Sundance Resources Limited (ASX: SDL) has entered into a new agreement with AustSino and the Noteholders of the Company being Senrigan Master Fund, Noble Resources International Pte Ltd, D. E. Shaw Composite Holdings International Ltd, BSOF Master Fund L.P. Wafin Limited and David Porter, after reinstatement of the Mbalam Convention was unable to be secured.
Sundance Resources Limited (ASX: SDL) has entered into a new agreement with AustSino and the Noteholders of the Company being Senrigan Master Fund, Noble Resources International Pte Ltd, D. E. Shaw Composite Holdings International Ltd, BSOF Master Fund L.P. Wafin Limited and David Porter, after reinstatement of the Mbalam Convention was unable to be secured.
Some of the key differences between the Previous Agreement and the New Agreement are as follows:
· The reinstatement of the Mbalam Convention is not a condition to the completion of the New Agreement.
· The cash payable by AustSino on completion of the New Agreement will reduce from $58M (payable on completion of the Previous Agreement) to $29M. Of this, $25M (previously $50M) will be paid to Noteholders and $4M (previously $8M) will be retained by Sundance.
· AustSino will again own approximately 50.2% of Sundance following the completion of the New Agreement under which AustSino will receive approximately 11,153,846,154 shares issued at a price of $0.0026 per share (resulting in a change of control of Sundance).
· The number of options to be granted to the Noteholders is to be halved from 10 billion to 5 billion. The terms of those options (having an exercise price of $0.02 and expiry date of five years from the date of issue) are otherwise unchanged.
· AustSino will provide certain financial support to Sundance to part support its working capital requirements until completion of the New Agreement. Sundance may also seek support from other parties. The support of AustSino will be via an initial $200,000 placement of ordinary shares to AustSino at an issue price of $0.00375 per share, resulting in the issue of 53,333,333 shares to AustSino (“Initial Placement”). The Initial Placement will occur within 5 business days of this announcement. After the Initial Placement and within 5 business days following a request by Sundance, AustSino is required to pay $100,000 per month to Sundance in return for the issue of ordinary shares in Sundance at an issue price of $0.00375 up to an aggregate of $600,000 (including the initial $200,000) (Financial Support Arrangement). The total number of ordinary shares potentially to be issued by Sundance to AustSino under the Financial Support Arrangement is 160,000,000 ordinary shares. In lieu of subscribing for additional Sundance shares, AustSino may instead require that amounts paid under the Financial Support Arrangement be deducted from the $29 Million purchase price payable by AustSino on Placement Completion. Neither the Initial Placement nor any subsequent placement of shares under the Financial Support Arrangement will require Sundance shareholder approval.
Although the reinstatement of the Mbalam Convention is not a condition precedent for the completion of the New Agreement, Sundance and AustSino will continue to explore the reinstatement of the Mbalam Convention and the transaction is conditional on the taking of certain further steps in this regard.
Sundance expects that trading in its shares on ASX will remain suspended until the New Agreement is completed or it comes to an end.
The Transaction
Under the New Agreement, Sundance has agreed to issue to AustSino 11,153,846,154 ordinary shares at an issue price of A$0.0026 per Share, together with the grant of 11,153,846,154 unlisted options at an exercise price of A$0.02 and an expiry date of five years after the date of issue, which are subject to a number of conditions precedent to be satisfied or waived by 31 December 2019 or another date agreed by the parties.
The proceeds of the Placement Completion will be used for the following:
· $25M cash will be paid to the Noteholders (“Cash Payment”); and
· The balance will be used for working capital and to progress development of the Project and the transaction costs associated with the New Agreement. It is expected that this will comprise the following (including corresponding estimates of the expenses):
· working capital, including in relation to salaries, administration and regulatory costs in Australia, Cameroon and Congo (approximately $2.5M);
· transaction costs associated with the New Agreement, including the Independent Expert’s Report, EGM and legal costs associated with the New Agreement and the Cameroon Convention (approximately $0.5M); and
· negotiation and legal costs associated with financing packages and EPC contracts for the Project (approximately $1M).
