TIDMKDNC
RNS Number : 1736O
Cadence Minerals PLC
29 September 2023
29 September 2023
Cadence Minerals plc
Interim Results for the Six Months Ended 30 June 2023
Cadence Minerals plc (AIM/AQX: KDNC) is pleased to announce its
interim results for the six months ended 30 June 2023.
HIGHLIGHTS
-- Amapá Pre-Feasibility Study ("PFS") completed. The study
established that the Amapá mine has potential to deliver a robust
5.28 Mtpa (dry) iron ore operation & excellent cash flow
including a post-tax NPV of US$949 million.
-- Amapá Mineral Resource Estimate (MRE) increased and upgraded.
Total Measured, Indicated and Inferred MRE increased to 276.24
million tonnes grading 38.33% Fe and a maiden Measured Resource of
55.33 Mt grading 39.26% Fe.
-- Scoping study identified changes and cost savings in Santana
Port layout & refurbishment of US$28m.
-- Progress with equity investments including ASX listed
Evergreen Lithium (ASX: EG1), Hastings Technology Metals (ASX: HAS)
and AIM listed European Metals Holdings (AIM: EMH).
-- Reduced LBT of GBP1.95m (6 months ended 30 June 2022: GBP5.05m, Y/E 31 Dec 2022: GBP5.50m)
-- Total group assets increased from GBP21.64m at 31 December 2022 to GBP25.79m at 30 June 2023.
CEO Kiran Morzaria commented: "Faced with unprecedented
geopolitical challenges and challenging global markets, your Board
are pleased to deliver reduced losses and an increase in group
assets at the half year. Our flagship Amap á project is developing
at pace, and we have seen the MRE increase combine with costs
savings at the Santana port to deliver material growth in our
investment. Our considered opinion, and that of several analysts
during the first half of 2023 is that these developments, along
with our investments in Evergreen, Hastings Tech Metals, European
Metals and Sonora have yet to be reflected in our market valuation.
We hope that our progress will be in some way reflected during the
second half of the year."
"I look forward to reporting back on further progress."
INVESTMENT REVIEW
Our public portfolio was bolstered during the period as our
private investments Evergreen Lithium and in the Yangibana Rare
Earth deposit were converted into equity in public listed entities.
However, the performance of our equity in stake in Hastings
Technology Metals (converted from our stake in the Yangibana Rare
Earth Deposit) weighed down the overall performance of our public
portfolio and is detailed in the review of our public listed
portfolio.
As stated in our annual report and accounts the overall ambition
of the portfolio is capital growth of the assets under management
which should be reflected in Cadence's share price. We intend to
fund this growth, where possible, by investing in undervalued
assets, selling these investments at higher valuations, and
reinvesting the proceeds. Once we reach critical mass in terms of
assets under management, this investment cycle will mitigate the
need for outside capital, either in new equity or debt.
As stated in our annual report, the overall ambition of the
portfolio is capital growth of the assets under management, which
should then be reflected in Cadence's share price. We intend to
fund this growth, where possible, by investing in undervalued
assets, selling these investments at higher valuations, and
reinvesting the proceeds. Once we reach critical mass in terms of
assets under management, this investment cycle will mitigate the
need for outside capital, either in new equity or debt.
PRIVATE INVESTMENTS, ACTIVE
The Amapá Iron Ore Project, Brazil
Interest - 30% at 30/06/2022 and 29/09/2023
The Amapá Project is a large-scale iron ore mine with associated
rail, port and beneficiation facilities that commenced operations
in December 2007. The project ceased operations in 2014 after the
port facility suffered a geotechnical failure, which limited iron
ore export. Before the cessation of operations, the project
generated an underlying profit of US$54 million in 2012 and US$120
million in 2011. Operations commenced in December 2007, and in
2008, the project produced 712 thousand tonnes of iron ore
concentrate. Production steadily increased, producing 4.8 Mt and
6.1 Mt of iron ore concentrate products in 2011 and 2012,
respectively.
Investment
In 2019, Cadence entered into a binding investment agreement to
invest in and acquire up to 27% of the Amapá iron ore mine,
beneficiation plant, railway and private port owned by a Brazilian
company DEV Mineração S.A. The agreement also gave Cadence the
first right of refusal to increase its stake to 49%. To acquire its
27% interest, Cadence invested US$6 million over two stages in a
joint venture company; this was completed in the first quarter of
2022. In October 2022, we increased this stake to 30%. At the end
of the reporting period, the total investment was US$11.02 million,
which, once fully converted to equity, will represent some 31.6% of
the Amapá Project.
Operations Review
During the reporting period our we made considerable progress at
the Amapá Project. The PFS was completed early in the year, this
was followed by the port optimisation study. Post period end it was
agreed that the following completion of the Amapá PFS, the
remaining operational focus for the year should include progressing
the permitting pathway and the completion of the regulatory
requirements for the mining concessions, tailing storage facilities
and the environmental permits.
Pre-Feasibility Study & Optimisation Studies
As part of the PFS, we upgraded and increased the Amapá Project
Mineral Resource Estimate. This resulted in a substantial increase
in total Measured, Indicated and Inferred Mineral Resources to
276.24 million tonnes grading 38.33% Fe and a maiden Measured
Resource of 55.33 Mt grading 39.26% Fe.
The PFS results were announced in early January 2023. The PFS
confirmed the potential for the Amapá Iron Ore Project to produce a
high-grade iron ore concentrate and generate strong returns over
the life of mine. It delivered a robust 5.28 Mtpa (dry) operation,
which can provide excellent cash flows and a post-tax NPV of US$949
million.
The Key Highlights of the PFS are below:
-- Annual average production of 5.28 million dry metric tonnes
per annum ("Mtpa") of Fe concentrate, consisting of 4.36 Mtpa at
65.4% Fe and 0.92 Mtpa at 62% Fe concentrate.
