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#KDNC Cadence Minerals – Cadence Minerals’ lithium asset upgrade after Cinovec’s ‘outstanding results’

Cadence Minerals have enjoyed a dramatic improvement in the quality of their lithium investments after ‘outstanding’ results from the Cinovec mine in the Czech Republic.

The Cinovec mine is operated by European Metal Holdings which has a 49% in the mine. Cadence Minerals holds 8.7% of the equity in European Metal Holdings.

In an announcement made this week, the Cinovec asset received significant upgrades to the resources that included revisions higher to the annual output and the impact of higher lithium prices.

The most recent feasibility study found it is possible to amend the mining process to incorporate the use of paste backfill which will be instrumental in increasing the mines output by 16%.

As a consequence, the Cinovec mine’s expected output has been increased from 25,267 tpa to 29,386 tpa.

The combination of rising lithium prices and the increased production means the projects NPV8 (post tax) increases from $1.108B to $1.938B. This is based on lithium prices of $17,000 which is significantly below the current market price.

“An increased mine life and a resource upgrade that takes the NPV8 from USD1.1bn to USD1.94bn adds substantial value to Cinovec’s already exceptional potential as a future battery grade lithium supply hub for Europe and the rest of the world,” said Cadence CEO Kiran Morzaria.

“Cadence are pleased to remain shareholders and supporters of EMH, and we look forward to further developments.”

The news has seen European Metal Holdings share soar this week to trade at 81p.

Cadence Minerals owns approximately 8.7% of European Metal Holdings following a placing conducted by European Metal Holdings to raise A$14.4 million.

Cadence Minerals stake is worth circa £12.4m with European Metal Holdings shares trading at 81p.

To put this in to context, Cadence Minerals entire market cap is £41m so the market is effectively currently attributing a value of just £28.5m to the rest of Cadence’s assets.

Cadence Minerals Portfolio

Although the latest developments at Cinovec adds tremendous value to a publicly-traded holding of Cadence’s portfolio, their flagship project is the Amapa Iron Ore project which has targets to produce $725 million iron ore per annum.

Cadence Minerals has additional exposure to lithium at the Sonora mine operated by Bacanora Minerals, as well as interest in Northern and Western Australia.

Cadence also has a 30% interest in the Yangibana Rare Earths project operated by Hastings Technology Metal in Western Australia.

 

Read the article on UK Investor Magazine

Cadence Minerals #KDNC – European Metals #EMH Cinovec PFS Update Delivers Outstanding Results.

Cadence Minerals (AIM/AQX: KDNC; OTC: KDNCY) is pleased to note that European Metals Holdings Limited (“European Metals” “EMH”) has announced the results of the mining update to the 2019 Pre-Feasibility Study (2022 PFS Update), led by mining definitive feasibility study (DFS) consultant Bara Consulting, on the backfilling potential of the Cinovec mine, in which it has a 49% economic interest, in the Czech Republic.

Highlights

  • The 2019 PFS Update for the Cinovec Project has been updated to demonstrate the effect of changes in the mining process to incorporate the use of paste backfill, which results in an increase in annual production, together with changes in lithium and by-product prices to reflect current and expected market conditions.
  • Annual production of battery grade lithium hydroxide monohydrate modelled to increase from 25,267 tpa to 29,386 tpa, an increase of 16%.
  • NPV8 (post tax) increases from US$1.108B to US$1.938B, an increase of 74.9%, based upon a lithium hydroxide price of USD17,000 per tonne which is significantly less than the current price.
  • NPV8 (post tax) increases to over USD 3.09B with a 30% increase in the lithium hydroxide price.
  • Post tax IRR of 36.3% and a payback period of 2.5 years from the commencement of production.
  • Up-front capital cost due to backfilling plant and additional capital costs to produce 29,386 tpa lithium hydroxide increased to US$644m.
  • This 2022 PFS Update assumes the life of mine extraction of 13.1% of the Measured and Indicated JORC Resources at Cinovec.
  • Use of tailings for backfill will result in a far smaller environmental impact, further enhancing the Project’s already strong ESG credentials.

