TIDMKDNC
RNS Number : 5799O
Cadence Minerals PLC
11 October 2021
Cadence Minerals Plc
("Cadence Minerals", "Cadence")
Bank Credit Committee Approval for Amapa Project Settlement
Agreement.
Cadence Minerals (AIM/AQX: KDNC; OTC: KDNCY) is pleased to
announce that it has received confirmation from the secured bank
creditors that they have obtained approval from their credit
committees with respect to the proposed terms of the settlement
agreement ("Approval") .
Highlights:
-- Bank credit committee approval for secured bank creditors
assits in paving the way for Cadence to vest initial 20% in the
Amapa Iron Ore Project
-- On the effective date of the settlement agreement Cadence's
and Indo Sino's joint venture company will own 99.9% of the Amapa
Project
-- The Amapa Iron Ore Project consists of an integrated mine,
processing plant, railway, and privately owned port. It was
previously owned by Anglo American and produced 6.1 million tonnes
of iron ore per annum, and was valued at US$ 660 million.
-- The current Mineral Resource of the Amapa Project consists of
176.7 million tonnes grading 39.7% Fe in the Indicated category and
8.7Mt at 36.9% Fe in the Inferred catergory
The Approval is subject to the completion of KYC (know your
client) and the finalisation of the documentation reflecting the
agreement in principle as announced on the 2 September 2020). The
Approval assists in paving the way for Cadence to vest its initial
20% indirect interest in Amapa Iron Project ("The Amapa Project").
The Amapa Project consists of an integrated mine, processing plant,
railway, and privately owned port. It was previously owned by Anglo
American and produced 6.1 million tonnes of iron ore ([1]) per
annum, and was valued by Anglo American at US$ 660 million ([2])
.
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 ("JRP") 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 Non-Executive Chairman, Andrew Suckling, commented; "As
I have said previously, in my time working with commodity projects
around the world, I have rarely if ever seen a lapsed mining
project with this sort of potential. Today's announcement is a
landmark for Amapa, both in terms of certainty for DEV employees,
the wider Amapa community and for Cadence shareholders. I know how
hard the team on the ground there have worked to make this happen,
and on behalf of our board I would like to express our thanks and
gratitude to DEV, the Government of Amapa, the team of local
Government officers and bank committees and administrators for
contributing to this momentous step in our history."
"In its previous life, Amapá's output contributed significantly
to the regional economy. Once again it is set to create new
opportunities for the community, and will help to improve prospects
in employment, health and education for this region in Brazil as
the world emerges from the COVID crisis."
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."
"On my arrival at Amapá last week, I was deeply impressed by the
rapid progress made by the DEV team, with reconstruction of some of
the administrative and community infrastructure already well
advanced. We look forward to working alongside both DEV and Indo
Sino to continue to develop this asset , creating further
opportunity and prosperity for the Amapa region, and of course
delivering ongoing value for all stakeholders."
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.
Cadence updated the Mineral Resource Estimate on 2 November
2020. Increasing the MRE by 21%. The current MRE contains an
Mineral Resource 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. 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 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$3.5 million. If Cadence is unable to complete the second stage
of the investment or not exercise its right of first refusal under
the terms of the Agreement, Indo Sino will have a twelve-month
option to buy the shares in JV Co held by Cadence for 1.5 (1 1/2 )
times the price paid by Cadence for such shares.
Cadence's investment is conditional on several material
preconditions, which include the grant of key operating licences
and the release of bank securities over the asset. On completion of
Cadence's investment (not including the first right of refusal),
our joint venture partner Indo Sino will own 73% of JV Co. The
Agreement also contains security and default clauses which if
triggered causes an upwards adjustment mechanism to allow Cadence
to either receive cash from JV Co or receive additional shares in
JV Co. In the latter case, Cadence's shareholding in the JV Co will
not go above 49.9%.
On completion of the US$ 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.
[1] Anglo American, Annual Report 2012, page 89, https://www.angloamerican.com//media/Files/A/Anglo-American-Group/PLC/investors/annual-reporting/2013/annual-report2012.pdf
[2] Anglo American, Annual Report 2012, page 183, https://www.angloamerican.com//media/Files/A/Anglo-American-Group/PLC/investors/annual-reporting/2013/annual-report2012.pdf
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