-- Post-tax Net Present Value ("NPV") of US$949 million ("M") at a discount rate of 10%.
-- Post-tax Internal Rate of Return of 34%, with an average
annual life of mine EBITDA of US$235 M annually
-- Maiden Ore Reserve of 195.8 million tonnes ("Mt") at 39.34%
Fe demonstrates an 85% Mineral Resource conversion.
-- Free on Board ("FOB") C1 Cash Costs of US$35.53/dmt at the
port of Santana. Cost and Freight ("CFR") C1 Cash Costs
US$64.23/dmt in China.
-- Pre-production capital cost estimate of US$399 million,
including the improvement and rehabilitation of the processing
facility and the restoration of the railway and the wholly owned
port export facility
Based on the positive outcome of the PFS and subsequent
consultations with the key contractors, three areas of possible
improvement to the Amapá Project were identified. The first was to
review the historical drilling and geological data north of the
Amapá mining concessions. The data was acquired, and work began;
however, the owner of these mining concessions filed for judicial
recovery, so the timing of this is likely to be delayed. We are
investigating other ways to progress this work, including
conducting a topography survey of the areas.
The second area of potential improvement is a change in the
layout of the port at Santana by moving the railway loop further
from the shore. A scoping study regarding this option was completed
during the period and identified a potential net capital saving to
the port refurbishment costs of US$28 million.
The last area of potential improvement is to investigate and
review the flowsheet to improve the final product quality over and
above the current 65% iron ore concentrate or reduce the operating
costs. From initial reviews, it appears that the most viable option
will be to reduce the operational costs. We are looking to appoint
an engineer to complete this work in the coming months.
Once these studies are completed, work on a Definitive
Feasibility Study ("DFS") can begin. The DFS is required to seek
project debt and equity finance, which will be sought once the DFS
is complete.
Permitting Pathway & Tailings Storage Facility
While the Amapá Project was operating, it held all the necessary
permissions to mine, process, transport and ship some six million
tonnes of iron ore annually. However, many of these licenses lapsed
after it ceased operations in 2014. Cadence has been working
alongside the team at the Amapá Project to obtain these licenses
and permissions. To date, we have reinstated and extended the
railway concession to 2046 (completed in December 2019) and been
granted a change of control over the wholly owned port in November
2021, which ensured the federal licenses could be maintained.
The Amapá Project owns the required Mining Concessions; however,
it must obtain a Mine Extraction and Processing Permit ("Mining
Permit") to begin operation. To get this permit, the Amapá Project
must obtain an L.I. and, when constructed, an Operational License
L.O. from the Amapá State Environmental Agency.
Before the suspension of mining, the project had numerous L.O.s
across the mining, rail, and port operations. These L.O.s expired
between 2013 and 2018. In 2022, the Amapá Project began
regularising the expired environmental permits and started
consultation with the Amapá State Environmental Agency and the
relevant state authorities. The Amapá Project requested that the
requirement for a full environmental impact study be waived. This
request for a waiver was on the basis that the previous L.O.s were
granted on an operation that is substantially the same as is
currently planned and remains applicable to future operations.
As a result of the discussions between the various state
authorities and the Amapá Project, we agreed with the Amapá State
Environmental Agency that on the mine and railway, we will be able
to submit an Environmental Control Plan - "PCA" (Plano de Controle
Ambiental) and an Environmental Control Report - "RCA" (Relatório
de Controle Ambiental). However, we will need to complete a full
environmental assessment on the port. Still, given that the Amapá
Project has already begun some background studies, we also
anticipate that the timeline for the grant of the port L.I. will be
shortened.
The fieldwork for the L.I. will begin as soon as possible with
current expectations that we will be able to submit the required
reports for the mine and rail in the second quarter of 2024 and the
reports for the port in the third quarter of 2024. The Amapá State
Environmental Agency will then review the application for the L.I.,
and we anticipate that these licenses will be granted in 2024.
This timeline is substantially shorter than expected on a
greenfield site, where the impact study and associated approval can
typically take between 24 and 36 months. The Amapá Project could
achieve this in 12 to 16 months.
One of Cadence's initial investment criteria into the Amapá
Project was the safety and stability of the TSF. As such, before
entering into the investment agreement with our joint venture
partners, we carried out a TSF review by an internationally
recognised consultant group and were satisfied with the structure
and stability of the T.S. Nonetheless, given the lack of reporting
and maintenance from 2014 onwards, the TSF at the Amapá Project was
considered high risk. The work carried out since 2019, including
maintenance, reporting, drilling and compliance, has meant that the
Amapá Project TSF is approaching the lowest risk rating for
operating TSF. The intent is that the TSF will continue to improve
its risk rating. This will be achieved by completing a dam break
study, installing video monitoring on the TSF, and ongoing
inspection and remediation of various TSF-associated
infrastructure.
Secured Bank Settlement Iron Ore Shipments
As per the settlement agreement announced in December 2021 here
, the net proceeds of the one shipment carried out in 2022, along
with approximately half of the net proceeds from the shipments in
2021, have been used to pay the secured bank creditors.
As previously disclosed, given these unprecedented macroeconomic
conditions in 2022, DEV could not meet the 2022 payment schedule
per the settlement deed. Although the bank creditors have reserved
their rights, the settlement deed remains in full effect. All
parties are in discussions to agree on a new timetable to rephase
payments or to reach a one-time payment to settle all outstanding
amounts.
With the current iron ore prices and shipping costs, selling the
58% iron ore concentrate stockpile is economically viable. Although
DEV can recommend material shipment, the secured bank creditors
must approve it as they will receive the net proceeds of the
stockpile sale. As a result of the ongoing discussions, no material
shipments are scheduled to be made.
