Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to announce that a maiden Ore Reserves has been declared on Cadence’s 30% joint venture ground at the Yangibana Rare Earth Project in the Gascoyne region of Western Australia (“Yangibana Project”). The total Probable Ore Reserves on our joint venture are 2.07 million tonnes (“Mt”) at 1.66% Total Rare Earths (“TREO”) including 0.43%neodymium oxide (“Nd2O3”) and praseodymium oxide (”Pr6O11.“).
- Probable Ore Reserves on entire Yangibana Project increase 34% to 10.35 million tonnesat 1.22%TREO including 0.43%Nd2O3+Pr6O11
- Updated Ore Reserve extends mine life by 3 years, supporting a +10-year operational life for the Project
- Updated Ore Reserve increases Yangibana Project NPV to AUD516Mconfirming outstanding project economics
- Includes the first Ore Reserves from joint venture ground
The Yangibana Project hosts rare earths deposits rich in neodymium and praseodymium, elements vital to permanent magnets that provide many critical components of wide ranging high-tech products, including electric vehicles, renewable energy wind turbines, robotics, medical applications and others. The Yangibana Project aims to be the next significant producer of neodymium and praseodymium outside of China.
Probable Ore Reserves
These joint venture Ore Reserves are contained within the Yangibana (M09/163) and Yangibana North (M09/159) tenemants and and form part of the larger Yangibana Project which contains Ore Reserves of 10.35 Mt at 1.22%TREO including 0.43 %Nd2O3+Pr6O11.
The Probable Ore Reserves were based on the Pre-Feasibility level study (“PFS”) information and recent geological, geotechnical, metallurgical and environmental work. Independent consultants Snowden Mining Industry Consultants (Snowden) has completed an updated mining reserve estimate based on Measured and Indicated Mineral Resources at each of Bald Hill, Fraser’s, Auer, Auer North, Yangibana, Yangibana West and Yangibana North deposits. This mining reserve estimate used Whittle pit optimisation software to maximise ore recovery using conventional drill and blast, load and haul mining methods.
The Probable Ore Reserves quoted in this document are derived from Measured and Indicated Resources as reported in our joint venture partners (“Hastings”) ASX announcement titled “Increase in Measured and Indicated Resources at Yangibana Project” dated 22nd November 2018.
The Probable Ore Reserves contained within 30% owned joint venture tenements are as shown in Table 1.
Table 1 – Yangibana Project – Probable Ore Reserves Within Tenements Held 30% by Cadence, December 2018
|Deposit||Tonnes||%TREO||%Nd2O3+Pr6O11||Nd2O3+Pr6O11 as a percent of TREO|
Full details of the derivation of these Ore Reserves, inclusive of Mineral Resources, Cut-Off Parameters, mining factor, metallurgical factors and assumptions, environmental and social factors can be found in the full ASX release by Hastings here:
The current Ore Reserve Statement has ore reserve estimates resulting from the design of several open pits that will produce mixed rare earth carbonates (“MREC”) over the current life of the project.
Capital and Operating costs are derived by independent third-party industry recognised specialists. The current Capex of $335M remains unchanged from the previous 2017 DFS. Operating costs reflect the mining and infrastructure setup costs of all pits within the mining schedule. Processing operating costs remain unchanged from the previous 2017 DFS study.
Additionally, over the life of the project a $17M allowance has been made in the operating cost for miscellaneous mining items for all the open pits within the mining schedule.
Current production targets on an annualised basis are to produce up to 15,000 tpa of MREC. The MREC will contain up to 8,850 tpa Total Rare Earths Oxides, of which up to 3,400 tpa will be neodymium oxide and praseodymium oxide. The mining schedule indicates the commencement of mining from the joint venture areas beginning in year 6 (2026) of with the large majority of the mined ore being derived from Yangibana North (M09/159) from year 8 onwards.
