Page 19 - Sundance Resources Ltd Annual Report 2013

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PROJECT DEVELOPMENT
Sundance’s business strategy is focussed on the development of its flagship asset, the Mbalam-
Nabeba Iron Ore Project. The pre-requisites required to progress to development, and ultimately to
commence construction, are now largely in place following the achievements of the past year.
The strategy proposes to financially separate the
development of the port and rail infrastructure and the
mine development and its associated iron ore product
sales, driven by the fact that approximately 80% of the
capital spend for Stage One is associated with the
infrastructure development.
This will be accomplished by:
a.Awarding to international construction
companies the Engineering Procurement and
Construction (EPC) contracts for the build of the
port and the rail and the provision of the requisite
debt funding to accomplish this. The participants
will also have the option of purchasing equity in
the infrastructure.
b.Entering into secure off-take contracts with
steel mills, traders and other users of iron
ore. Term sheets have been issued for these
contracts. The off-take contracts will need to
be at such a level that they can be used as
security for the funding of the EPC infrastructure
contracts. These companies will also have the
opportunity to take an equity position in the mine
or the total project, at terms to be agreed.
The Company’s preferred position is that the total
Mbalam-Nabeba Iron Ore Project, encapsulating the
mines and transport infrastructure, will be operated
and controlled as one entity by Sundance in order to
maximise operational efficiencies.
Rail & Port Infrastructure
In August 2013, Sundance issued tender documents
for the construction of rail and mineral terminal (deep
water port) infrastructure to a number of international
Engineering, Procurement and Construction (EPC)
contractors, consisting of both Chinese and non-
Chinese groups. The contractors invited to submit
tenders have a proven track record in building
successful projects of large scope and scale.
Preliminary feedback from tenderers indicates
some participants would form consortiums
to provide the financial and technical
strengths necessary to undertake
the work.
It is expected that construction
could commence on the rail and
port immediately following the
successful completion of the
EPC tender process and
associated funding
solutions.
SUNDANCE RESOURCES LIMITED ANNUAL REPORT 2013