Development Plan for the Amapá Project
The goal is to bring this project back into production. With the
PFS completed, a project would typically directly proceed to DFS,
funding, and construction. Cadence and Its joint venture partners
have agreed that the lowest risk and currently best commercial
approach to developing this project is to bring on a highly
experienced mining operator or EPCM contractor as a joint venture
partner. We are making good progress in this regard. While we
develop this further, we will continue with the optimisation
studies, licensing pathway, and community engagement, which should
further improve the project's economics while reducing its
risks.
PRIVATE INVESTMENTS, PASSIVE
Ferro Verde Iron Ore, Brazil
Interest - 1% at 30/06/2022 and at 29/09/2023
During the previous year, Cadence invested a small (GBP0.21
million) in an advanced iron ore deposit in Brazil. The Ferro Verde
Deposit is located in the southern portion of the state of Bahia,
in the northeastern region of Brazil, next to the town of Urandi,
some 700 km southwest of Salvador, the capital of the state of
Bahia.
The project is currently progressing with its DFS. It has a
historic inferred resource of 284 million tonnes of iron ore at 31%
Fe. The intent is to produce 4.5 Mtpa of 67% Fe. Our intended exit
strategy is either when the asset is listed or the owners carry out
a trade sale.
PRIVATE INVESTMENTS, PASSIVE
Sonora Lithium Project, Mexico
Interest - 30% at 30/06/2022 and at 29/09/2023
Cadence holds an interest in the Sonora Lithium Project via a
30% stake in the joint venture interests in each of Mexalit S.A. de
CV ("Mexalit") and Megalit S.A. de CV ("Megalit").
Mexilit and Megalit form part of the Sonora Lithium Project (the
"Project"). The Sonora Lithium Project consists of nine granted
concessions. Two of the concessions (La Ventana, La Ventana 1) are
owned 100% by subsidiaries of Ganfeng Lithium Group Co., Ltd
("Ganfeng"). El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1
concessions are owned by Mexilit S.A. de C.V. ("Mexilit"), which is
owned 70% by Ganfeng and 30% by Cadence. The Buenavista and San
Gabriel concessions are owned by Megalit, which is owned 70% by
Ganfeng and 30% by Cadence.
Ganfeng Lithium has been developing the project, consisting of
an open pit mine and a lithium chemical product processing
facility. The principal planned lithium product for the project is
lithium hydroxide.
As previously announced, In April 2022 and May 2023, the Mexican
Government approved amendments to its Mining Law (the "Mining Law
Reform"), which prohibited lithium concessions, declared lithium as
a strategic sector and granted the exclusive right to engage in
lithium mining operations to a state-owned entity. The Mining Law
Reform is not supposed to apply to pre-existing concessions,
including those held by the Mexilit and Megalit. Ganfeng's and
Cadence's position is that these reforms cannot impact the
project's concessions because they were granted before the
enactment of the Mining Law Reform. This is consistent with the
terms of the Constitution of Mexico, which, among other principles
and rights, recognises the principles of legality and
non-retroactivity of laws.
Guided by the principles of good faith, cooperation, and mutual
benefit, Ganfeng has been proactively engaging with the Mexican
Government in general and with the Secretary of Economy in
particular, regarding a potential collaboration on the Sonora
Project while respecting Ganfeng and its subsidiaries rights
(including those subsidiaries 30% owned by Cadence). Ganfeng
continues to seek a mutually beneficial resolution. No agreement
has been reached among the Company, Ganfeng and the Mexican
Government concerning this potential collaboration.
While Ganfeng was holding discussions with the Secretary of
Economy, the General Directorate of Mines ("DGM") initiated a
review of nine of the lithium concessions held by the Mexican
Subsidiaries, including the lithium concessions including the
concessions owned by Mexilit and Megalit.
According to the DGM, if the Mexican Subsidiaries failed to
submit sufficient evidence within the specified timeframe to prove
that they had complied with minimum investment obligations for the
development of lithium concessions in 2017-2021, there was a risk
of cancellation of the above-mentioned lithium concessions.
As of May 2023, Mexlait and Megalit had submitted extensive
evidence of their compliance with the minimum investment
obligations of the above-mentioned lithium concessions in a timely
manner. However, the DGM issued a formal decision notice to the
Mexican Subsidiaries in August 2023, indicating that nine lithium
concessions were cancelled, which include those owned by Mexilit
and Megalit.
The lithium concessions' cancellations issued by the DGM are not
final and are subject to ongoing appeals. Ganfeng and Cadence
believe that the Mexican Subsidiaries have complied with their
minimum investment obligations, as required by Mexican law. Indeed,
the mine development investment by the Mexican Subsidiaries has
significantly exceeded the minimum investment obligations, and the
Mexican Subsidiaries regularly submitted to the DGM annual reports
for the 2017-2021 periods detailing their operations within the
prescribed period annually.
Moreover, Ganfeng and Cadence's position is that the resolutions
cancelling the concessions violate both Mexican law and
international law as they are arbitrary, unsubstantiated in both
fact and law and infringe upon Cadence's, Ganfeng's and its
Subsidiaries' fundamental due process rights. Therefore, Ganfeng
and the Mexican Subsidiaries have filed administrative review
recourses before the Secretary of Economy against the
aforementioned resolutions.
The lithium concessions' cancellations issued by the DGM are not
final. Depending on the progress of Ganfeng's further actions and
the outcome of the above-mentioned matters, whether cancellations
will be revoked or maintained in place and the scope of the
concessions affected are still uncertain.
Ganfeng's interim results announcement published on 29 August
2023 discussed these developments as part of their post-balance
sheet analysis. Therefore, there is still uncertainty about the
impact on Cadence's investment. Ganfeng is pursuing various
remedies, including administrative review recourses, to challenge
the DGM's resolutions. If necessary, Ganfeng will resort to
additional remedies under Mexican or international law.
