Austalian Company Extorting Resources from Africa leaving 10% Profit, Company Profits 90%

ASX-listed Sundance Resources says it expects to deliver an operating margin of around $25,5 a ton on its emerging Mbalam iron-ore project in Cameroon.

The proposed $2,46-billion mine – in which Sundance has a 90% stake - is targeting first production in 2011.

MD Don Lewis said that the project was shaping up as a potentially world-class high-grade hematite resource.

“On our proposed 35-million ton a year production, the mine should deliver an estimated annual operating margin of around $892-million,” Lewis said at the Africa DownUnder conference in Perth.

He said that the estimation was relatively conservative, as it was based on 2006 ore prices. Sundance was 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-million tons to 300-million tons in the immediate years ahead, Sundance believes it will be more likely around 500-million tons.

“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.”

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.”

He said remaining priorities for 2007 were to confirm Mbalam’s potential for a one billion ton 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.”

Lewis acknowledged that the company had significant work to do over the next 12 to 18 months to achieve its objectives. - Kevin Skinner