Sundance Resources (ASX: SDL) has struck a deal that cancels its debt and firmly positions the company to advance the world-class, high-grade Mbalam-Nabeba iron ore project in West Africa. The deal will see AustSino Resources (ASX: ANS) inject $58m into Sundance in return for a majority stake. Sundance will use $50m of the cash to cancel $133m of notes – noteholders will also receive shares and options – to leave enough cash to advance Mbalam-Nabeba feasibility work.
Summary:
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Sundance Resources and AustSino Resources Group Limited have agreed to a $58M placement of Sundance shares to AustSino.
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This placement will result in a change of control of Sundance and a transformation of the Company.
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Sundance, AustSino and potential Chinese partners will work together to advance the Mbalam-Nabeba Iron Ore Project in Cameroon and Congo.
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Sundance and AustSino will soon be travelling to Cameroon and Congo.
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Following completion of the agreement, $50M will be used to cancel Sundance’s existing convertible notes on issue in exchange for a cash, share and option package for the existing noteholders.
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Sundance will retain $8M cash for working capital and to progress the Mbalam-Nabeba Iron Ore Project.
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The existing term sheet to convert the existing convertible notes into equity and royalties (see ASX announcement dated 30 July 2018) has been extended to facilitate completion of this transaction, and if completion of this transaction does not occur then the arrangements under that term sheet remain on foot.
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The transaction will require a number of regulatory and shareholder approvals before completion, but is expected to be completed within four months. The conditions to this transaction include completion of AustSino’s own placement of shares, which in turn requires regulatory and shareholder approvals (including Chinese and FIRB approvals) and there is no guarantee that such approvals will be obtained (see AustSino’s ASX announcement in Schedule 2 to this announcement for further information). Failing to obtain these approvals will result in neither AustSino’s placement nor the transaction proceeding.
The Board of Sundance Resources Limited (ASX: SDL) (“Sundance” or “Company”) is pleased to announce that Sundance has an agreement dated 24 September 2018 (“Agreement”) with AustSino Resources Group Limited (ASX: ANS) (“AustSino”) and all noteholders of the Company (other than Wafin Limited (Wafin)) being Senrigan Master Fund, Noble Resources International Pte Ltd, D. E. Shaw Composite Holdings International, Ltd, Wafin Limited, BSOF Master Fund L.P. and David Porter (together the “Noteholders”), which will fund Sundance, bring in partners who have the capability and capacity to fund and bring the Mbalam-Nabeba Iron Ore Project (“Project”) into production and leave Sundance debt free.
The issue of securities to AustSino and the Noteholders and the cancellation of the convertible notes is conditional on Wafin agreeing to the transactions contemplated by the Agreement (which Wafin expects to do so by end of September 2018).
Sundance will remain in suspension while AustSino responds to ASX’s request for further information concerning AustSino’s proposed transactions, including regarding Western Australian Port Rail Construction (Shanghai) Ltd (WAPRC) and its corporate/capital structure, the source of funds and the new controllers of AustSino following completion of the WAPRC placement (which is itself a control transaction) – see the AusSino Announcement in Schedule 2 for further information.
