Sundance Resources mining camp at the Mbalam project in Cameroon.
Sundance Resources' mining camp at the Mbalam project in Cameroon.

One of the world's biggest commodity traders, Hong Kong's Noble Group, has committed to buying all the iron ore produced by Sundance Resources' Mbalam project for a 10-year period, a deal that could underpin development of the Perth company's long-held West African ambition.

Sundance announced this morning that Noble had signed a "firm long-term off-take contract" for Mbalam and the adjoining Nabeba deposit, which combined are slated to produce 35 million of iron ore a year.

The Noble deal is for 10 years and will be priced on the benchmark spot price for deliveries of 62 per cent fines cargoes to China.

The spot price is trading about $US110 a tonne, giving the Noble deal a nominal value of $US38.5 billion.

It remains unclear if the Noble off-take is bankable, that is accepted by financiers as a guaranteed take-or-pay deal.

But it is the biggest financial advance in Sundance's long-running, high-profile efforts to develop Mbalam-Nabeba. Mbalam is in Cameroon and Nabeba across the border in the Democratic Republic of Congo.

Under the terms of the Noble deal, Sundance has the right to claw back about 50 per cent of Mbalam-Nabeba's production in the event the company wants to offer the volumes to potential equity partners.

The capital cost of Mbalam-Nabeba has been put at $US5 billion and Sundance has been busy seeking tenders from parties to help build the complex mine, rail and port operation. It is expected that Sundance will sign up parties to help develop the infrastructure and then also the mine development, in return for handing over some equity.

Sundance shares were up 1.3 cents, or 14.61 per cent, to 10.2 cents shortly before the close of trade.

The West Australian

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