Cadence will continue to liaise with our joint venture partners
regularly and ensure within the limits of the joint venture
agreement that the matter is given the utmost attention and that
regulatory requirements are fulfilled promptly.
PUBLIC EQUITY
The public equity investment segment includes active and passive
investments in our trading portfolio.
The trading portfolio consists of investments in listed mining
entities that the board believes possess attractive underlying
assets. The focus is to invest in mining companies that are
significantly undervalued by the market and where there is
substantial upside potential through exploration success and/or the
development of mining projects for commercial production.
Ultimately, the aim is to make capital gains in the short to medium
term. Investments are considered individually based on various
criteria and are typically traded on the TSX, ASX, AIM or LSE.
During the period, our public equity investments generated an
unrealised and realised loss of GBP1.53million (2022: loss of GBP
4.15 million). These unrealised losses are a reflection of the
transfer of the receipt of Hastings Technology Metals Ltd's ("HAS")
equity at the market value (GBP 5.15 million) and then the
subsequent reduction in share price in HAS by circa 66%. However,
the treatment of the mineral license swap of the Yangibana Rare
Earth Deposit into the equity of HAS is due to Cadence reporting on
an unconsolidated basis. Assuming the returns were reported on a
consolidated basis, we would have reported an unrelaised / realised
profit of GBP2.17 million, with roughly GBP0.93 million gain being
attributed to improvements in the price and profits from sales of
European Metals Holdings share price ("EMH"), GBP0.93 million is
attributed to the net improvement in the Evergreen Lithium Share
Price ("E.G.") and GBP0.75 million being attributed to the gain in
price associated with the Yagibana Rare Earth License swap into
HAS.
If we look at the cumulative share performance of this portfolio
at the end of the period, the realised return on historical costs
is circa 143%, and the unrealised return is 149%. Our investment in
EMH is the only active investment in the public equity
portfolio.
The movement in public portfolio values during the year is
summarised below. We have reported for clarity the unconsolidated
and consolidated values and movements. Our disposals in our pubic
equity were invested in the Amapá Project.
GBP,000 GBP,000
(Unconsolidated) (Consolidated)
Portfolio value at the beginning of period of 2023 5,244 5,244
------------------- -----------------
Addition of HAS shares at market value 5,152 NA
------------------- -----------------
Transfer of HAS from private to public portfolio NA 905
------------------- -----------------
Transfer of E.G. from private to public portfolio 1,810 1,810
------------------- -----------------
Disposal of public Investments during the year (935) (935)
------------------- -----------------
Realised and Unrealised (loss) / profit on portfolio value for the period (1,532) 2,715
------------------- -----------------
Portfolio value at the end of the period 9,740 9,740
------------------- -----------------
As of 30 June 2023, our public equity stakes consisted of the
following:
Company 30-Jun-23 GBP,000 31-Dec-22 GBP,000 30-Jun-22 GBP,000 31-Dec-21 GBP,000 30-Jun-21 GBP,000
European Metals
Holding Ltd 5,207 4,882 5,357 11,287 14,180
------------------ ------------------ ------------------ ------------------ ------------------
Evergreen Lithium 2,738 - - - -
Ltd
------------------ ------------------ ------------------ ------------------ ------------------
Hastings 1,570 - - - -
Technology Metals
Ltd
------------------ ------------------ ------------------ ------------------ ------------------
Charger Metals NL 187 301 196 342 109
------------------ ------------------ ------------------ ------------------ ------------------
Macarthur
Minerals Ltd - - 103 181 327
------------------ ------------------ ------------------ ------------------ ------------------
Eagle Mountain
Mining Ltd 20 37 47 122 153
------------------ ------------------ ------------------ ------------------ ------------------
Mont-Royal
Resources Ltd 12 19 39 35 -
------------------ ------------------ ------------------ ------------------ ------------------
Celsius Resources
Ltd - - - - 103
------------------ ------------------ ------------------ ------------------ ------------------
Miscellaneous 5 5 5 7 6
------------------ ------------------ ------------------ ------------------ ------------------
Total 9,740 5,244 5,747 11,974 14,878
------------------ ------------------ ------------------ ------------------ ------------------
PUBLIC EQUITY, ACTIVE
European Metals Holdings Limited ("EMH"), Czech Republic
Interest - 6.2% at 30/06/2022 and 5.8% at 29/09/2023
EMH owns 49% of Geomet s.r.o. with 51% owned by CEZ. CEZ is a
significant energy group listed on various European Exchanges.
Geomet s.r.o. owns 100% of Cinovec, which hosts a globally
substantial hard-rock lithium deposit with a total Measured,
Indicated and Inferred Mineral Resource of 708.2Mt at 0.43% Li2O
and 0.05% Sn containing a combined 7.39 million tonnes of Lithium
Carbonate Equivalent.
This followed previous reports on 28 November 2017 (Further
Increase in Indicated Resource at Cinovec South). An initial
Probable Ore Reserve of 34.5Mt at 0.65% Li2O and 0.09% Sn reported
on 4 July 2017 (Cinovec Maiden Ore Reserve - Further Information)
has been declared to cover the first 20 years' mining at an output
of 22,500tpa of battery-grade lithium carbonate reported on 11 July
2018 (Cinovec Production Modelled to Increase to 22,500tpa of
Lithium Carbonate). This makes Cinovec the largest hard-rock
lithium deposit in Europe, the fourth largest non-brine deposit
globally, and a globally significant tin resource.
In January 2022, EMH completed an updated PFS, which indicated a
return post-tax NPV8 of USD1.94B and a post-tax IRR of 36.3%. The
study confirmed that the Cinovec Project is a potential
low-operating-cost producer of battery-grade lithium hydroxide or
battery-grade lithium carbonate as markets demand. It confirmed
that the deposit is amenable to bulk underground mining.
