Home » Cadence Minerals (KDNC) » Cadence Minerals #KDNC – Updated PFS Level Economic Study Delivers an Increased Net Present Value of US$1.145 Billion

Cadence Minerals #KDNC – Updated PFS Level Economic Study Delivers an Increased Net Present Value of US$1.145 Billion

Cadence Minerals (AIM: KDNC) is pleased to announce the results from the updated economic study, the progress on the environmental applications and the ongoing development of the 67% ‘Green Iron’ processing flow sheet at the Amapá Ore Project (“Amapá”, “Project” or “Amapá Project”). Since the end of March 2024, Cadence’s total investment in the Amapá Project had increased by approximately US$0.7 million to approximately US$13.9 million, and consequently, the equity stake in the project now stands at 34.2%.


  • 20% increase of Post-tax Net Present Value (“NPV”) to US$1.14 billion at a discount rate of 10%, with profit after tax of US$3.14 billion over the Life of Mine (“LOM”).
  • 10% increase in average production after ramp-up to 5.82 million dry metric tonnes (“DMT”) per annum (“Mtpa”) of Fe concentrate, consisting of 4.81 Mtpa at 65.4% Fe and 1.01 Mtpa at 62% Fe concentrate.
  • A 6% decrease in Free on Board (“FOB”) C1 Cash Costs to US$33.5/dmt at the port of Santana. Cost and Freight (“CFR”) C1 Cash Costs US$62.2/dmt in China.
  • Improved Post-tax Internal Rate of Return from 34% to 42%.
  • The port’s environmental licensing is on schedule with the studies complete and the required reports being drafted, it is due to be submitted on schedule in the current quarter of this year.
  • Testing of the 67% Fe “Green Iron” flow sheet has commenced, and results are expected by the end of September 2024.
  • If successful, the 67% flow could increase the net operating profit of the Project, at full production, from approximately US$227 million to US$324 million per year.

Cadence CEO, Kiran Morzaria, commented: “On behalf of our Board, I am thrilled with the positive outcomes from the updated economic study at the Amapá Ore Project, along with further significant progress made at Amapá. The increased net present value of US$1.145 billion and the enhanced post-tax internal rate of return demonstrate substantial improvements to the Project’s already robust economics.

The ongoing development of the 67% ‘Green Iron’ processing flow sheet and the Project’s 100% renewable power source exemplify our commitment to propelling Amapa forward to meet the growing demand for low-carbon iron ore and steel, while at the same time demonstrating a potential 43% uplift in projected annual net operating profit.

We are optimistic about the potential of the Amapá Iron Ore Project and look forward to providing further updates on our progress in the future.”

Updated PFS-level economic study

In March this year, the Amapa Project announced the results of the optimisation study, which delivered material capital savings to the Project. Based on these results, the Amapa Project carried out an updated PFS-level economic study.

Updated Mining Schedule

As part of the optimisation study completed in March 2024, the engineering consultants identified higher availability at the processing plant, which increased the annual run-of-mine feed rate to the processing plant. As a result of this, it was necessary to re-examine the mining and other related engineering disciplines, and in particular, the mine schedule had to be recalculated to optimise the project’s NPV.

A life of mine production plan was scheduled using the Deswik.Blend® Scheduler Optimizer. The solids used in the mine scheduling were based on the final pit design, with an SMU (Selective Mining Unit) of 100 m x 200 m x 4 m. The life of mine schedule allows for 15 years of production with the current economic values and cut-off of 25% Fe.  The resultant life of mine strip ratio is approximately 0.4:1 (tonnes waste: tonnes ore) and an average ore mine delivered to the plant of 13  million metric tonnes per annum.

Project Financial Analysis

An updated PFS financial model, which included the updated mining schedule, lower capex, and lower operational costs, was developed to evaluate the project’s economics. All other aspects of the financial analysis remained the same as per the PFS published in January 2023, including the iron ore concentrate price. Which was a long-term average price for 62% iron ore concentrate of US$95/dmt and US$118.8/dmt for 65.4% iron ore concentrate, both quoted on a Cost and Freight (“CFR”) basis. As of 8 July 2024 the 62% iron ore concentrate price was US$108.75/dmt and 65% iron ore fines was US$129/dmt. Summary results from the financial model outputs are presented in the tables below, including financial analysis. The financial model considers 100% equity funding for the Project, although, in reality, the financing of the Project will be a mix of debt and equity. However, the existing obligations in terms of principal repayment and current interest liabilities payable have been included in the financial model. A summary of the key financial information is presented below, alongside the 2022 PFS data.

