Sundance Resources Limited (ASX: SDL) has provided investors with its annual report for the financial year ended 30 June 2020.
In their letter to shareholders, company chairman, David Porter, and CEO Giulio Casello said:
This has been an extraordinary year for all of us as COVID-19 impacted every aspect of our lives. None more so than the World economies that have been battered by lockdowns imposed by Governments. While we will not blame the pandemic for holding up the Company’s well-intended plans to eliminate Sundance’s $132 million debt and finally advance our world-class Mbalam-Nabeba Iron Ore Project it has had a slowing effect.
This is manifested by our inability since March 2020 to travel to and from Cameroon and the Republic of Congo where our Project is based, or to China to try to speed up a frustratingly slow financial agreement with AustSino. The Project has been in limbo for 9 months and this has added to the disappointment and frustration of Sundance management and our shareholders.
The year under review started with some momentum as Sundance and AustSino coordinated visits to Cameroon to progress the Project with Cameroon Government officials. Visits to China were also arranged for Cameroon Government officials to meet with the potential consortium lined up for our Project.
The consortium of Chinese players that are willing to fund, build and operate the Mbalam-Nabeba Iron Ore Project includes some of the largest companies in the world. Included in the Consortium are Shenzhen Yantian Port Holdings, China Railway Construction Co, China Baowu Steel Group and Shanghai Tsingshan Mineral Co Ltd. Naturally we and the Governments in Cameroon and Congo have been impressed with the quality and potential of the consortium members.
The efforts of AustSino and in particular Mr Chun Ming Ding in arranging this high-quality consortium have been essential in the support we have continued to receive in Cameroon, including the potential for the Mbalam Convention to be reinstated. Our last visit to Cameroon was in February this year just before COVID-19 hit. Pleasingly, on this visit to Yaounde the Government of Cameroon offered its support and expressed enthusiasm for the completion of our transaction with AustSino.
As you will be aware, the Company’s transaction with AustSino is progressing much more slowly than anticipated. However, the Board of Sundance continues to believe that completing the transaction is in the best interests of all shareholders as it will eliminate the Company’s debt of $132 million; see AustSino take a controlling stake of just over 50 per cent in Sundance; provide us with an immediate significant cash injection of $4 million to advance the Project; while still retaining a near undiluted 40% equity for our existing shareholders.
During the year it became clear to AustSino that WAPRC, the original funder of its plans to invest in Sundance was unable to secure the necessary finance. AustSino has since identified a new Chinese funder and remains confident it can complete the transaction with Sundance by 30 November 2020. The change in funder who has committed $100 million to AustSino coupled with the challenges of Covid-19 has resulted in multiple extensions of the deadline for completion of the Sundance/ Aust Sino transaction. Even with the many extensions of the deadline it is pleasing that Sundance shareholders continue to support AustSino and the transaction which was approved at a Sundance General Meeting on 29 July 2020. There has also been strong ongoing support from our Noteholders who approved the extensions.
As at the writing of this letter, Sundance has given AustSino until 30 November 2020 to complete the transaction. In the meantime, AustSino continues to inject a significant amount of cash into Sundance as an interim funding measure. Over the past two years, AustSino has invested more than $4 million cash in Sundance. We acknowledge that it has now been two years since Sundance shares were suspended from trading by the Australian Stock Exchange Ltd (ASX). We also acknowledge the disappointment and frustration among our shareholders, which is shared by the Directors of Sundance who are sizeable investors in the Company.
The Board of Directors of Sundance is focused on the completion of Sundance/ AustSino transaction which is a prerequisite for the $6 billion capital funding for the Mbalam-Nabeba Iron Ore Project in 2021. Following the successful completion Sundance share will resume trading on the ASX.