The study updates the outcomes of the previously updated pre-feasibility study announced on 17 June 2019 (2019 PFS Update), for changes in the mining process as well as an increase in annual production and changes in lithium and by-product prices.

As a result of the conclusions of the study, Geomet s.r.o. (Geomet) has changed the planned mining method for the Cinovec orebody from open stoping to longhole stoping with backfill using paste backfill. This change, together with other changes to the material assumptions outlined in this update, increases the Cinovec mine’s proposed ore extraction from 34.5mt up to 54.5mt, enabling an increase in the annual processing rate by approximately 33% per annum over the previous 21-year life of mine, from 1.69mtpa to 2.25mtpa over a now 25-year life of mine.

Link here for the full EMH announcement: https://www.londonstockexchange.com/news-article/EMH/pfs-update-delivers-outstanding-results/15293716

European Metals Executive Chairman Keith Coughlan commented; I am very pleased to report to shareholders on the completion of this 2022 PFS Update for the Cinovec Project which adds significantly to the already robust forecast economics for the project. The results of the study are very positive for the overall economics, resulting in a far greater amount of the ore resource being utilised for production of lithium and increasing the after tax NPV8 from USD1.1B to USD1.94B. The increased NPV assumes a long-term price for lithium hydroxide of US$17,000 per tonne. An increase in the lithium hydroxide price to USD 22,100 would increase the NPV8 (post tax) to over USD 3BN. Given the current price of lithium hydroxide is in the vicinity of USD 40,000 per tonne it is clear that that the Cinovec Project will be critical to European battery self-sufficiency.

“The use of approximately 54% of the plant tailings for backfill will result in a far smaller environmental impact, with much smaller dry stack tailings storage required, further enhancing the already strong ESG credentials of the Project.

“The significant increase in lithium produced will further add to the supply security of the European battery industry. Importantly, even at this increased production rate, the resource is nowhere near fully utilised – paving the way for future assessment of further production increases.

“Cinovec is strategically located in central Europe, in close proximity to the continent’s vehicle manufacturers. With increasing demand for electric vehicles and the expected demands of grid storage capacity, the project is very well placed to supply the European lithium market for many decades.”

Cadence CEO Kiran Morzaria added; “Our congratulations to Keith Coughlan and the European Metals team on an outstanding result at Cinovec. An increased mine life and a resource upgrade that takes the NPV8 from USD1.1bn to USD1.94bn adds substantial value to Cinovec’s already exceptional potential as a future battery grade lithium supply hub for Europe and the rest of the world.”

“Cadence are pleased to remain shareholders and supporters of EMH, and we look forward to further developments.”

Cadence Minerals Holding in EMH following placing

In a separate announcement today, EMH stated that it had conducted a Placement at A$1.40 per CDI to raise approximately A$14.4 million. The Placement issue price represents a 0.7% premium to the Company’s last traded price on 18 January 2022 (A$1.39). Following the placing, Cadence holds approximately 8.7% percent of the equity in European Metals, which, through its wholly owned Subsidiary, Geomet s.r.o. (“Geomet”), controls the mineral exploration licenses awarded by the Czech State over Cinovec.

Link here for the full EMH placing announcement:  https://www.londonstockexchange.com/news-article/EMH/successful-placing-to-raise-aud14-4m/15293733

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For further information:

Cadence Minerals plc +44 (0) 7879 584153
Andrew Suckling
Kiran Morzaria
WH Ireland Limited (NOMAD & Broker) +44 (0) 207 220 1666
James Joyce
Darshan Patel
Novum Securities Limited (Joint Broker) +44 (0) 207 399 9400
Jon Belliss

 

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.

Forward-Looking Statements:

Certain statements in this announcement are or may be deemed to be forward-looking statements. 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 key 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 actual results will be consistent with such forward-lookingstatements.

Cadence Minerals #KDNC – Project Updates, Corporate Update and Company Presentation and Q&A

Cadence Minerals (AIM/AQX: KDNC; OTC: KDNCY) is pleased to provide a series of project updates, and details of a new presentation and Q&A session.

Amapa Project

On 29 December 2021, Cadence announced the execution of the binding settlement agreement with the secured bank creditors, which allows us to vest our 20% interest in the large-scale Amapa iron ore mine, beneficiation plant, railway and private port (“Amapa Project”, “Amapa”).

