Sundance confident of surging global demand

Sundance Resources Ltd says it expects to deliver an operating margin of aroun....

  Sundance Resources Ltd says it expects to deliver an operating margin of around US$25.5 per tonne on its emerging Mbalam iron ore project in the African state of Cameroon.The proposed US$2.46 billion mine – in which Sundance has a 90% stakeis targeting first production in 2011.Addressing the 2007 Paydirt Africa DownUnder Conference, Sundance Resources’ Managing Director, Don Lewis, said the project was shaping up as a potentially world-class high grade hematite resource.“On our proposed 35 million tonnes per annum production, the mine should deliver an estimated annual operating margin of around US$892 million,” Mr Lewis said.“This is relatively conservative as it is based on 2006 ore prices. Sundance is budgeting on a minimum 20-year mine life with Mbalam ore expected to arrive at market by 2011 with a continuing supply shortfall globally.“The strength of iron ore demand is quite stunning. While most observers have forecast demand growth of 200-300 million tonnes in the immediate years ahead, Sundance believes it will be more likely around 500 million tonnes.“This growth will persist for at least a decade and probably beyond as even expansion plans among world majors will not meet the shortfall, particularly as current estimates do not account for any new demand from India.”Mr Lewis said the net result of the supply bottleneck would be continued price pressures.“Forget any thought that price is going to flatten. It can be expected to head upwards around 20% next year and possibly as high as a 30% price rise. The market demand generally is not going away in the short term. This environment offers great opportunity for projects such as Sundance’s Mbalam mine.”Mr Lewis said remaining priorities for 2007 were to confirm Mbalam’s potential for a one billion tonne hematite resource, negotiate a Project Convention Memorandum of Understanding with the Cameroon Government, define infrastructure requirements, develop the financing strategy and identify key offtake and development partners.“The essence for Sundance is scale. A one billion tonne resource will deliver very significant financial returns to the company.”Mr Lewis acknowledged that the company had significant work to do over the next 12-18 months to achieve its objectives.Sundance Resources will need to transport its ore west from the mine on a 490km railway terminating at its preferred shiploading point just south of the port of Kribi.