Metallurgical test work has produced battery-grade lithium
hydroxide and lithium carbonate in addition to high-grade tin
concentrate. A DFS for the Cinovec Project is currently
underway.
For the reporting period, EMH continued to manage the
advancement of the Cinovec Lithium/Tin Project in the Czech
Republic. The Cinovec project was awarded pre-approval for an EUR
49 million grant under the E.U.'s Just Transition Fund scheme in
January 2023 and was formally classified as a "Strategic Project"
as part of this grant scheme. The final application and approval
process is due to be completed in early 2024.
Other key milestones achieved during the year included the
appointment of DRA Global to complete the DFS, the continuation of
outstanding results from the final test work, and securing the land
necessary to build the proposed lithium processing plant at Dukla,
approximately 6.2km from the proposed portal site.
Post-period end, EMH received an investment from a significant
strategic investor, the European Bank for Reconstruction and
Development ("EBRD"). The EBRD is an International Financial
Institution owned by the European Union, the European Investment
Bank and 71 countries, including the Czech Republic. The EBRD
investment aims to fund the project's predevelopment work.
PUBLIC EQUITY, PASSIVE
Evergreen Lithium Limited ("EG"), Australia
Interest - 13.2% at 30/06/2022 and 8.7% at 29/09/2023
In July 2022, Cadence Minerals received approximately 15.8
million shares in EG when Cadence sold its 31.5% stake in Lithium
Technologies and Lithium Supplies ("L.T. and L.S.") to EG as
announced on 27 June 2022. EG was listed on the Australian Stock
Exchange ("ASX") during the reporting period.
Before listing, Cadence's equity stake in Evergreen was 13.16%;
due to the IPO and associated fundraising, this was reduced to
8.74%. At the time of writing, the value of this stake was
approximately GBP3.3 million; our initial investment into this
asset was GBP0.83 million.
A further AS$ 6.63 million (GBP3.80 million) shares in Evergreen
are due to Cadence on achieving certain performance milestones by
Evergreen. Further details of these milestones can be found in the
Evergreen prospectus. Cadence's shares are subject to a 2-year
escrow agreement as determined by the listing rules of the ASX.
Evergreen is the 100% owner of three exploration tenements. The
Bynoe Lithium Project and Fortune Lithium Project (awaiting grant
of exploration permit) are in the Northern Territory, and the Kenny
Lithium Project is in Western Australia.
The Bynoe Lithium Project is Evergreen's flagship prospect.
Evergreen's primary focus is to explore and discover an
economically viable lithium resource for development. The Bynoe
Lithium Project is located south of Darwin in the Northern
Territory, Australia. It covers the northeastern strike extent of
the lithium- and tantalum-endowed Bynoe Pegmatite Field. The Bynoe
Pegmatite Field is host to Core Lithium Ltd's (ASX: CXO) ("Core
Lithium" or "Core") high-grade Finniss lithium deposit, which is
adjacent to Core Lithium's producing lithium mine. Core Lithium's
deposit is just 1.2km from the Bynoe Lithium Project. Soil sampling
conducted on the Bynoe Lithium Project has returned geochemical
anomalies that indicate the lithium mineralisation continues along
the trend into the Company's
Bynoe Lithium Project. Based on the initial stages of soil
sampling alone (which only covers approximately 10- 20% of the
Bynoe Lithium Project area, an initial five target zones have been
identified that contain lithium mineralisation. The Bynoe Lithium
Project covers an area of 231 km2, making Evergreen one of the
largest tenement holders within the central Bynoe Pegmatite Field
after Core Lithium.
The Kenny Lithium Project is located within the Dundas Mineral
Field of Western Australia and 50km East of Norseman in the Eastern
Goldfields. It is near the Mt Dean and Mt Belches-Bald Hill
pegmatite fields, and multiple significant lithium discoveries have
been made near the Kenny Lithium Project.
Initial field mapping on the Kenny Lithium Project has confirmed
the presence of substantial outcropping pegmatites, whereby an
approximate 10km zone of pegmatite outcropping has been established
in the North- Eastern section of the Kenny Lithium Project, which
significantly exceeds what has already been identified by the
Government Survey of Western Australia (GSWA).
Evergreen aims to explore and discover an economic lithium
resource for subsequent development. As with the Company's Bynoe
Lithium Project, minimal geochemical work has been undertaken
within the tenure; however, historical results have proven
encouraging. During the reporting period, EG has continued to
progress with the development of these assets, with some initial
positive results from the geochemical and geophysical results on
both the Byone and Kenny lithium prospects.
PUBLIC EQUITY, PASSIVE
Hastings Technology Metals Ltd ("HAS"), Australia
Interest - 1.4% at 30/06/2022 and 1.4% on 29/09/2023
In June 2022, Cadence entered into a binding agreement to sell
its working interest in the leases in the Yangibana Project to HAS,
the current owner and operator of the Yangibana Rare Project.
Cadence sold its 30% working interest in the Yangibana Project
tenements, to Hastings, for A$9 million (GBP5.1 million), which has
been satisfied via the issue of 2,452,650 new ordinary shares in
Hastings to Cadence. These shares represented approximately 1.9% of
the issued share capital of Hastings Technology and are subject to
a 12-month voluntary escrow. Cadence has disposed of some of this
investment to fund our investment in the Amapá Iron Ore Project,
holding circa 1.4% of HAS. Amapa. At the period end, the value of
this stake was approximately GBP1.6 million; our initial investment
in this asset was GBP0.91 million.
