEO Giulio Casello said that the funding would also assist the government of Cameroon to progress the signing of an engineering, procurement and construction (EPC) contract for the construction of the port and rail infrastructure for the Mbalam-Nabeba project, after the signing of the EPC contract was postponed in January, as market conditions deteriorated.

Sundance would also continue the process of negotiating and then agreeing to the terms of an equity investment in the mine infrastructure.

Furthermore, funds from the entitlement issue would be used to pay David Porter A$500 000 in cash and a portion of the proceeds received from the entitlement offer, in accordance with a settlement reached between the parties in January this year.

The Supreme Court of Western Australia in December ordered Sundance to pay damages of more than A$5-million to Porter in lieu of the grant of 10-million options. Porter and Absolute Analogue also in 2013 launched a separate case against Sundance, in relation to the issue of 30-million shares, which had now been settled for a total amount of A$11.5-million.

“The company’s circumstances have been impacted significantly by the EPC contract postponement and the Porter litigation. However, we are pleased that we have been able to develop a plant that, with the support of our shareholders, noteholders and Mr Porter, will allow the company to continue to operate and ultimately realise the potential of our project for all our stakeholders here and in Cameroon and Congo,” Casello said.

Due to the delay in the EPC contract, Sundance had announced a number of cost reduction measures, which included the reduction in the remuneration and the size of the board, as well as a significant scale-back of employees, overheads and activities in Perth, Cameroon and the RoC.

The company was targeting an 80% reduction in its previously planned spend.