Cadence Minerals says second Amapa iron ore shipment has been completed in record time
(KDNC ) said the sale and shipment of the second batch of iron ore from the Amapa Iron Ore Project in Brazil has been completed by DEV Mineração S.A. ("DEV").
The mineral explorer said it loaded 48,670 of the iron ore sinter fines (around 58% of iron) at Companhia Docas de Santana ("CDSA") in record time (60 hours), which it said bodes well for DEV's plan to increase the frequency of shipping from CDSA over the coming months.
DEV worked alongside Indo Sino Pte and Cadence to carry out a competitive bid process for the cargo. The company told investors that the buyer is one of the world's largest globally diversified natural resource companies and a major producer and marketer of commodities.
The Group said the shipment was approved via a court petition, thereby allowing DEV to export sufficient iron ore to realise a US$10 million profit. As part of the Approved Court Petition, DEV undertook that it would pay certain outstanding claims from former employees and small creditors from the net profit of the sale of the iron ore stockpile.
DEV has now transferred R$7.5m to the judicial deposit account, representing some three-quarters of the amounts owed. Once fully paid, this will mark the completion of a crucial step in the Judicial Restructuring Plan ("JRP") approved by the creditors in August 2019.
Cadence said operations continue to progress in regard to the recommissioning of the Amapa Project with key personnel having been engaged, including a new head of shipping operations responsible for the efficient and safe movement of the iron ore shipments.
As part of the process for reinstating critical concessions and operational licenses, the group outlined that its current focus is on the reinstatement of DEV's private port concession.
DEV, IndoSino and Cadence have engaged with the relevant authorities, highlighting the macroeconomics and the local and regional importance of Amapa. To date, feedback has been positive, and it intends to update the market once further progress has been made.
Cadence also highlighted to investors that essential maintenance and security of the mine tailings dam continues, with cost-effective and incremental improvements ongoing. It said it expects this process to accelerate, along with the commencement of the plant engineering and conditioning study, which it said is ‘an outstanding part of the scoping study’ on Amapa.
As part of providing reliable iron ore stockpile data, SGS Brasil has been engaged to carry out a re-assay of DEV's iron ore stockpiles. The company noted that this will allow DEV to confidently market the material, and reconcile any variations to historic assays results.
Cadence’s CEO Kiran Morzaria said, "We are pleased and proud that the sale and shipment of the second batch of iron ore from Amapa has completed so quickly. That the customer is once again one of the world's largest globally diversified natural resource companies is a clear signal that Amapa is very much back in business, with keen demand for its product."
“Although in line with the Approved Petition, it is nonetheless immensely gratifying to see a substantial amount of Amapa's outstanding debts to former employees and creditors settled with the shipment sale profits, marking a small step along the road to improving prospects for employment and economic activity in the region,” added Morzaria.
View from Vox
Cadence announced the first iron ore sale and shipment from Amapa since 2015 last month.
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 sale from the 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 almost doubled in value since the beginning of 2021. The stock was trading 7.28% higher this morning at 29.23p following the announcement.
Reasons to KDNC
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.
Follow News & Updates from here:
Disclaimer & Declaration of Interest
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.