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Wildebeest is a PhD MBA who invests primarily in resource stocks such as base metals, iron ore and coal.
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  • Sundance Resources 5 comments
    Jul 4, 2010 11:45 AM

    I've mentioned Sundance Resources a couple of times this year as a company readers may want to take a look at:

    seekingalpha.com/author/wildebeest/comme...

    seekingalpha.com/author/wildebeest/comme...

    Sundance Resources is currently undertaking a definitive feasibility study on its large Mbalam iron ore project in Cameroon. I did have a speculative stake in this company before the GFC and keep it on my watch-list to consider re-entering.

    While I was away in June a plane carrying 6 of the Sundance Resources board, including the company chairman, the CEO, and the largest shareholder (Aussie mining magnate Ken Talbot) crashed near the Cameroon/Congo border. All people on the plane were killed. In the interim the company has appointed Gindalbie Metals founder George Jones, who was involved with the company a few years ago, as strategic advisor to help them through the transition period until a new board and CEO are appointed.

    Hard to say how the stock will trade when it emerges from the trading halt. My feeling about the longer term prospects of this company is that, given the size of the project, it would be unlikely that they'd get the funding without Chinese involvement. The exact amount needed will be known when the feasibility study is completed but numbers of the order of $2.5 billion have been talked about, admittedly speculatively, in the past. It could well be that the upheaval resulting from this tragedy, and the death of a major shareholder, could provide an opportunity for Chinese participation in the project. It is worth noting that George Jones has strong Chinese connections through Gindalbie (which is 36% owned by Chinese steel producer  Ansteel) and was previously involved in a proposal to merge Sundance Resources and Gindalbie Metals.

    Due to the flatlining of the global economy I have been in no rush to buy mining stocks this year -- among other things I have said often that they look overpriced at the moment -- but it might be time to (re)consider Sundance Resources, starting with a small stake, as a bet on a stronger price if and when a Chinese company becomes involved.

    http://www.sundanceresources.com.au (note that the websote was down at the time of writing this)


    Disclosure: long Gindalbie Metals

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Comments (5)
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  • James Duade
    , contributor
    Comments (310) | Send Message
     
    www.theaustralian.com....

     

    It looks like talks are starting to heat up, and Posco is publicly interested in Sundance. The article indicates an announcement by the end of February. Do you think this timeline is feasible? Do you think Sundance is a Joint Venture Partner target, or a buy out target? Curious to get your thoughts here.
    8 Feb 2011, 06:22 AM Reply Like
  • James Duade
    , contributor
    Comments (310) | Send Message
     
    www.miningreview.com/n...

     

    Sorry to fill up your message board here, but it looks like Posco has agreed to buy up to 35mtpy from Sundance. This was as of February, 3rd.
    8 Feb 2011, 06:26 AM Reply Like
  • Wildebeest
    , contributor
    Comments (778) | Send Message
     
    Author’s reply » Given that several of the principals died in a plane crash it may well be that the remaining major shareholders look for an exit. Who knows. The thing is that the project will never get done without some major support, most likely from a steel mill with connections who can provide finance.

     

    It is a large project but not without risk. First risk find finance. In addition to the mine they need to build a railway line several hundred miles to the coast. But then you also have sovereign risk etc.

     

    Risk vs reward. Not sure if I'd want to be a buyer at the current price. If you were to buy and some deal gets announced then you will make short term money. So that is essentially what you are better on in the short term.
    8 Feb 2011, 04:01 PM Reply Like
  • James Duade
    , contributor
    Comments (310) | Send Message
     
    Thanks Wildebeest. I think you're right that the pay off isn't commensurate with the risk at these price levels. I'll keep sundance on my watch list. If it comes down a bit I may bite. By the way, I'm curious, do you have an opinion on New Millennium Resources?
    8 Feb 2011, 10:30 PM Reply Like
  • Wildebeest
    , contributor
    Comments (778) | Send Message
     
    Author’s reply » www.reuters.com/articl...
    10 Feb 2011, 12:37 AM Reply Like
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