We are pleased to announce that the completion and filing of the required contractual and regulatory documentation is proceeding as planned and we currently expect to finalise this in the first two weeks of next month.

Cadence has already begun work on the next investment phase to earn an additional 7% of Amapa for US$3.5 million. These funds will be primarily used to progress the pre-feasibility studies on the asset.

The pre-feasibility study (“PFS”) is progressing as expected, with the consulting engineers for the mine operations, ore reserve estimation, metallurgy, processing and shipping identified and in the process of being appointed. The rail logistic study has been completed in draft form, and is being reviewed.

In addition, to supplement the technical team at the Amapa, Tony Cau has been appointed as the pre-feasibility project director. Tony is a Civil Engineer with 40 years of global experience in the metals processing and engineering industry. Tony has worked for internationally recognised consulting and operational firms, including SNC-Lavalin, Bateman Engineering, BHP Billiton and Ausenco.

Litchfield and Picasso Projects

On 29 September 2021, Cadence announced that Castillo Copper (ASX/LON: CCZ) (“Castillo”) had entered into a 90-day option agreement with Lithium Technologies Pty Ltd (“LT”) and Lithium Supplies Pty Ltd (“LS”) in which Cadence owns a 31% shareholding, to acquire the Litchfield and Picasso Lithium Projects in the Northern Territory (NT) and Western Australia (WA) respectively.

LT and LS have informed us that the board of CCZ and LT & LS have mutually agreed to unwind the Option Agreement. As part of the break agreement terms, the A$50,000 deposit has been returned to CCZ.

Cadence CEO, Kiran Morzaria, commented: “On behalf of the board, I am pleased to advise shareholders that the filing of the contractual and regulatory documentation pertaining to the Amapa bank settlement agreement is proceeding as planned. Work has already started on the next investment phase to take Cadence up to 27% ownership of Amapa.

“I would also like to take this opportunity to welcome Tony Cau to the Amapa Project. Tony’s experience will be invaluable to us as Amapa undergoes recommissioning, and he joins the asset at an exciting phase of its development.”

“In regard to the Litchfield and Picasso option with Castillo, given the recent increases in lithium compound pricing to over US$40,000 per tonne of battery grade lithium carbonate, and the pending analysis of the assay results, we see the unwinding of this option agreement as an opportunity for Cadence to extract a higher valuation for these prospective assets”

Presentation and Q&A Session

Further to the announcement on the 5 January 2020, the online presentation and Q&A session is available here.

In addition, an updated PowerPoint presentation is available on the Company’ website, https://www.cadenceminerals.com/

Share Incentive Vesting

On the 2 November 2020, the Company announced that, under the share incentive plan established in September 2014, it had conditionally granted up to 240,000 Ordinary Shares to each of the directors. These share awards were conditional on meeting performance conditions during the award period (“2021 SIP Awards”). 2021 SIP Awards would be transferred from the Employee Benefit Trust (“EBT”), with no New Ordinary Shares being issued to satisfy the 2021 SIP Awards.

The award period ran from November 2020 to December 2021 (“Award Period”). The 2021 SIP Awards were subject to the board achieving performance conditions which were in line with market practice. One of the conditions was met by the end of 2021 entitling each director to be awarded 80,000 shares from EBT. With this award two of the three performance conditions were met during the period and no further awards will be made in relation 2021 SIP Awards. Once the shares have been transferred from the EBT to the board the Company will make a Director / PDMR disclosure.

 

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For further information:

Cadence Minerals plc

                                                   +44 (0) 7879 584153

Andrew Suckling

Kiran Morzaria

WH Ireland Limited (NOMAD & Broker)

                                +44 (0) 207 220 1666

James Joyce

Darshan Patel

Novum Securities Limited (Joint Broker)

                                +44 (0) 207 399 9400

Jon Belliss

 

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.

 

Forward-Looking Statements:

Certain statements in this announcement are or may be deemed to be forward-looking statements. 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 Cadence Minerals Plc’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 key personnel uninsured and underinsured losses and other factors many of which are beyond the control of Cadence Minerals Plc. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. Cadence Minerals Plc cannot assure investors that actual results will be consistent with such forward-looking statements.