Hastings is a well-managed Perth-based rare earth company primed
to become the world's next producer of neodymium and praseodymium
concentrate ("NdPr"). NdPr is vital in manufacturing permanent
magnets used daily in advanced technology products ranging from
electric vehicles to wind turbines, robotics, medical applications
and digital devices.
Hasting's flagship Yangibana project, in the Gascoyne region of
Western Australia, contains a highly valued NdPr deposit with an
NdPr: TREO ratio of up to 52%. The site is permitted for long-life
production and with offtake contracts signed and debt finance in an
advanced stage.
During the period Hastings announced it had introduced a staged
development programme to the Yangibana asset. This strategy will
reduce upfront capital requirements and project execution risks and
provide a faster pathway to cash flow by Q1 2025. Hastings will
initially focus on constructing the Yangibana mine and
beneficiation plant to produce rare earths concentrate (Stage 1),
followed by developing a hydrometallurgical plant to produce mixed
rare earth carbonate (Stage 2). This has resulted in the total
project capital cost being estimated at $948m, with the Stage 1
component being $470m. The beneficiation plant construction will
commence in Q3 2023, supporting the Stage 1 concentrate delivery
target date of Q1 2025.
As a result of this staged development programme, Stage 1 will
have a post-tax NPV11 of $538m, an IRR of 27.54% and an average
annual EBITDA of $174m, providing a funding source for Stage 2.
FINANCIAL RESULTS:
During the period, the Group made a loss before taxation of
GBP1.95 million (6 months ended 30 June 2022: GBP5.05 million, year
ended 31 December 2022: GBP5.50 million). There was a weighted
basic loss per share of 1.163p (30 June 2022: 3.136p, 31 December
2022: 3.355p). During the period, the Group disposed of its
Yangibana Joint Venture Interest. This interest was held in the
Company's wholly owned subsidiary, Mojito Resources "Mojito" which
acquired 2,452,650 shares in Hastings Technology Metals Ltd in
return valued at AUD $9m. Therefore, the sale's profit is reflected
in the subsidiary, not the Company's accounts. Mojito, in turn,
sold these shares to the Company for $9m, which resulted in an
amount owing to the subsidiary of GBP4.75m at the period end in the
Company's accounts. This transaction constitutes a related party
transaction. The Company currently holds an investment in Mojito of
GBP0.96m, supported by the intercompany balance of GBP4.75m. Should
the intercompany loan be waived this would result in a profit of
approximately GBP3.79m, based on the balances at 30 June 2023, for
the Company.
The total assets of the Group increased from GBP21.64 million at
31 December 2022 to GBP25.79 million. During the period, our net
cash outflow from operating activities was GBP0.76 million, gross
proceeds of GBP1.31m were raised through the issue of loans and new
shares, and our net cash position was up GBP0.47 million at GBP0.58
million.
Kiran Morzaria
Director
29 September 2023
This announcement contains inside information for the purposes
of Article 7 of E.U. Regulation 596/2014.
For further information:
Cadence Minerals plc +44 (0) 20 3582 6636
Andrew Suckling
Kiran Morzaria
WH Ireland Limited (NOMAD
& Broker) +44 (0) 207 220 1666
James Joyce
Darshan Patel
Brand Communications +44 (0) 7976 431608
Public & Investor Relations
Alan Green
CADENCE MINERALS PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIODED 30 JUNE 2023
Notes Unaudited Unaudited Audited
period ended period year ended
30 June ended 30 31 December
2023 June 2022 2022
GBP'000 GBP'000 GBP'000
Income -
Unrealised loss on financial
investments (1,319) (5,259) (4,593)
Realised (loss)/profit on
financial investments (213) 1,110 552
(1,532) (4,149) (4,041)
Share based payments (25) - (13)
Other administrative expenses (768) (906) (1,443)
Total administrative expenses (793) (906) (1,456)
Operating profit/(loss) (2,325) (5,055) (5,497)
Foreign exchange gains/(losses) 407 10 3
Finance cost (36) - (3)
Profit/(loss) before taxation (1,954) (5,045) (5,497)
Taxation - - -
-------------- ----------- -------------
Profit/(loss) attributable
to the equity holders of the
Company (1,954) (5,045) (5,497)
Total comprehensive profit/(loss)
for the period, attributable
to the equity holders of the
Company (1,954) (5,045) (5,497)
-------------- ----------- -------------
Loss per share
Basic (pence per share) 3 (1.163) (3.136) (3.355)
-------------- ----------- -------------
Diluted (pence per share) 3 n/a n/a n/a
-------------- ----------- -------------
CADENCE MINERALS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 30 JUNE 2023
Share Share Share-based Investment Retained Total
capital premium payment in own earnings equity
account reserve shares
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January
2022 1,903 33,207 249 (70) (13,136) 22,153
Transfer on
exercise
of warrants - - (10) - 10 -
Issue of share
capital 241 4,670 - - 4,911
Issue of
shares held
in Trust - 111 - 6 - 117
Costs of share
issue - (376) - - (376)
Transactions
with owners 241 4,405 (10) 6 10 4,652
-------------------- -------------------- -------------------- -------------------- ------------------ ---------------
Loss for the
period - - - (5,045) (5,045)
Total
comprehensive
loss for the
period - - - (5,045) (5,045)
-------------------- -------------------- -------------------- -------------------- ------------------ ---------------
Balance at 30
June 2022
(unaudited) 2,144 37,612 239 (64) (18,171) 21,760
-------------------- -------------------- -------------------- -------------------- ------------------ ---------------
Share based
payments - - 13 - 13
Transactions
with owners - - 13 - - 13
-------------------- -------------------- -------------------- -------------------- ------------------ ---------------
Loss for the
period - - - (452) (452)
Total
comprehensive
loss for the
period - - - - (452) (452)
-------------------- -------------------- -------------------- -------------------- ------------------ ---------------
Balance at 31
December
