Jones predicts strong iron ore; Sundance approves $3bn plan

Sundance Resources chairman George Jones has predicted an 8 to 10 per cent increase in iron ore prices in 2008, which would help to attract support for the company's $3.1 billion Mbalam iron ore project in west Africa.
Mr Jones, who also chairs aspiring Mid West iron ore miner Gindalbie Metals, was speaking at Sundance's extraordinary general meeting today.
The meeting approved a $30 million capital raising, which will allow Sundance to accelerate its pre-feasibility study and exploration program.
Mr Jones said he joined Sundance last year because of "the potential quality and scale" of the Mbalam project, located in the Republic of Cameroon in west Africa.
He believes the strength of the global iron ore market augurs well for the company.
"I expect iron ore prices to again increase in 2008, probably by around 8 - 10%, on the strength of the continuing and growing demand for high quality iron ore from China and other Asian and European markets," Mr Jones said.
The Mbalam project requires extensive infrastructure, including power and water to the mine site, construction of a 490 km rail link to port storage and export facilities, and development of a new port facility on the southern coast of Cameroon.
"Indicative capital cost estimates for the project are in the range of US$2,460 million (A$3.1 billion) for the establishment of a long-term operation producing 35 million tonnes pa of direct ship hematite," he said.

The company's announcement is pasted below:

SUNDANCE ACCELERATES WEST AFRICAN IRON ORE PROJECT AFTER COMPLETING $30M PLACEMENT
SHAREHOLDER APPROVAL RECEIVED FOR SECOND TRANCHE OF $30M PLACEMENT

International iron ore company Sundance Resources Ltd (ASX: SDL) has announced the commencement of an intensive 2007 work program at its flagship Mbalam Iron Ore Project in West Africa after today receiving shareholder approval to complete the second tranche of a $30 million capital raising. The substantial raising will enable Sundance to accelerate its pre-feasibility study and exploration program to be carried out on the Mbalam Project.

At a shareholder meeting in Perth today (8 January 2007), approval was received for the issue of 219,812,500 ordinary shares at 8c each, to raise $17.6 million. The first tranche, comprising the issue of 155,187,500 ordinary shares at 8c each, was completed on 30 November 2006 under the Company's 15% placement capacity and in accordance with ASX Listing Rules.

The placement has resulted in the introduction of a number of leading Australian and international institutional shareholders to the Company.

Speaking at the shareholder meeting today, Sundance's Chairman, Mr George Jones, said the Company was now well funded to pursue an aggressive pre-feasibility drilling program with the aim of confirming the potential of the Mbalam Project to support a resource of 1,000 million tonnes of high-grade hematite at Mbalam.

"The Mbalam Project is potentially a world-class hematite project, strategically located midway between European and Asian markets, and our focus will be on enhancing the value of this asset as rapidly as possible," Mr Jones said. "With continuing strong demand in the iron ore sector - as evidenced by the recent 9.5% price increase accepted by Chinese steel mills - we believe that there is a significant opportunity to develop a large scale, high grade iron ore project."

"The resource defined by previous exploration has shown that the Mbalam Project, which is located in the Republic of Cameroon, has the potential to be at the forefront of a new generation of major iron ore projects," Mr Jones added.

"The important message to get across is that the Mbalam Project is located within one of the world's emerging iron ore provinces in West Africa. It is in the same region and geologically similar to the US$3 billion Belinga Project under development by China National Machinery and Equipment Import and Export Corporation in Gabon, 170km from Sundance's Mbalam Project, and other large iron ore projects currently under evaluation in Guinea. Sundance has a significant potential opportunity to develop a large-scale iron ore export business, delivering large volumes of high-grade hematite ore to international markets".

'With installation of our new expanded management team, headed up by Don Lewis, we are well placed to unlock the true value of this project over the coming 12 months," Mr Jones said.

Sundance plans to use the funds raised in the placement to expand its pre-feasibility drilling work over the 875sq km Exploration Permit No. 92 held by Sundance subsidiary, Cam Iron S.A.

"Our key focus this year will be the completion of an expanded exploration program as part of our Pre-Feasibility Study of the Mbalam Iron Ore Project. This will initially target the Mbarga prospect as identified in previous exploration by the United Nations Development Fund. This previous work identified an Inferred Resource of 800 million tonnes iron ore, including 218 million tonnes grading more than 60% Fe, based on a very limited drilling program covering just 2.7km of strike length within our Exploration Permit area", Mr Lewis said.

"Airborne magnetic and radiometric surveying recently completed by Sundance have identified 26 highly prospective magnetic anomalies and targets, at depth and at surface, consistent with the previous drilling work by the UN. The data suggests in excess of 35km of prospective iron formations within the permit area".

Sundance plans to mobilise diamond and RC drill rigs to site as soon as possible to confirm the potential of the Mbarga prospect. "Our initial focus will be to confirm a resource of 300 million tonnes of hematite grading more than 60% Fe from this prospect. The next stage of work will aim to expand the resource base to at least 1,000 million tonnes of high grade hematite by targeted exploration of high priority targets identified from our aeromagnetic surveys," Mr Lewis said.

The pre-feasibility study being undertaken by Sundance will focus on the exploration program but will also include preliminary engineering, infrastructure and environmental planning required to progress project development. The expanded Pre-Feasibility Study is scheduled for completion by end 2007.