Cadence Minerals #KDNC – Questions for Investor Q&A Session

Cadence Minerals (AIM/AQX: KDNC; OTC: KDNCY) is pleased to announce that CEO Kiran Morzaria will be recording an investor presentation and Q&A with Vox Markets, which will be released on Friday January 14th 2022.

Shareholders and investors are invited to submit their questions to Katrina Perez at Vox Markets via her email at kperez@voxmarkets.co.uk.

The questions should arrive no later than 6pm on Tuesday 11th January 2022. Any that arrive after the deadline will not be included in the Q&A.

 

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For further information:

Cadence Minerals plc                                                    +44 (0) 7879 584153
Andrew Suckling
Kiran Morzaria
WH Ireland Limited (NOMAD & Broker)                                 +44 (0) 207 220 1666
James Joyce
Darshan Patel
Novum Securities Limited (Joint Broker)                                 +44 (0) 207 399 9400
Jon Belliss

 

 

Forward-Looking Statements:

Certain statements in this announcement are or may be deemed to be forward-looking statements. 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 Cadence Minerals Plc’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 key personnel uninsured and underinsured losses and other factors many of which are beyond the control of Cadence Minerals Plc. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. Cadence Minerals Plc cannot assure investors that actual results will be consistent with such forward-looking statements.

Daily Mail – Justin Urquhart Stewart: Co-founder, Seven Investment Management tips Cadence Minerals at 28p

From the Daily Mail. Share picks for the cautious and the brave for 2022: As investors eye an anwkward year ahead, we ask three experts for their stock ideas.

For the brave: Cadence Minerals (28p) 

This is a riskier investment as it is not just a corporate story but involves politics as well. Cadence (formerly known as Rare Earth Minerals) is not a mining company but bears more resemblance to an investment trust made up of rare earth mining companies.

Rare earth minerals are in high demand but are often difficult to extract. Sometimes this is due to geology, but more often because of geography. Often they are from developing nations with poor infrastructure alongside an unreliable political backdrop.

The largest deposits are in China, and having your investments reliant upon the Communist party there may not be the best position for your portfolio. Cadence reduces risk by giving you a basket of rare earth mining companies and most of its assets are outside the direct clutches of the Chinese authorities directly.

One is in the Czech Republic, where Cadence has a significant holding in a lithium mine. This is a longer-term investment. Success will come if the portfolio companies show their mines are money makers and not just money pits.

Link here to view online

Vox Markets – Cadence CEO Kiran Morzaria discusses a big milestone achievement at the Amapa Iron Ore Project

Kiran Morzaria, CEO of Cadence Minerals #KDNC discusses a big milestone achievement at the Amapa Iron Ore Project

He talks about the execution of the settlement agreement and vesting of Cadence Minerals’ initial $2.5m for 20% of the Amapa Iron Ore Project.

UK Investor Magazine – Cadence Minerals: A Small Company making a Big Difference in Amapa, Brazil

From UK Investor Magazine

By Alan Green

On December 29, Cadence Minerals (AIM: KDNC), a mining investment company listed in London, announced that it had completed all the preconditions to invest into and acquire an initial 20% of the integrated Amapa iron mine, railway and port in North Eastern Brazil.

When we talked to Cadence CEO, Kiran Morzaria, via zoom on Christmas Eve just after the settlement agreement had been signed, he was understandably in good spirits.  His home office is dominated by two framed pictures, one of the head gear at a mine and the second of the three miners drilling a narrow-vein ore body. Kiran relates that these pictures are from a mine that he helped restart and rehabilitate in 2008, and which remains in production, further extending its 100-year history. Morzaria relates the story:

“These images remind me of two key things; the first is that the right asset, proper jurisdiction, and right people make all the difference. The second is that however hard I am working here, there others working in far tougher conditions, so the least I can do is put in that extra mile and ensure we can move the asset forward for all our stakeholders.”

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There is no doubt that the team involved in the Amapa transaction have put in the hard yards. The process started back in September 2018, when Cadence partnered with commodity trading firm Indo Sino to form a joint venture. Cadence and Indo Sino then engaged with thelocal authorities and commercial courts to acquire Amapa mine owner in administration, DEV Mineração S.A.

