China's Hanlong Mining has cleared one of three key hurdles to its long-delayed $1.3 billion takeover of Australia's Sundance Resources, agreeing on key terms with Cameroon for developing the Mbalam iron ore project.

To go ahead with the Sundance bid, Hanlong also needs to secure approval from Australia's Foreign Investment Review Board by June 30, and line up funding from China Development Bank by August 31, which is seen as the biggest challenge.

Hanlong is targeting Sundance for its $4.7 billion Mbalam iron ore project on the border of Congo and Cameroon, a resource vital to helping China ease its dependence on Australia and Brazil for iron ore.

Despite China's desire tap new sources of iron ore in Africa, China Development Bank has so far failed to give its blessing to Hanlong's A$1.34 billion ($1.3 billion) bid, first announced last July.

The bank has said it was waiting for Congo and Cameroon to seal mining agreements, now in hand, and waiting for approval from Australia, now also expected to come through.

“We now look forward to finalising the remaining elements of the (agreement) and paving the way for the people of the republics of Cameroon and Congo to reap the benefits of this world-class project,” Sundance Chairman George Jones said in a statement.

At least one Chinese source has said China Development Bank is nervous about making big investments in the current uncertain global environment, especially when it involves a privately owned Chinese company.

Those doubts have kept Sundance's shares, last at A$0.40, trading well below the value of Hanlong's offer of A$0.57 share.

Sundance said Cameroon Prime Minister Philemon Yang has written to Chinese Premier Wen Jiabao calling for China's support for the Mbalam project, crucial to the country's future as it includes building a 510 km (320 mile) rail line and a deepwater port. - Reuters