TIDMKDNC
RNS Number : 8149W
Cadence Minerals PLC
29 December 2021
Cadence Minerals Plc
("Cadence Minerals", "Cadence")
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."
"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$3.5 million. If Cadence is unable to complete the second stage
of the investment or not exercise its right of first refusal under
the terms of the Agreement, Indo Sino will have a twelve-month
option to buy the shares in JV Co held by Cadence for 1.5 (1 1/2 )
times the price paid by Cadence for such shares.
Cadence's investment was conditional on several material
preconditions, which as of the date of this announcement have been
satisfied. On completion of Cadence's investment (not including the
first right of refusal), our joint venture partner Indo Sino will
own 73% of JV Co. The Agreement also contains security and default
clauses which if triggered causes an upwards adjustment mechanism
to allow Cadence to either receive cash from JV Co or receive
additional shares in JV Co. In the latter case, Cadence's
shareholding in the JV Co will not go above 49.9%.
On completion of the US$ 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
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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END
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