A plan was put forward by Cadence to bring the former Anglo American owned Amapa mine,railway and wholly owned port at Santana (complete with 1.39 Mt of iron ore in three stockpiles) out of administration and ultimately back into production. Naturally the process came with some unique challenges. Morzaria explains:

“The judicial restructuring plan was a tough process. Not only did it set some key legal precedents, it also faced challenges from competing investors. This delayed the creditors meeting by one week, and yet despite this, we got over 90% of the creditors, by value to approve our restructuring plan.”

The history of the Amapa iron ore mine goes back to its discovery and ownership by a Brazilian conglomerate, which it then packaged with the massive 6 billion tonne Minas-Rio iron ore deposit and sold on to Anglo American for US$5.5 billion. For Anglo, Amapa was a relatively small transaction, and was certainly not part of the company’s long term strategic focus and plan. As a result, Amapa was sold to Brazilian company Zamin Ferrous in 2013, but during the finalisation of this sale, the company’s wholly owned port suffered a landslide which curtailed exports. Zamin Ferrous then negotiated a lower price, but the absence of a port prevented any meaningful product export and consequently DEV went into administration.

Before its sale in 2013, Anglo American valued its 70% stake in Amapá at US$866 million (100% US$1.2 billion). Anglo impaired the asset in its 2012 Annual Accounts to US$462 million (100% US$660 million).

Given its history, to most smaller listed companies, the challenge of bringing Amapa back to life would in most cases have represented a bridge too far. However, Cadence saw an opportunity, as outlined by Morzaria:

“Once we understood the legal process in Brazil, we saw an opportunity for significant upside for our shareholders. The not inconsiderable technical and existential risks typically associated with developing a mineral resource asset were largely mitigated. The mineral resource was auditable, the mining and processing technology are established, the product mix is well known, and there is a well-trodden path to obtain the required operating licenses, with several key licenses being granted before our investment.”

“Moreover, and critically, although the asset is not a large one in terms of global production, it is very significant for the state of Amapa. Our estimates suggest that once we reach our production targets, it will represent some 3.5% of the state GDP and could contribute some 4,200 jobs to the local and national economy. These facts helped to focus support at local and governmental levels and ensured our efforts didn’t become ensnared in in red tape. A government working committee has also been set up to work with us to troubleshoot any critical issues along our path to production.”

The investment proposition to bring Amapa out of administration sees Cadence acquire a 27% interest by investing US$6 million over two stages in the JV company. The first stage is for20% of the JV, the consideration for which is US$2.5 million. The second stage of investment is for a further 7% of the JV for a consideration of US$3.5million. The funds for the first stage of investment are currently held in a judicial trust account of the commercial court of Sao Paulo.The agreement also gives Cadence a first right of refusal to increase its stake to 49%.

As the various pre-conditions set out by the commercial court of Sao Paulo were met, in 2020, DEV received permission to start shipping the iron ore stockpiled at Santana port, which immediately started generating cash. By the end of August 2021, DEV had shipped three cargoes of approximately 143,000 wet tonnes of iron ore. The net proceeds from shipment went to pay labour and small creditors, while also providing funds to invest into the recommissioning of the assets, the upgrading of the Mineral Resource Estimate and commencement of the pre-feasibility Study.

Move forward to December 2021, and with  the preconditions set out by the courts met and satisfied, the final hurdle was to agree a settlement with the banks – no easy task giventhat the team were negotiating with different state owned and private banks, in two jurisdictions, with varying degrees of organizational complexity and internal compliance hurdles. Nonetheless,with Credit Committee approval announced in October 2021, the final settlement with the banks was agreed and signed in December, triggering the initial US $2.5 million investment and a 20% stake for Cadence in the Amapa project.

The final settlement is a remarkable achievement by any standards: in combination with the other unsecured creditors the settlement terms meant that DEV was now only paying 45 cents in the dollar.

