Investors in Sundance Resources face a nervous wait of at least 24 hours to find out if the company’s sole project has crucial financial backing from China.
Investors fear the company’s $4.7 billion Mbalam Iron Ore project in west Africa may not go ahead if Chinese approval is not given.
Shares in Sundance went into a trading halt until Thursday, pending an announcement about whether its $1.65 billion takeover deal with private Chinese suitor Hanlong Mining had been approved.
The Chinese regulator, the National Development and Reform Commission is due to decide this week whether to approve Hanlong’s takeover bid.
Along with the $1.65 billion takeover price, another estimated $4.7 billion will be needed to build the company’s Mbalam Iron Ore project in Cameroon and Congo in central west Africa.
The takeover was delayed at Hanlong’s request in May, by six months, with the suitor struggling to secure financing in China.
However Hanlong’s first public display of interest came when it took a 15.95 per cent, $19.1 million stake more than 16 months ago in March, 2011.
The delay and investor fears of an economic slowdown in China have sent Sundance’s share price down by 30 per cent in the last 10 weeks.
That showed the market was betting against the deal going ahead at all, said Mine Life senior resources analyst Gavin Wendt.
He said the length of time being taken was disappointing and it showed that large scale, big picture projects were not as attractive as they were 18 months ago.
“The Chinese have got deep pockets but even they are baulking in the current financial climate at committing to these sorts of projects,” he told AAP.
Mr Wendt warned that if the Chinese company had to withdraw, Sundance did not have a “plan B”.
“We haven’t seen a rival bidder emerge … in these tough economic circumstances, there is unlikely to be a plan B,” he said.
Sundance shares were one cent weaker at 33.5 cents before the trading halt, well below Hanlong’s 57 cent a share offer.
Meanwhile, Hanlong’s former vice president Calvin Zhu of China’s Hanlong Mining has pleaded guilty in Sydney to three charges of insider trading.
The charges related to profits made trading in companies, including Sundance.