Table 1.1 Key Project Metrics (100% project basis)

Metric Unit 2022 PFS Data 2024 PFS Data
Total ore feed to the plant Mt (dry) 176.88 176.93
Life of Mine Years 16 15
Fe grade of ore feed to the plant % 39.34 39.34
Recovery % 76.27 76.27
62.0% iron ore concentrate production Mtpa 0.89 0.95
65.4% iron ore concentrate production Mtpa 4.23 4.51
C1 Cash Costs FOB * US$/dmt 35.53 33.50
C1 Cash Costs CFR ** US$/dmt 64.23 52.20
Pre-Production capital investment*** US$M 399 343
Sustaining capital investment over LOM**** US$M 245 245
Post-tax NPV (10%) US$M 949 1,145
Post-tax IRR % 34 42
Project payback Years 4 4
Total profit after tax (net operating profit) US$B 2.96 3.14
* Means operating cash costs, including mining, processing, geology, OHSE, rail, port and site G&A, divided by the tonnes of iron ore concentrate produced. It excludes royalties and is quoted on a FOB basis (excluding shipping to the customer).
** Means the same as C1 Cash Costs FOB; however, it includes shipping to the customer in China (CFR).
*** Includes direct tax credit rebate over 48 months
**** Includes both sustaining CAPEX and deferred capital expenditure, specifically, improvements to the railway and the installation of conveyor belt and mine site to rail load out

Table 1.2 FOB and CFR average cash cost per tonne of dry product over the LOM

Cash Cost Per Discipline PFS 2022 PFS 2024
US$/dmt US$/dmt
Mine 17.05 16.73
TSF 0.08 0.08
Beneficiation Plant, Road / Conveyor Transfer & Rail Loading 12.43 10.94
Rail Freight 2.43 2.43
Port 1.55 1.55
G & A (5% total cost) 1.99 1.77
FOB Cash Costs 35.53 33.50
Marine Logistics 28.70 28.70
CFR Cash Costs 64.23 62.20

Table 1.3 Summary of key financial information for the Project.

Item Over Life of Mine Unit 2022 PFS Data 2024 PFS Data
Gross revenue US$M 9,387 9,389
Freight (Maine Logistics) US$M (2,350) (2,351)
Net Revenue US$M 7,037 7,038
Operating costs US$M (2,910) (2,744)
Royalties and taxes (excluding income tax) US$M (373) (373)
EBITDA US$M 3,754 3,922
EBIT US$M 3,315 3,547
Net Taxes and Interest US$M (355) (390)
Net Operating Profit US$M 2,960 3,144
Initial, Sustaining capital costs & repayments US$M (727) (645)
Free Cash Flow US$M 2,672 2,874


Item Unit 2022 PFS Data 2024 PFS Data
LOM Years 16 15
Discount rate % 10 10
NPV US$M 949 1,145
IRR % 34 42
Project Payback Years 4 4


As announced in September 2023, Amapá Project Management had agreed with the Amapá State Environmental Agency (“SEMA”) to an expedited environmental process, given the Project had previously been granted all its Operational Licenses (“LO”).

SEMA is reviewing the application for the Installation License (“LI”) for the mine and railway, which were submitted in March 2024. The the LI application for the wholly-owned port are nearing completion, with the final reports due for submission in the current quarter. Our understanding from SEMA is that based on the current timeline, the LI will be granted by the end of 2024. The LI allows the rehabilitation and construction of the Amapá Project, and once this is completed, the LO is granted, and mining operations can commence.

67% ‘Green Iron’ Flowsheet

The Amapá Project Management team continues to develop the ‘green iron’ flowsheet. Part of the work entails carrying out a mineralogical and multi-elemental analysis of run-of-mine ore, concentrate, and tailings and testing the full circuit at a pilot-scale level.

To this end, the Project has completed a life-of-mine sampling programme, collecting approximately two tonnes of material, which was shipped to our independent consultant engineers in March. The samples were shipped and cleared Chinese customs in late June. The samples have been checked and reconciled, and flow sheet testing results are expected by the end of the current quarter.

Assuming the testing confirms the flow sheet, we will update the project economics to reflect the increased revenue and any capital expenditure changes and update the market with these figures.

Project Financing

In October 2023, Cadence announced a memorandum of understanding (“MOU”) to obtain debt financing for the Project. More information can be found in the announcement here. The MOU remains in place and our primary focus has been on securing the equity needed for the Project’s construction.

We have signed several non-disclosure agreements in this regard, and interested parties have been and will be conducting technical site visits as part of their due diligence. The Project will need to have the necessary equity and debt in place to start construction. We will inform the markets if any definite agreements are made. In the meantime, Cadence plans to fund ongoing work, including the advancement of the 67% flow sheet, licensing, maintenance of the tailings storage facility, and general working capital for the Project.

About the Amapá Project and Cadence Ownership

The Amapá Project is a brownfield integrated iron ore project in the Amapá State of Brazil. It has Mineral Resources of 276 million tonnes (Mt) at 38.33% Iron (Fe) and Ore Reserves of 196 Mt at 39.34%. The Project comprises the mine, processing plant, wholly owned port and a 194km railway.

Since the end of March 2024, Cadence’s total investment in the Amapá Project had increased by approximately US$0.7 million to approximately US$13.9 million, and consequently, the equity stake in the project now stands at 34.2%.

For further information contact:


Cadence Minerals plc +44 (0) 20 3582 6636
Andrew Suckling
Kiran Morzaria
WH Ireland Limited (NOMAD & Broker) +44 (0) 20 7220 1666
James Joyce
Darshan Patel

Isaac Hooper

Fortified Securities – Joint Broker +44 (0) 20 3411 7773
Guy Wheatley
Brand Communications +44 (0) 7976 431608
Public & Investor Relations               
Alan Green

Qualified Person

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.

Cautionary and Forward-Looking Statements

Certain statements in this announcement are or may be considered forward-looking. Forward-looking statements 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-looking statements 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 crucial personnel 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 results will be consistent with such forward-looking statements.

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