After the completion of the feasibility study and project financing, the rehabilitation of the mine,railway and port is expected to take between one and half to two years, following which the mine plans to produce over 5 million tonnes of 65% iron ore. From an investor and shareholder perspective, the financials really highlight and put into perspective what Cadence has achieved here. Assuming that the targets are hit and a current 65% iron ore price (US$ 145 / tonne in Dec 2021) is achieved, gross revenues could be circa US$725 million per annum. With solid demand for iron ore showing little sign of slowing as we go into 2022, quite rightly Cadence shares should see a re rating as investors run the slide rule over the Amapa numbers.

While there is no doubt Amapa is a landmark achievement, the rest of the Cadence portfolio also continues to deliver impressive returns. Cornerstone stakes in projects such as the Cinovec Lithium and Tin Project via AIM listed European Metals Holdings (AIM: EMH) in the Czech republic generated a £3.54 million return in the first 6 months of the year, with pre- tax profits of £2.84 million.

In particular, Cinovec, owned by European Metals Holdings and Eastern European utility giant CEZ is set to become a major European and Global lithium supply hub to meet the boom in batteries and electric vehicles, with demand anticipated to grow exponentially in the coming years.

Cadence also has a range of other ‘passive’ investments, including several ASX listed lithium assets, plus joint ventures at the Yangibana Rare Earths project in Australia, the Sonora Lithium project in Mexico and a hard rock lithium exploration assets 2 km away from Core Lithium’s (ASX:CXO) mining projects in the Northern territories of Australia.

Despite this exceptionally impressive asset portfolio, along with other micro-cap investors and explorers, the sector malaise has seen Cadence shares drift during the second half of 2021, currently rating the company on a modest £32m market cap.

Nonetheless CEO Morzaria remains enthused by the opportunities he expects to materialise in 2022.

“Our shareholders have stuck with us over what has been a hugely frustrating period”

“The completion of the first phase at Amapa marks a huge achievement for everyone involved, and we are really excited about the possibilities in Brazil in 2022” 

A recent visit to Amapá left a deep impression on Morzaria, who reported back to the markets in a live interview from the port at Santana.

“I was delighted to see the rapid progress on the ground, driven by a highly motivated local management team and staff. The rate of reconstruction and recommissioning work already completed gives our board huge confidence in what can be achieved next year.”

There is no doubt that bringing Amapá back to life has in cycling parlance represented a Tour de Brazil equivalent for Cadence. Regardless, Morzaria and his team have now completed the mountain section, and with several stage victories, look set for a great team result as they transition from micro-cap explorer and investor to mid-tier iron ore producer. Solid Cadence!

Cadence Minerals #KDNC – Execution of Settlement Agreement and Vesting of Initial US$2.5m for 20% of the Amapa Iron Ore Project

Cadence Minerals (AIM/AQX: KDNC; OTC: KDNCY) is pleased to announce that it has entered into a binding settlement agreement (“Settlement Agreement”) with the secured bank creditors of DEV Mineração S.A. (“DEV”), the owner of the Amapa iron ore project in Brazil.

The execution of the Settlement Agreement represents the last major precondition for Cadence to vest its initial US$2.5m for 20% of the large-scale Amapa iron ore mine, beneficiation plant, railway and private port (“Amapa Project”, “Amapa”) . Anglo American, a previous owner  had  valued its 70% stake in the Amapa Project in [date]at US$ 866 million (100% US$ 1.2 billion). It impaired the asset in its 2012 Annual Accounts to US$ 462 million (100% US$ 660 million).

Highlights:

  • Execution of the Settlement Agreement with the Secured Bank Creditors of the Amapa Project allows Cadence’s (20%) and Indo Sino’s (80%) joint venture to secure 100% ownership of the Amapa Project.
  • The restructuring of the secured and unsecured creditors achieved by this Settlement Agreement and the Judicial Restructuring Process (“JRP”) has more than halved registered creditors balances.
  • Cadence has already commenced its next stage of investment in the Amapa Project to increase its stake to 27%.
  • Pre-feasibilty studies are ongoing on the project

Next Steps

The parties to the agreement are now completing and filing the required contractual and regulatory documentation which will crystallise the Cadence and Indo Sino Trade Pte. Ltd. (“Indo Sino”) joint venture company’s 100% ownership of DEV and the Amapa Project.

