Sundance raises cash for Cameroon iron plan

By Tansa Musa

YAOUNDE (Reuters) - Australian miner Sundance Resources has raised A$85 million from institutional investors to advance its Mbalam iron ore project in Cameroon, the company said on Monday.

According to the agreement, 567 million shares will be issued at A$0.15 per share, subject to shareholder approval.

Proceeds will be used to complete a definitive feasibility study of the Mbalam project, undertake drilling to define more high-grade mineralisation and provide general working capital.

"We have deliberately targeted a new investor base to broaden the reach and exposure of the company to the international market ahead of our proposed project financing activities in 2010," managing director Don Lewis said in a statement.

Sundance Resources submitted a feasibility study on Mbalam to the Cameroonian government last month, projecting the Central African country would receive some $5 billion in royalties, taxes, and dividends during the 25-year life of the mine.

The project, some 400 km (250 miles) southeast of the capital Yaounde, holds an estimated 2.5 billion tonnes of hematite, a mineral form of iron oxide. The company hopes to produce some 35 million tonnes per year.

Sundance said last month it was putting back its target for initial production at the project to 2013 from 2011 because of the global economic slowdown which has seriously impacted iron ore markets and the availability of project finance in 2009.