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 27.
The agreement follows shortly after Sundance received approval from the Republic of Congo
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 development.
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.