REG - Cadence Minerals PLC - Optimisation Study Delivers Savings at Amapá

Cadence MineralsAnnouncement

22/03/2024 07:00

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RNS Number : 8926H  Cadence Minerals PLC  22 March 2024

Cadence Minerals Plc

 

("Cadence Minerals", "Cadence", or "the Company")

 

Optimisation Study Delivers Material Capital Savings at the Amapá Iron Ore
Project

 

Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to report the
successful completion of its capital expenditure optimisation program at the
Amapá Iron Ore Project (the "Project", "Amapa" or "Amapá Project"). The
program has identified significant savings in processing plant recommissioning
and increased production. The optimisation study was conducted at a
pre-feasibility level and marks an important milestone in the company's
progress towards achieving cost-efficient and sustainable operations.

 

Highlights:

·      PFS-level optimisation studies (the "Study") have identified 33%
(US$63.2 million) of capital savings associated with the beneficiation plant
at the Amapá Project.

·      The Study has resulted in a forecast increase in production of
approximately 4.8% to 5.5 Mtpa of iron ore concentrate, of which 4.51 will be
a 65% product and 0.99 Mtpa a 62% product.

·      Alongside our joint venture partners, we plan to redesign the
mine plan to reduce mining costs.

·      The revised capex and mine plan will form the basis of an amended
economic assessment at a PFS level.

·      Fully committed to advancing the development of a 67% "Green
Iron" Fe product flow sheet at a production rate of 5.5 Mtpa.

·      The capital requirement for the entire Project is now in the
bottom quartile of comparables at US$58 per million tonnes of annual
capacity.

·      The Study was completed ahead of schedule, so we do not
anticipate any delays to the timeline already announced.

 

Cadence CEO Kiran Morzaria commented: "We're thrilled to announce the
successful completion of our capital expenditure optimisation program at the
Amapá Iron Ore Project. This effort has delivered a substantial 33% reduction
in capital costs, saving $63.2 million and forecasted a 4.8% to 5.5 Mtpa
increase in iron ore concentrate production.

 

Moreover, given the Study was completed ahead of schedule, we do not
anticipate any delays to the timeline already announced, even with the
additional work associated with optimising the mine plan to accommodate the
increased production.

 

We remain fully committed to advancing the development of the 67% Fe product
flow sheet, aligning with our vision for sustainable growth and value
maximisation."

 

Background to Optimisations Studies

As per the announcement made on 7 March 2024, our joint venture company Pedra
and Branca Alliance ("PBA"), which owns 100% of the Amapá Iron Ore project,
engaged an engineering firm in 2023 to carry out an in-depth review of the
processing plant flowsheet to significantly reduce capital and operating
expenditures and, possibly, improving the iron ore concentrate quality.

 

We are pleased to report that the review of capital and operating expenditures
is complete, and the 67% flow sheet development continues.

 

Results from Amapá Project Optimisation Studies

This part of the optimisation study focused on the iron ore beneficiation
plant at the Amapá Project. It aimed to reduce the capital and operational
expenditure while producing a product mix of 65% Blast Furnace Pellet Feed
("BFPF") and 58% spiral concentrate.

 

An independent Chinese consulting engineering company carried out this work
and identified several material capital savings, particularly in the equipment
and materials suppliers. As a result of their work, the direct and indirect
capital associated with the beneficiation plant has been reduced by US$63.2
million (approximately 33%) from US$191.7 million to US$128.5 million.
Utilising the comparables within the PFS report published in 2023, the entire
capital required for the Amapá Project is in the bottom quartile of capital
intensity at US$58 per million tonnes of capacity; the median of the
comparable projects is US$142 per million tonnes of capacity.

 

In addition, the utilisation and availability rates of the beneficiation plant
were increased, resulting in an increase in plant throughput and production
from 5.28 million tonnes per annum ("Mtpa") to 5.5 Mtpa, both on a dry basis.
This also led to a marginal reduction in operating costs. Out of the 5.5 Mtpa,
approximately 4.51 Mtpa will be 65% BFPF, and 0.99 Mtpa will be a 58% spiral
concentrate.

 

Next Steps

Based on the positive results derived from the optimisation study, which
included an increase in throughput, we have decided, in conjunction with our
joint venture partners, to redesign the mine plan to reduce mining costs. As
already highlighted, the Study was completed ahead of schedule. Therefore, we
do not anticipate any delays in the already announced timeline.

 

This revision and the revised capex will form the basis of an amended economic
assessment of the Project at a PFS level. Additionally, we are fully committed
to advancing the development of the 67% Fe product flow sheet, as previously
outlined in the announcement on 7 March 2024. We also anticipate it being at a
production rate of 5.5 Mtpa.

 

About the Amapá Project and Cadence's Ownership

The Amapá Project is a brownfield integrated iron ore project in the Amapá
State of Brazil. It has Mineral Resources of 276 million tonnes (Mt) at 38.33%
Iron (Fe) and Ore Reserves of 196 Mt at 39.34%. The Project consists of the
mine, processing plant, wholly owned port and a 194km railway, all operated by
PBA. A PFS was published in January 2023. The PFS delivered a post-tax net
present value of US$949 million at a discount rate of 10% and a post-tax
internal rate of return of 34%, with an average annual life of mine EBITDA of
US$235 million annually. In the PFS, after ramp-up, the planned yearly average
production was forecast to be 5.3 Mtpa of Fe concentrate, consisting of 4.4
Mtpa at 65.4% Fe and 0.9 Mtpa at 62% Fe concentrate. Over the life of the
mine, The Project is forecast to deliver free on-board C1 Cash Costs of
US$35.53 / dry metric tonne.

 

At the end of September 2023, Cadence's total investment in the Amapá Project
stood at approximately US$12.1 million, with the equity stake in the Project
standing at 32.6%. Since then, Cadence has continued to invest in the Amapá
Project, and a further updated equity position will be provided at the end of
March 2024.

 

 For further information contact:

 Cadence Minerals plc                                         +44 (0) 20 3582 6636
 Andrew Suckling
 Kiran Morzaria

 WH Ireland Limited (NOMAD & Broker)                          +44 (0) 20 7220 1666
 James Joyce
 Darshan Patel

 Fortified Securities - Joint Broker                          +44 (0) 20 3411 7773
 Guy Wheatley

 Brand Communications                                         +44 (0) 7976 431608
 Public & Investor Relations
 Alan Green

 

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.

 

Cautionary and Forward-Looking Statements

Certain statements in this announcement are or may be considered
forward-looking. Forward-looking statements are identified 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 the company'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 reflect 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 the company. Although any forward-looking statements
contained in this announcement are based upon what the Directors believe to be
reasonable assumptions. The company cannot assure investors that results will
be consistent with such forward-looking statements.

 

The information contained within this announcement is deemed by the company to
constitute Inside Information as stipulated under the Market Abuse Regulation
(E.U.) No. 596/2014, as it forms part of U.K. domestic law under the European
Union (Withdrawal) Act 2018, as amended. Upon the publication of this
announcement via a regulatory information service, this information is
considered to be in the public domain.

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