Australian miner Sundance Resources has reached an agreement
with the Cameroon government on terms affecting the company's
Mbalam iron ore project in the country, it said on Friday April
The agreement follows shortly after Sundance received approval from the Republic
government for the Congo portion of the project.
Mbalam straddles the border between the two countries.
"The Mbalam project is one of the largest investments ever to
be carried out in Cameroon," the Cameroon government, Sundance
and its strategic partner, China's Hanlong Group, said in a
statement. "[It] will be the foundation of the regional iron
ore mining industry."
The company has agreed to give 10% free carry equity to the
government in the various subsidiary companies that will be
created to implement and operate the Mbalam project.
Sundance will in turn receive a 25-year mining permit. During
that time, the agreement says that Sundance will pay a 2.5%
mining royalty on the ore extracted, while it will receive
certain tax incentives.
The terms also give the miner some exemptions from capital
gains tax when it restructures over different stages of
Sundance has also agreed procedures for building a
beneficiation plant to extend the life of the mine.
The company and the government did not elaborate further about
the details of the terms of the agreement.
The Mbalam project has an estimated capital investment of
around $5 billion, with another $3.7 billion estimated for the
beneficiation stage of the project.
This, along with Congo's approval of the first stage of the
project, sets the stage for Mbalam to go ahead as planned,
Sundance chairman George Jones said.
The first phase of the project, Nabeba on the Congo side, will
mine 35 million tpy of direct shipping iron ore for ten years,
with the Cameroon side extending the life of the project by a
further 15 years.