Shares in Cadence Minerals jumped on Monday after announcing a landmark deal which will pave the way for the Company to vest an initial 20% in the Amapa Iron Ore Project.
In September 2020, DEV, Cadence and Indo Sino Pty agreed in principle to the settlement terms proposed by secured bank creditors. Cadence outlined that this would need to be executed to satisfy a remaining major precondition, thereby allowing it to make an investment.
Today’s approval assists in paving the way for Cadence to vest this initial 20% indirect interest in Amapa, a project consisting of an integrated mine, processing plant, railway, and privately owned port. The project, previously owned by Anglo American, has produced 6.1m tonnes of iron ore per annum, and was valued by Anglo American at US$660 million.
Cadence CEO, Kiran Morzaria, commented: "After a long and protracted process, I am delighted to be able to announce to you that we have now received Credit Committee Approval for the secured bank creditors to execute the Settlement Agreement. Cadence can then vest its initial 20% and eventually a further 7%, which in practical terms means we have a clear path and process to get Amapá recommissioned, licensed and back into production."
Non-Executive Chairman, Andrew Suckling, said the news is “a landmark for Amapa,” both in terms of certainty for DEV employees, the wider Amapa community and for its shareholders.
While awaiting credit committee approval, the drafting of the final settlement documents have continued to progress. On the effective date of the Settlement Agreement and under the Judicial Restructuring Plan Cadence and Indo Sino Trade Pte Ltd (Indo Sino), via their joint venture company, will own 99.9% of DEV Mineração S.A., the owner of the Amapa Project.
Cadence updated the mineral resource estimate in 2020, increasing the MRE by 21%.The current mineral Resource of the Amapa Project consists of 176.7 million tonnes grading 39.7% of iron in the Indicated category and 8.7Mt at 36.9% of iron in the Inferred category.
The current agreement with Cadence’s joint venture partner, Indo Sino, is to invest in and acquire up to a 27% of a joint venture company Pedra Branca Alliance Pte. Ltd.
To acquire its 27% interest Cadence will invest US$ 6 million over two stages in JV Co. The first stage is for 20% of the JV Company, 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
Despite delays in crystallising its investment in Amapa, which Cadence said was as a result of the secured bank creditors' ‘internal bureaucratic process’, it has continued to move the Amapa Project forward which has included, amongst other things, the iron ore stockpile shipments commencing in March and the pre-feasibility studies starting soon after that.
By the end of June 2021, DEV Mineração S.A. had shipped three of the estimated four shipments of 58% iron ore required to net $10m profit at Amapa. It 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.
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