Sundance Resources looks set to have to agree to a reduced takeover price from Chinese suitor Hanlong Mining, with the pair locked in negotiations.

The iron ore hopeful’s chances of being acquired improved on Thursday when Hanlong received provisional Chinese regulatory approval.

But deteriorating economic conditions including a falling iron ore price appear to have prompted both the regulator and suitor to demand a reduced price.

There is market speculation that the Chinese regulator, the National Development and Reform Commission (NDRC), wants the current $1.65 billion, 57 cents a share bid lowered to 50 cents.

The lower offer price would value Sundance at $1.5 billion.

The NDRC’s conditions for approval include what it deems a reasonable acquisition price and private company Hanlong securing equity and debt funding from relevant banks.

Sundance is developing the $4.7 billion Mbalam Iron Ore project in west Africa but is dependent on a larger partner providing funding.

The other NDRC conditions include Hanlong securing Sundance’s mining, port and railway rights from Cameroon and Congolese authorities.

Sundance chairman George Jones said the provisional approval was positive news and the takeover was on target to be implemented by mid-November this year.

The takeover has already been delayed by six months at Hanlong’s request, with the suitor struggling to secure financing in China, which is conscious of previous high profile unsuccessful investment in Australian miners.

Sundance shares will remain in a trading halt while it continues to negotiate with Hanlong, the company said.

The delay and investor fears of an economic slowdown in China have sent Sundance’s share price down by 30 per cent in the past 10 weeks.

They are currently at 33.5 cents.