Cadence has already begun work on the next investment phase to earn an additional 7% of Amapa for US$3.5 million. These funds will be primarily used to progress the pre-feasibility studies on the asset.

Details of the Settlement Agreement

Cadence alongside Indo Sino entered into a Settlement Agreement with DEV and the Secured Bank Creditors on 24 December 2021.

The original credit facility provided to DEV has a principle amount outstanding of US$135 million (“Credit Facility”). The Settlement Agreement settles all of the principle amount plus all interest, default interest, outstanding costs and fees (“Settlement Amount”). The Credit Facility is secured over all of DEV’s equity and assets.

As a result of the Settlement Agreement and the JRP approved in August 2019, the total principle amounts owed to the secured and unsecured creditors in classes I to IV of DEV have been reduced from  approximately US$231 million to approximately US$103 million or approximately 45% of the original value.

The Settlement Amount will be paid over two years from the effective date of the Settlement Agreement, and It is to be be satisfied by the net profits from the sale of DEV’s iron ore stockpiles. As agreed in the JRP in August 2019 the unsecured creditors will be paid from DEV’s free cash flow over a period of nine years.

Under the Settlement Agreement, DEV remains the obligor with the Secured Creditors having no recourse of repayment of the Settlement Amount to either Cadence or Indo Sino. The Settlement Agreement will remain secured over all of DEV’s equity and assets.

Cadence CEO, Kiran Morzaria, commented: “When Cadence first announced Heads of Terms for Amapa back in May 2019, we knew that while a tremendous amount of work lay ahead, the investment and terms, if secured would represent our greatest achievement to date as a mining investment company.”

“That we are at this point today is entirely due to the team at Cadence, Indo Sino and DEV sharing a common vision and working together to achieve it. I am proud that together we have overcome some considerable challenges, including the impact of COVID on the Amapa region, to reach this moment.”

“We have already embarked on Phase 2, where Cadence will vest an additional US$3.5m to take our holding to 27%. Given the rate of progessthat I saw on visiting Amapa in October, I have every confidence that the day when our newly recommissioned mine re-commences production will come, at which point the nascent value in the project will be realised for the benefit of all our investors and shareholders.”

 

Cadence Non-Executive Chairman, Andrew Suckling, commented; “This is indeed a momentous day for Cadence, Indo Sino, DEV, the Government of Amapa, the legal teams and bank committees and administrators who have worked tirelessly, COVID notwithstanding, to finalise the final and perhaps the most lengthy part of the judicial restructuring plan agreed back in 2019.”

“I would also like to put on record my heartfelt thanks to everyone involved in making this happen, and in particular to Kiran and the team for realising what is an absolutely transformational transaction for Cadence and its shareholders.”

“Having achieved what we set out to do, the work really starts in earnest. Bringing Amapa back to life has created a raft of new opportunities for the region and its community, with improved prospects for employment, health and education. The opportunity is simply huge: Amapa was once owned Anglo American, and we fully intend to restore the mine and infrastructure to its former glory, and more besides given that we intend to produce a higher quality product mix. Even now, the value of this transaction is only starting to register with the markets, something I truly believe will change dramatically in the coming years.”

About the Amapa Project

The Amapa Project commenced operations in December 2007 with the first production of iron ore concentrate product of 712 kt in 2008.  In 2008 Anglo American (70%) and Cliffs (30%) acquired the Amapa Project in 2008 as part of a larger package of mining assets in Brazil.

Production steadily increased to 4.8 Mt and 6.1 Mt of iron ore concentrate product in 2011 and 2012.  During this period, Anglo American reported operating profits from its 70% ownership in the Amapa Project of US$ 120 million (100% US$ 171 million) and US$ 54 million (100% US$ 77 million). Before its sale in 2012, Anglo American valued its 70% stake in the Amapa Project at US$ 866 million (100% US$ 1.2 billion). It impaired the asset in its 2012 Annual Accounts to US$ 462 million (100% US$ 660 million.

DEV filed for judicial protection in August 2015 in Brazil, and mining ceased at the Amapa Project. A judicial order in early 2019 offered investors and creditors the opportunity to file a revised JRP. Cadence and Indo Sino filed a conditional JRP, which creditors approved in August 2019. Cadence, Indo Sino and DEV have continued to develop the Amapa Project and satisfy the conditions of the JRP.