2022 2,144 37,612 252 (64) (18,623) 21,321
-------------------- -------------------- -------------------- -------------------- ------------------ ---------------
Share based
payments - - 25 - - 25
Issue of share
capital 83 41 - - 124
Transactions
with owners 83 41 25 - - 149
-------------------- -------------------- -------------------- -------------------- ------------------ ---------------
Loss for the
period - - - - (1,954) (1,954)
Total
comprehensive
loss for the
period - - - - (1,954) (1,954)
-------------------- -------------------- -------------------- -------------------- ------------------ ---------------
Balance at 30
June 2023
(unaudited) 2,227 37,653 277 (64) (20,577) 19,516
-------------------- -------------------- -------------------- -------------------- ------------------ ---------------
CADENCE MINERALS PLC
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
Assets Notes GBP'000 GBP'000 GBP'000
Non-current
Financial Assets 4 10,530 8,963 11,365
Investment in associate
---------- ---------- -------------
10,530 8,963 11,365
Current assets
Trade and other receivables 3,978 5,222 3,957
Financial Assets 4 10,702 5,747 6,206
Cash and cash equivalents 577 1,994 110
---------- ---------- -------------
Total current assets 15,257 12,963 10,273
Total assets 25,787 21,926 21,638
========== ========== =============
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables 348 166 317
Borrowings 6 565 - -
---------- ---------- -------------
Total current liabilities 913 166 317
Liabilities due after
one year
Borrowings 6 611 - -
Amounts owed to subsidiaries 4,747 - -
---------- ---------- -------------
Total liabilities 6,271 166 317
Equity
Share capital 5 2,227 2,144 2,144
Share premium 37,653 37,612 37,612
Share based payment
reserve 277 239 252
Investment in own shares (64) (64) (64)
Retained earnings (20,577) (18,171) (18,623)
Total equity attributable
to owners of the company 19,516 21,760 21,321
Total equity and liabilities 25,787 21,926 21,638
========== ========== =============
CADENCE MINERALS PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD 30 JUNE 2023
Unaudited Unaudited Audited year
period ended period ended ended
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Operating loss (2,325) (5,055) (5,497)
Net realised/unrealised loss
on financial investments 1,532 4,149 4,041
Equity settled share-based
payments 25 - 13
Adjustment for issue of own
shares - 117 -
(Increase)/decrease in trade
and other receivables (21) (170) 24
Increase/(decrease) in trade
and other payables 31 (687) (536)
Net cash outflow from operating
activities (758) (1,646) (1,955)
-------------- -------------- -------------
Taxation - - -
Cash flows from investing
activities
Payments for current financial
investments - (176) (235)
Receipts on sale of current
investments 935 1,256 1,926
Payments for non-current financial
investments (975) (2,305) (4,600)
Net cash inflow from investing
activities (40) (1,225) (2,909)
-------------- -------------- -------------
Cash flows from financing
activities
Proceeds from issue of share
capital 124 4,911 5,016
Share issue costs - (376) (376)
Borrowings 1,187 - -
Finance cost (12) - (3)
Net cash (outflow)/inflow
from financing activities 1,299 4,535 4,637
-------------- -------------- -------------
Net increase/(decrease) in
cash and cash equivalents 501 1,664 (227)
Foreign exchange movements
on cash and cash equivalents (34) 6 13
Cash and cash equivalents
at beginning of period 110 324 324
Cash and cash equivalents
at end of period 577 1,994 110
-------------- -------------- -------------
Material non-cash transactions
During the period the Company acquired 2,452,650 shares in
Hastings Technology Metals Ltd from its wholly owned subsidiary
Mojito Resources, at a cost of AUD$ 9m (GBP5.152m). This amount was
not paid in cash but treated as a intercompany loan from Mojito
Resources. This has been treated as a non-current liability.
During the year ended 31 December 2022 the Company disposed of
its 31.5% stake in in Lithium Technologies and Lithium Supplies,
(non-current financial investments) for initial proceeds of
GBP1,810,000 which were settled in shares of Evergreen PTY Ltd
(non-current investment). Additionally, at 31 December 2021 the
Company had a loan outstanding of GBP514,000 from Amapá and a
balance of GBP554,000 held in a trust account (trade and other
receivables) which were converted into its investment in Amapá
(non-current investment). There were no material non-cash
transactions in the year ended 31 December 2021.
NOTES TO THE INTERIM REPORT
FOR THE PERIODED 30 JUNE 2023
1 BASIS OF PREPARATION
The interim financial statements have been prepared in
accordance with applicable accounting standards and under the
historical cost convention. The financial information set out in
this interim report does not constitute statutory accounts as
defined in section 434 of the Companies Act 2006. The Group's
statutory financial statements for the year ended 31 December 2022
have been delivered to the Registrar of Companies. The auditor's
report on those financial statements was unqualified.
The principal accounting policies of the Group are consistent
with those detailed in the 31 December 2022 financial statements,
which are prepared under the historical cost convention and in
accordance with U.K. adopted International Accounting Standards
(IAS).
GOING CONCERN
The Directors have prepared cash flow forecasts for the period
ending 30 September 2024. The forecasts demonstrate that the Group
has sufficient funds to allow it to continue in business for a
period of at least twelve months from the date of approval of these
financial statements. Accordingly, the accounts have been prepared
on a going concern basis.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results
2 SEGMENTAL REPORTING
The Company operates a single primary activity to invest in
businesses so as to generate a return for the shareholders.
3 EARNINGS PER SHARE
The calculation of the earnings per share is based on the loss
attributable to ordinary shareholders divided by the weighted
average number of shares in issue during the period.
