Cadence Minerals and JV partner raise $100.7m to accelerate Yangibana Rare Earth Project

Francesca Morgan
Vox Newswire
11:52, 25th February 2021

Cadence Minerals (KDNC FOLLOW) has provided an update on Hastings Technology Metals, its JV partner at the Yangibana Rare Earth Project, as the parties seek funding to advance its construction. Meanwhile, the Group has also provided an update on Macarthur Minerals, of which it owns around 1% interest in, regarding a new exclusive mining lease agreement.

The London-listed minerals explorer noted yesterday that Hastings Technology Metals, the Group’s joint venture partner at the Yangibana Rare Earth Project in the Gascoyne region of Western has received commitments to raise $100.7 million through an equity placement.

Cadence owns 30% of 3 Mining Leases, 6 Exploration Licences which form part of the Yangibana Project, while Hastings owns 70% of these leases and licences. The proceeds from the placing will be used to overall advance development of the Yangibana Project.

A definitive feasibility study from 2017 modelled two production scenarios at the site. The study’s production target and additional production target from the definitive feasibility study indicates that 11% of the plant feed will come from Cadence’s joint venture area.

The company highlighted to investors that the strong institutional demand in the project ‘reinforces confidence that Yangibana will become Australia's next rare earths producer.’

Upon settlement of both tranches of the Placement, Hastings Technbology will have a cash balance of around $120m, before costs. The equity component of Yangibana’s capital cost is $124m.

Morzaria said, "We are delighted to see the strong financial support shown by institutional, sophisticated and professional investors in the Hastings placing. This development will accelerate project construction and provide a positive read-over into the value and future potential of two of the Cadence joint venture areas of Yangibana and Yangibana North.”

Today, Cadence Minerals said Macarthur Minerals, of which it owns around 1% interest in, has entered into an exclusive agreement with Zanil Pty in order to undertake due diligence over 10 tenements in and around the Leonora Goldfields region in Western Australia.

Macarthur Minerals is an Australian mining exploration firm focused primarily on iron ore, nickel, lithium and gold in Western Australia. It also has a lithium project in Nevada, USA.

The agreement with Zanil, an Australian Proprietary company, is intended to strengthen the value proposition for a potential future repositioning of Macarthur's non-iron ore assets.

The Leonora tenements (Fig.1) are in the Central Goldfields region of Western Australia, approximately 237 kilometres north of the city of Kalgoorlie within the proximity of active gold mines such as Agnew gold mine, Gwalia gold mine and Sunrise Dam gold mine.

The tenement portfolio consists of two mining leases and eight prospecting licences, with nine of the areas located on historic gold workings. The other tenement, Barlow's Gully, has no established mine workings, but has been subject to surface gold extraction for over 100 years.

The key tenements include Garden Well, Camel Lease, Great Northern, Barlow's Gully, and Coppermine. The Company outlined to investors that past production from the tenement's areas are not treated as current or historical Mineral Resources and further exploration is therefore now required to understand the potential for gold or copper mineralisation.

Figure 1: The location of the 10 tenements is shown on the below map that highlights the prospectivity of the Leonora Goldfields and indicates the potential of this tenement portfolio.

(Source: Cadence Minerals)

lan Joe Phillips, Managing Director of Macarthur Minerals, said, “The entering into of the due diligence agreement with Zanil is designed to all for an exclusive low-cost review of the Central Goldfields assets to augment the Pilbara gold, copper and lithium tenement portfolio.”

He added, “If these tenements demonstrate value, Macarthur will consider spinning out this portfolio as part of a wider Pilbara/Central Goldfields transaction. The objective is to create value for shareholders by exploiting these tenements without detracting or distracting Macarthur from delivering on its substantial Lake Giles Iron Project."

"The main focus for the Company is 'first and foremost' the ongoing development of the Lake Giles Iron Ore assets,” said Phillips. The company is now focused on delivering a current Feasibility Study for the Lake Giles Iron Project in Western Australia this year so that the Company can target commencement of first shipment of iron ore from the site in Q1 2024.

In a recent quarterly update, Macarthur said it is ‘well placed’ to deliver on its stated 2021 goals for Lake Giles, which include completing a feasibility study, concluding a route-to-market contract and advancing terms of financing the project commencing 2023. 

It seems the current iron ore demand is in China with UBS economics forecasting its GDP growth rate at 8.2% in 2021. Earlier this month, UBS said growth is being driven by domestic and export- focused production, with exports of finished products to grow at 11-12% over the 2021 year. 

Analysts at Morgan Stanley have also held on to a bullish scenario for iron ore prices in the years ahead. In a recent report, analysts laid out a ‘plausible scenario’ of iron ore prices trading at more than $US165 per tonne ($216/tonne) for a three-year period out to 2024.

‘Global iron ore production growth will accelerate in the coming years, bringing an end to the stagnation that has persisted since iron ore prices hit a decade-low average of $55 per tonne in 2015,’ market analyst Fitch Solutions predicts within its latest industry report. Shares in Cadence were trading 0.13% lower this morning at 19.22p following today's news.

KDNC price chart

Reasons to Follow KDNC

Amapá – 30% (once final agreement with bank creditors has been completed)

Candece plans to rehabilitate Amapá, including commissioning the studies required of bank finance, shipping of the iron ore from the stockpile and the restarting of full operations.

The historic mine plan would mean that Amapá would produce at steady-state production an estimated 4.4 Mt of 65% iron and 0.9 Mt of 62% iron per annum for approximately 14 years.

Cinovec – 16%

Cadence holds around 12% of the equity in European Metals, which, through its subsidiary, Geomet, controls the exploration licences awarded for the Czeach Cinovec Lithium Project.

Cinovec, which is the largest hard rock lithium deposit in Europe, is strategically located to produce lithium for Europe with the goal of contributing to a sustainable supply chain for a world leading centre for electric vehicle development and manufacture in Europe.

Diego Pavia, CEO of EIT InnoEnergy, said he views Cinovec as “critical” to the development of Europe's energy storage industry and in meeting the EU's climate goals of electrification of mobility and large-scale development of renewable energy storage.

Last week, the ongoing nineteen-hole resource drilling programme at the Cinovec Project returned strong drilling results. Cadence’s Chief Executive, Kiran Morzaria told investors that the encouraging results ‘serve to highlight the overall quality of the Cinovec project.’

Yangibana – 30%

Last year, Cadence unveiled ‘outstanding’ rare earth oxide grades in a report which highlighted positive drilling results at the Yangibana rare earth project in Australia, exceeding its expectations for its planned 20,000 metre 2020 exploration drill program.

Cadence, which owns 30% of three mining leases and six exploration licences which form part of the Yangibana Rare Earth Deposit, expects to advance the programme until Q420.

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The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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