Cadence Minerals reports ‘solid operational progress’ at Amapa Iron Ore Project
(KDNC ) has reported to investors “solid operational progress” at the Amapa Iron Ore Project in regard to recommissioning work at the mine, port and railway.
Addressing shareholders today, Cadence’s Chief Executive Officer Kiran Morzaria said ongoing sales from Amapa’s iron ore stockpiles are providing sufficient funding to complete the PFS, along with some of the work required to bring the complete operation back to life.
The mineral exploration firm DEV Mineração S.A., working alongside Cadence and Indo Sino Pty Ltd, has been progressing with the redevelopment of Amapa in several key areas.
Earlier this year, the Commercial Court of São Paulo ruled that DEV could export sufficient iron ore to realise a total US$20m profit from the Amapa stockpiles. In particular, $10m was permitted on each separate occasion and a portion of these funds is now being used to redevelop Amapa, including commissioning studies, capital projects and working capital.
In regard to the development of Pre-feasibility Studies ('PFS') at the project, DEV has appointed IDG Engenharia E Consultoria LTDA ('IDG') to carry out the engineering and conditioning study on the beneficiation and processing plant at the Amapa mine.
In addition to the engineering and conditioning study, IDG will review the power supply options for the mine and plant, particularly the possibility of connecting to the grid network, enabling the mine and the plant to be predominantly powered by lower-cost renewable energy.
DEV has also appointed Technicontrol Consultoria E Etrinamento Empresarial Ltda to carry out the PFS work on the railway. Both of these studies, once complete, will form part of the PFS and in the coming months, DEV is also expected to appoint a consulting and engineering firm to start work on the port studies and conduct a geotechnical investigation of the mine.
Working in partnership with Companhia Docas de Santana ('CDSA'), DEV tested a process at CDSA's port in Santana to load a vessel (45,000 ton) with iron ore at Pier 2 from berth-side which saw two vessels loaded at piers 1 and 2 with iron ore simultaneously for the first time.
Cadence highlighted that DEV had carried out this trial operation by loading ore owned by a third party. The shipment of this ore is part of the judicial recovery process approved by the creditors in July 2019 and was carried out at a commercial rate. ‘With this increased capacity, DEV will ship its stockpiles at a faster rate than previously expected,’ it explained to investors.
DEV is now scheduled to complete its fourth and last shipment under the court judgment granted earlier this year in August. The four shipments of 58% beneficiated iron ore have netted approximately US$10 million to DEV. Following this fourth shipment, DEV will begin shipments to fulfil the second court judgment, as announced on 26 July 2021, Cadence said.
“We remain enthused by the opportunities and possibilities that a fully recommissioned Amapa mine will deliver, and I am delighted to see local contractors and companies already engaged with us to make it happen. 'I look forward to reporting further progress to you in the coming weeks and months,” said Morzaria.
Back in early September 2020, DEV, Cadence and Indo Sino Pty Ltd (together known as “the Investors") agreed in principle to the settlement terms proposed by the Bank Creditors.
DEV is owned by the JV group with Indo Sino Pte. Ltd and, on completion of Cadence's investment it will own a 27% stake, with an option to increase its interest up to 49%.
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By the end of June 2021, DEV Mineração S.A. ("DEV") had shipped three of the estimated four shipments of 58% iron ore required to net $10m profit at Amapa. It has also contracted to carry out logistical and shipping activities for third parties who have stockpiles held at its port.
To date, Cadence, alongside its partners at Amapa, Indo Sino Pte Ltd ("Indo Sino") and DEV, have completed an updated mineral resource statement increasing the total mineral resources by 21%. It is now advancing towards completing a pre-feasibility study at Amapa.
Addressing shareholders, Cadence Minerals said it believes The Amapa Project will give the business ‘an exceptional return on investment’ in the run-up to full production as well as an opportunity to become ‘a significant shareholder in a mid-tier iron ore producer.’
Cadence announced its first iron ore sale and shipment from Amapa since 2015 in April 2021.
Both this and the resultant earnings represent “a milestone of huge significance”. Looking ahead, Cadence said it believes that all parties are aligned ‘to complete and execute’ the agreement which will see Cadence Minerals become a 20% shareholder in Amapa.
The company said its recent sale from an unnamed customer, which is said to be one of the world's largest globally diversified natural resource companies, is a “clear signal” that the Amapa project in Brazil is very much back in business, with keen demand for its product.
Shares in Cadence Minerals have doubled in value since the beginning of 2021. The stock was trading 3.42% higher this morning at 30.25p following the announcement.
In September 2020, DEV, Cadence and Indo Sino Pty ("the Investors") agreed in principle to the settlement terms proposed by the secured bank creditors ("Bank Creditors").
The execution of a settlement agreement with the Bank Creditors would represent the satisfaction of Cadence's remaining major precondition to make its initial 20% investment in Amapa. On completion of the conditions and the release of the Cadence escrow monies, it will become a 20% shareholder in Amapa via its JV company, which will own 99.9% of DEV.
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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