Unaudited Unaudited Audited
six months six months year ended
ended ended
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Profit/(loss) on ordinary activities
after tax (GBP'000) (1,954) (5,045) (5,497)
---------------- ---------------- ----------------
Weighted average number of
shares for calculating basic
profit/loss per share 174,360,940 167,656,144 170,208,788
---------------- ---------------- ----------------
Less: shares held by the Employee
Benefit Trust (weighted average) (6,380,000) (6,804,309) (6,380,000)
Weighted average number of
shares for calculating basic
(loss)/profit per share 167,980,940 160,851,835 163,828,788
Share options and warrants
exercisable n/a n/a n/a
Weighted average number of
shares for calculating diluted
profit per share n/a n/a n/a
---------------- ---------------- ----------------
Basic profit/(loss) per share
(pence) (1.163) (3.136) (3.355)
---------------- ---------------- ----------------
Diluted profit per share (pence) n/a n/a n/a
---------------- ---------------- ----------------
4 FINANCIAL INVESTMENTS
Financial assets at fair value through
profit or loss:
GBP'000 GBP'000 GBP'000 GBP'000
Level Level Level
1 2 3 Total
Fair value at 31 December
2021 11,974 - 5,660 17,634
Additions 235 - 7,479 7,714
Fair value changes (4,593) - - (4,593)
(Loss)/Gains on disposals (446) - 998 552
Disposal (1,926) - (1,810) (3,736)
Fair value at 31 December
2022 5,244 - 12,327 17,571
-------- -------- -------------------- --------
Additions 5,152 - 975 6,127
Transfers on listings 1,810 - (1,810) -
Fair value changes (1,319) - - (1,319)
(Loss)/Gains on disposals (213) - - (213)
Disposal (934) - - (934)
Fair value at 30 June
2023 9,740 - 11,492 21,232
-------- -------- -------------------- --------
Losses on investments
held at fair value through
profit or loss
Fair value loss on investments (1,319) - - (1,319)
Realised loss on disposal
of investments (213) - - (213)
Net loss on investments
held at fair value through
profit or loss (1,532) - - (1,532)
-------- ------- --------
Non-current - - 10,530 10,530
Current 9,740 - 962 10,702
9,740 - 11,492 21,232
-------- ------- --------
5 SHARE CAPITAL
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Allotted, issued and fully
paid
173,619,050 deferred shares
of 0.24p (30 June and 31 December
2022: 173,619,050) 417 417 417
180,971,037 ordinary shares
of 1p (30 June 2022 and 31
December 2022 172,719,813 ordinary
shares of 1p) 1,810 1,727 1,727
----------------------- ----------------------- -----------------------
2,227 2,144 2,144
----------------------- ----------------------- -----------------------
6 LOANS
On 25 May 2023 the Company secured a Mezzanine Loan Facility
("Loan Facility") This comprised an unconditional and committed
initial tranche by the Investors of US$ 2 million, received during
the period (net of costs) and a further conditional Loan Facility
amount of US$ 8 million, subject to agreement by the Investors. The
Loan Facility is valid for three years.
The First Tranche of US$ 2 million has a 24-month term
("Maturity Date"). It has a six-month principal repayment holiday,
followed by 18 equal monthly cash repayments thereafter to the
Maturity Date. The Loan Facility has an effective annual interest
rate of 9.5% and has a 5% implementation on the value of the First
Tranche. After accounting for the costs, the Effective Interest
Rate applied is 31.3%.
If the Company elects not to settle a monthly payment in cash
(each being a "Missed Payment"), they will automatically grant a
right for the Missed Payment to be settled in shares as per the
non-cash repayment terms contained in the Loan Facility Agreement
("Non-Cash Repayment"). Following a Non-Cash Repayment, the
Investors will be automatically granted conversion rights over such
principal and interest balances due concerning the Missed Payment.
The Investors will then have the right for 12 months to convert
such amounts either at a price equal to 12.7 pence (representing a
30% premium to the closing price on 25/05/2023) or at a 7% discount
to the average of the five daily VWAPs chosen by the Investors in
the 20 trading days preceding its conversion notice or at the price
the Company issues further equity if lower than the existing
conversion price. As the Investors have no automatic conversion
rights, management have concluded that there is no equity or
derivative value.
Cadence has provided a security package to the Investors as part
of the Loan Facility. This package includes a floating charge over
the Company's investments, placing its holding in European Metals
Holdings into escrow and the issue of new ordinary shares to the
Investors ("Initial Issued Shares"). The Initial Issued Shares
represent 50% of the value of the First Tranche, or 8,251,224 new
ordinary shares. These initial Issued Shares will be used as part
of any Non-Cash Repayments if applicable. On the Maturity Date, the
Initial Issued Shares may be sold and provided all amounts due have
been settled in cash the profits on the sale revert to the Company.
Of the gross proceeds of US$2m (GBP1,622,000), $350,000
(GBP284,000) were deducted in fees, $153,000 (GBP124,000) was
allocated as payment for the Initial Issued Shares, and $33,000
(GBP27,000) were paid in legal and escrow fees.
As part of the Loan Facility, the Company has agreed to grant
8,251,224 warrants to subscribe for ordinary shares in the Company
at an exercise price of 13.2 pence (representing roughly a 35% per
cent premium to the prevailing share price of the Company's Shares)
with a 48-month term.
The movements in the loans are summarised below.
31 December
30 June 2023 2022
GBP'000 GBP'000
Balance at beginning of period - -
Net loans received 1,187 -
Interest charged 36 -
Repaid in cash (12) -
Foreign exchange (35) -
Balance at end of period 1,176 -
============= ============
Due within one year 565 -
Due after one year 611 -
============= ============
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR GIGDCISDDGXC
(END) Dow Jones Newswires
September 29, 2023 04:53 ET (08:53 GMT)
Cadence Minerals (LSE:KDNC)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Cadence Minerals (LSE:KDNC)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024