TIDMKDNC
RNS Number : 8805Q
Cadence Minerals PLC
01 November 2021
Cadence Minerals Plc
("Cadence Minerals", "Cadence")
Port Concession Update, Amapa Project
Cadence Minerals (AIM/AQX: KDNC; OTC: KDNCY) is pleased to
announce the approval of the change of control request for the
federal port concession owned by DEV Mineração S.A.'s ("DEV")
("Port Change of Control"). Alongside the reinstatement of the life
of mine railway concession by the State of Amapa in December 2019,
details of which can be found here , both these approvals represent
two essential regulatory requirements over the critical
infrastructure to operate the integrated Amapa Iron Ore Mine
("Amapa Project")
DEV, Cadence and Indo Sino Pte. Ltd. ("Indo Sino") have been
liaising with the Agencia Nacional De Transportes Aquaviarios
("ANTAQ") to approve the Port Change of Control. The federal port
concession is one of the licenses required to operate DEV's
privatley owned port in Santana, Amapa. The approved Port Change of
Control will occur once Cadence's and Indo Sino's joint venture
company Pedra Branca Alliance Pte. Ltd. ("JV Co") is the 99.9%
owner of DEV. As part of the Port Change of Control, ANTAQ has
agreed to cease the recommended abrogation of the port concession.
In addition, DEV has agreed to pay the outstanding fines of
approximately US$267,000 to ANTAQ, 30 days after our JV Co takes
control of DEV.
DEV ownership will pass to the JV Co once DEV, Cadence and Indo
Sino have executed the settlement agreement with the secured bank
creditors. Further details of the settlement agreement can be found
here .
This approval represents a significant step forward in the
licensing process to bring the Amapa project back into production.
DEV continues to progress the licensing workstream across the
multiple regulatory authorities, and we will update our
shareholders as this progresses.
Cadence CEO, Kiran Morzaria, commented: "The Port Concession
marks another significant step along the road to bring the Amapa
Project back to life. Licensing and permitting often represent a
substantial risk in the development of mineral projects, but thanks
to the efforts of the team at DEV and its advisors, we have
successfully secured two key concessions critical to the
operational success of the Amapa project."
"On my recent Amapa site visit, I was delighted to see the rapid
progress on the ground, driven by a highly motivated local
management team and staff. I look forward to reporting further
progress."
About the Amapa Project
The Amapa Project commenced operations in December 2007, with
the first iron ore concentrate product of 712 kt shipped in 2008.
In 2008 Anglo American (70%) and Cliffs (30%) acquired the Amapa
Project as part of a larger package of mining assets in Brazil.
Cadence updated the Mineral Resource Estimate on 2 November
2020, increasing the MRE by 21%. The current MRE contains a 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.
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 their 70% ownership in the
Amapa Project of USD 120 million (100% USD 171 million) and USD 54
million (100% USD 77 million).
Before its sale in 2012, Anglo American valued its 70% stake in
Amapa Project at USD 866 million (100% 1.2 billion). It impaired
the asset in its 2012 Annual Accounts to USD 462 million (100% USD
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, and since that time, Cadence, Indo Sino
and DEV have continued to develop the Amapa Project and satisfy the
conditions of the JRP.
Details of the Joint Venture Agreement
The agreement with our joint venture partner, Indo Sino, is to
invest in and acquire up to 27% of a (JV Co. On completion and
registration of the settlement agreement with the bank creditors,
the equity of 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%.
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's
consideration, which is US$2.5 million. The second stage of
investment is for a further 7% of JV Co for a consideration of
US$3.5 million. If Cadence is unable to complete the second stage
of the investment or not exercise its right of first refusal under
the terms of the Agreement, Indo Sino will have a twelve-month
option to buy the shares in JV Co held by Cadence for 1.5 (1 1/2 )
times the price paid by Cadence for such shares.
Cadence's investment is conditional on several material
preconditions, including the grant of key operating licences and
the release of bank securities over the asset. Upon completing
Cadence's investment (not including the first right of refusal),
our joint venture partner Indo Sino will own 73% of JV Co. The
Agreement also contains security and default clauses which, if
triggered, causes an upwards adjustment mechanism to allow Cadence
to either receive cash from JV Co or receive additional shares in
JV Co. In the latter case, Cadence's shareholding in the JV Co will
not go above 49.9%.
Upon completing the US$ 6 million investment, Cadence will have
the right to appoint two members to a five-member board. The
remaining three members will comprise 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
identi ed 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 re ect
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.
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