Sundance set to raise $40m

Sundance Resources has signed agreements to raise $40 million from a consortium of investors as it looks to progress its Mbalam-Nabeba iron ore project in West Africa.

Sundance has secured commitments from commodity trader Noble Resources International to invest $20 million in the form of an unsecured convertible note in exchange for 200 million options, subject to shareholder approval.

Noble will have the right to convert the note into fully paid Sundance shares at 12 cents per share or a 30 per cent stake in a yet to be formed company which will market ore produced at the Mbalam-Nabeba project.

Noble will also be given the first right to offer a price and other terms for an offtake deal for 15 per cent of the total iron ore production at the project.

A further $20 million will come from an investor consortium comprised of funds advised by Blackstone, the D.E. Shaw Group and existing Sundance shareholder Senirgan. 

The consortium will invest through a two-year zero coupon convertible note issue which is convertible to Sundance shares at a price of 10 cents per share and will also receieve a total of 260 million options.

UBS AG, Australia Branch and Gilbert + Tobin acted as financial and legal advisers respectively in relation to the transaction.

Sundance said the funds would be used for working capital and to meet pre-development capital expenditure for the Mbalam-Nabeba project, including costs associated with approvals, mining permits and engineering procurement and construction contract tenders.

Sundance hopes to produce 35 million tonnes of ore per annum at the $US4.7 billion project and is targeting production for 2017-18.

"These funding arrangements will not only secure Sundance's financial position but also demonstrate the ongoing support our company and the project continues to receive from strategic parties and global institutional investors," Sundance chief executive Giulio Casello said.

Sundance earlier this year terminated a planned $1.3 billion takeover of the company by Chinese company Hanlong Mining.

Shares in Sundance were 7.7 per cent lower at 12 cents at 9:30AM WST.