Sundance dives after China deal fails

PUBLISHED : Tuesday, 09 April, 2013, 1:14pm
UPDATED : Wednesday, 10 April, 2013, 3:46am

Shares in Australian iron ore company Sundance Resources crashed more than 50 per cent in intraday trade yesterday after a billion-dollar takeover agreement with China's Hanlong Group collapsed.

Sundance terminated the prolonged A$1.3 billion (HK$10.5 billion) deal after almost two years of negotiations when it became apparent Hanlong could not meet its funding conditions.

No reason was given for the privately-owned company missing a deadline to provide information on how it will finance the deal, which would have allowed it to acquire all the issued share capital of Sundance.

But Chinese media last week reported that Hanlong's chairman, Liu Han, was being held by police on suspicion of harbouring his brother, who has been arrested for murder.

The website of the Economic Daily newspaper also quoted sources as saying Liu was suspected of laundering money through casinos in Macau.

The bid was also marred by allegations of insider trading.

The Africa-focused Sundance said discussions were now under way with other parties as part of an ongoing strategy to develop its Mbalam-Nabeba iron ore project, which straddles the border of Cameroon and the Republic of Congo.

"Sundance believes that it continues to receive support from the governments of Cameroon and Republic of Congo and from China for this project," Sundance chairman George Jones said in a statement.

"The Mbalam-Nabeba project has been globally recognised as an excellent asset, which is financially robust and will unlock a new world class iron ore region in Africa," he said. "We are confident that we can find a suitable partner to help us bring this project into production."

Despite that show of determination, Sundance shares plunged when a trading halt was lifted on Tuesday morning, to trade below 10 Australian cents.

Before the halt, its shares were worth 21 Australian cents, having almost halved since December.

Hanlong is a diversified company with interests from tourism to minerals and assets of more than 20 billion yuan (HK$24.7 billion), according to its website.