Iron-ore developer Sundance Resources has appointed construction company Mota-Engil Africa as the engineearing, procurement and construction (EPC) contractor for its $3.5-billion port and rail infrastructure for the Mbalam-Nabeba iron-ore project.

The EPC contract includes a 510 km railway from the Mbarga mine, in Cameroon, to the mineral terminal facility at Lolabe, and a 70 km rail spur from the Nabeba mine, in the Republic of Congo, to the Cameroon railway.

The contract also includes the construction of a 35-million-tonne-a-year deep-water mineral terminal facility, which will host stockyards capable of loading China-max vessels.

Further, Standard Bank has been appointed to advise on funding and to be the lead debt arranger for the project and the infrastructure.

“The decision by Mota-Engil Africa and Standard Bank to take on the key roles of engi-neering and construction contractor and lead debt funding arranger is a major vote of con-fidence not only in our company and the project, but also in the Central African countries of Cameroon and Congo, and our belief that this will become a world-class iron-ore region,” comments CEO and MD Giulio Casello.

“The Mbalam-Nabeba iron-ore project will be one of the lowest-cost producing assets in the world. Now that we have confirmed capital costs for the project, I believe it is positioned as the most attractive, large-scale high-grade iron-ore project in the world that is ready for development,” he adds.

Sundance is currently targeting production of 35-million tonnes a year at Mbalam-Nabeba, with the project expected to have a minimum mine life of 25 years.
Stage 1 of the operation, which will have a mine life of ten years, will be focused on producing direct shipping ore hematite, while the second stage of the operation will be the continued production of itabirite hematite concentrate.

Casello says the company will now proceed to deliver its project equity funding strategy, which will involve parties that have previously expressed an interest in the project.

The provision of project equity is expected to be finalised in parallel with reaching financial close for the debt and equity funding by mid-2015.

The company is also advancing plans with Standard Bank and its EPC contractor for an alternative funding strategy based on an own-operate and transfer model for the port and rail infrastructure.

If successful, these negotiations could see a greatly reduced equity requirement from Sundance and its partners.

Meanwhile, Sundance has signed a rail and mineral terminal concession for its Mbalam-Nabeba project with the government of Cameroon, paving the way for the ratification of the Mbalam Convention by that country’s Parliament later this year.

In November 2012, the government of Cameroon entered into the Mbalam Convention, requiring that two key agreements be signed, including a mineral terminal agreement and a rail agreement.

The two agreements will regulate the rights and obligations of Sundance and government in relation to the construction and operation of key infrastructure assets servicing the Mbalam and Nabeba mines, as well as detail the procedure for the eventual transfer of these assets back to the government of Cameroon.

The agreements also outline third-party access to the infrastructure.