Cadence updated the Mineral Resource Estimate on 2 November 2020, increasing the MRE by 21%. The current MRE contains an Mineral Resource of 176.7 million tonnes grading 39.7% Fe in the Indicated category and Mineral Resource of 8.7Mt at 36.9% in the Inferred category, both reported within an optimised pit shell and using a cut-off grade of 25% Fe.

Details of the Joint Venture Agreement

The agreement with our joint venture partner, Indo Sino Pty Ltd, is to invest in and acquire up to a 27% of a joint venture company Pedra Branca Alliance Pte. Ltd. (“JV Co”).  On Completion and registration of the Settlement Agreement the equity of DEV Mineração S.A. (“DEV”) will be transferred to the JV Co, at which point it will own 99.9% of the Amapa Project. Should Indo Sino seek further investors or an investment in the JV Co, the agreement also provides Cadence with a first right of refusal to increase its stake to 49% in the JV Co.

To acquire its 27% interest Cadence will invest US$ 6 million over two stages in JV Co. The first stage is for 20% of the JV Co the consideration for which is US$2.5 million. The second stage of investment is for a further 7% of JV Co for a consideration of US$3.5 million. If Cadence is unable to complete the second stage of the investment or not exercise its right of first refusal under the terms of the Agreement, Indo Sino will have a twelve-month option to buy the shares in JV Co held by Cadence for 1.5 (1 ½) times the price paid by Cadence for such shares.

Cadence’s investment was conditional on several material preconditions, which as of the date of this announcement have been satisfied. On completion of Cadence’s investment (not including the first right of refusal), our joint venture partner Indo Sino will own 73% of JV Co. The Agreement also contains security and default clauses which if triggered causes an upwards adjustment mechanism to allow Cadence to either receive cash from JV Co or receive additional shares in JV Co. In the latter case, Cadence’s shareholding in the JV Co will not go above 49.9%.

On completion of the US$ 6 million investment, Cadence will have the right to appoint two members to a five-member board, with the remaining three comprising of one member jointly appointed by Cadence and Indo Sino and two appointed by Indo Sino.

– Ends –

 

For further information:

Cadence Minerals plc                                                    +44 (0) 7879 584153
Andrew Suckling
Kiran Morzaria
WH Ireland Limited (NOMAD & Broker)                                 +44 (0) 207 220 1666
James Joyce
Darshan Patel
Novum Securities Limited (Joint Broker)                                 +44 (0) 207 399 9400
Jon Belliss

 

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.

Forward-Looking Statements:

Certain statements in this announcement are or may be deemed to be forward-looking statements. 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 Cadence Minerals Plc’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 key personnel uninsured and underinsured losses and other factors many of which are beyond the control of Cadence Minerals Plc. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. Cadence Minerals Plc cannot assure investors that actual results will be consistent with such forward-looking statements.

UK Investor Magazine – Top Stock Picks for 2022 with Alan Green

investor

 

Alan Green joins the UK Investor Magazine Podcast to deliver his top stock picks for 2022.

We touch briefly on the economic outlook for 2022 before delving into the companies Alan will be keeping a particularly close eye on next year.

Top picks for 2022:

Technology Minerals #TM1

Power Metal Resources #POW

Blue Star Capital #BLU

IQE #IQE

Poolbeg Pharma #POLB

Tertiary Minerals #TYM

Special Mentions:

Coinsilium #COIN

Cadence Minerals #KDNC

A number of these companies have been discussed in greater detail on the Podcast this year so do check back through for great insight on companies mentioned.

Top Stock Picks for 2022 with Alan Green

Podcast- Cadence Minerals #KDNC CEO Kiran Morzaria talks to UK Investor Magazine

Cadence Minerals #KDNC CEO Kiran Morzaria talks to UK Investor Magazine and covers:

– Group investment strategy

– Flagship Amapa Iron Ore project

– Cinovec #Lithium project

– Sonora Lithium project

– Yangibana #RareEarths project

Unlocking value in Lithium, Rare Earth and Iron Ore assets with Cadence Minerals

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