The PFS financial model assumes an average long-term US$/A$ exchange rate of 0.71 and uses Adamas Intelligence price forecasts for rare earths prices in 2021. Financial evaluation of the Probable Ore Reserves in the PFS results in the economic outcome shown in Table 2.
Table 2 – Yangibana Project – PFS Financial Evaluation Results
|Operating Life||12 years|
|Net Present Value (NPV)||A$516 M|
|Internal Rate of Return (IRR)||32.0%|
|Payback Period||2.7 years|
The economic model assumes that Cadence’s wholly owned subsidiary Mojito Resources will participate in the development of the deposits held by Hastings (70%) in joint venture with Mojito Resources (30%) under the ‘Yangibana Joint Venture Agreement’. The specific deposits to which the joint venture applies are Yangibana and Yangibana North.
If there is a mine development by the joint venture, not only will there need to be a Mining Joint Venture Agreement agreed and put in place to replace the existing joint venture documentation and regulate the arrangements between the participants for the mine development, but arrangements will also need to be established to determine how the Yangibana production and tenements the subject of the joint venture fit with the broader 100% Hastings group owned production and tenements.
No costs or revenue ascribed to the 30% interest in the deposits held by Mojito Resources are reported in the financial modelling. If Mojito Resources did not participate in any development of the joint venture deposits and the development of those deposits was to proceed on a 100% basis by Hastings, then the economic model would need to be updated to allocate those costs and revenues to Hastings.
The estimates in this study relating to mining, processing and cost performance are underpinned by an updated PFS which has a confidence range of ±25%.
Details of Ownership
On 1 December 2011, Cadence announced that it had acquired a 30% free carried interest to Bankable Feasibility Study of the Yangibana North Rare Earth Deposit. The exploration costs until the commencement of the BFS are therefore borne solely by Hastings (70% owners and operator). The same terms agreed and announced on 1 December 2012 also apply to Gossan, Hook, Kanes Gossan, Lions Ear and Bald Hill North.
Cadence Minerals CEO Kiran Morzaria commented: “It is great to see the inclusion of Cadence’s joint venture ground within the mine plan of the Yangibana Project, and we look forward to working with Hastings Technology Metals to progress the Mining Joint Venture and crystalise value to Cadence’s shareholders.”
“The Yangibana Project has high grades in neodymium and praseodymium, which are critical in the manufacture of permanent magnets used in the motors of electric vehicles. In 2017, 75% of the rare earth market by value was represented by neodymium and praseodymium, and we see Yangibana as an important part of that supply chain.
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For further information:
|Cadence Minerals plc||+44 (0) 207 440 0647|
|WH Ireland Limited (NOMAD & Broker)||+44 (0) 207 220 1666|
|Hannam & Partners LLP (Joint Broker)||+44 (0) 207 907 8500|
|Novum Securities Limited (Joint Broker)||+44 (0) 207 399 9400|
Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the information contained in this announcement. Kiran holds a Bachelor of Engineering (Industrial Geology) from the Camborne School of Mines and an MBA (Finance) from CASS Business School.
Certain statements in this announcement are or may be deemed to be forward-lookingstatements. Forward-lookingstatements are identiﬁed by their use of terms and phrases such as ‘‘believe’’ ‘‘could’’ “should” ‘‘envisage’’ ‘‘estimate’’ ‘‘intend’’ ‘‘may’’ ‘‘plan’’ ‘‘will’’ or the negative of those variations or comparable expressions including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors’ current expectations and assumptions regarding the Company’s future growth results of operations performance future capital and other expenditures (including the amount. nature and sources of funding thereof) competitive advantages business prospects and opportunities. Such forward-lookingstatements reﬂect the Directors’ current beliefs and assumptions and are based on information currently available to the Directors. Many factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions competition environmental and other regulatory changes actions by governmental authorities the availability of capital markets reliance on keypersonnel uninsured and underinsured losses and other factors many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions.The Company cannot assure investors that actual results will be consistent with such forward-lookingstatements.