Cadence Minerals sees more iron ore exports permitted at Amapa
(KDNC ) announced to investors that it has been permitted to export a further $10 million of iron ore from its stockpiles at the group’s Amapa project in Brazil.
Today’s authority follows the first permission which was granted to DEV Mineração S.A. in February 2021, in which it was permitted to ship an initial $10m net of costs of iron ore.
At the time, Cadence explained to investors that the first portion of these net revenues would be used to pay historic small and employee creditors (~US$2.5m) after which around US$ 6m of the net revenues will be used to begin recommissioning studies on the Amapa Project and to start maintenance and monitoring of the current tailing dam facilities.
In August 2021, DEV is scheduled to complete its fourth and last shipment under the first permission. The four shipments of 58% beneficiated iron ore has netted around $10m to DEV.
The net profit from the sale of the iron ore will be used primarily for commissioning studies, capital projects and working capital. As per the First Permission, 10% of the net profits will be reserved for payment against the amounts owed to the secured bank lenders, said Cadence.
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 5.17% higher during late morning trading at 30.25 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.
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