AAP reported that shares in Sundance Resources are expected come under downwards pressure when they resume trading, as the prospect of a takeover deal with Hanlong Mining appears even more remote.
Sundance shares were placed in a trading halt on November 3rd, just before the company said Hanlong wanted to delay the takeover deal because it could not secure funding by December 13th.
This compares with the prospective 46% a share bid by Hanlong, which would value Sundance at around USD 1.3 billion, which itself had been revised down by the Chinese suitor from 57% a share earlier in the year amid falling world iron ore prices.
Hanlong already owns about 17% of Sundance and wants the iron ore explorer for its USD 4.7 billion Mbalam mine in West Africa that straddles the border between the republics of Congo and Cameroon in West Africa.
Sundance is dependent on a larger partner, such as Hanlong, to provide funding for the project.
Sundance said that it did not agree to Hanlong's most recent proposal to delay the takeover deal.
The latest development raises the prospect among some investors that the deal may not go ahead and comes a month after Sundance reported that Hanlong had secured USD 438 million from the China Development Bank to fund the acquisition of Sundance.
Sundance in a statement said that "Sundance will consider its position when it has adequate information and will further update the market when it is in a position to do so."
The company said the trading halt would be lifted and it would seek further particulars from Hanlong about its timetable for the bid.
Analysts have questioned the viability of the Mbalam project because of its remote location and given recent iron ore price volatility amid a slowing world economy.
CMC Markets analyst Mr Michael McCarthy said that Hanlong had pulled its bid too many times.
Mr McCarthy said that "What a disaster. If you ever wanted to come up with a difficult takeover bid to do, this would be it."
The market had persistently priced the stock below its takeover price, so there were persistent doubts about the viability of the deal.
He said that "There is something quite wrong here and my sense is this deal will not go ahead."
The Mbalam project, which includes building a 510 kilometer rail line and a deepwater port is expected to produce 35 million tonnes a year of iron ore.
