REG - Cadence Minerals PLC - Amapa - Formal Completion & Vesting of 20%

Cadence MineralsAnnouncement

07/02/2022 07:00

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RNS Number : 8148A  Cadence Minerals PLC  07 February 2022

Cadence Minerals Plc

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

 

Cadence formally completes Phase One to vest its 20% in the Amapa Iron Ore
Project

Cadence Minerals (AIM/AQX: KDNC; OTC: KDNCY) is pleased to announce that
further to the announcement of December 29th 2021 (link here
(http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=31142821540789137)
), all of the required contractual and regulatory documentation has been
completed and filed and Cadence now owns 20% of the Amapa Iron Ore Project.

On the 24th December 2021, the Company alongside Indo Sino entered into a
Settlement Agreement with DEV Mineração S.A. ("DEV") and the Secured Bank
Creditors, which to become effective required some additional contractual and
regulatory documentation to be completed and filed. As this work has now been
completed, Pedra Brance Alliance ("PBA"), the Cadence and IndoSino joint
venture company now owns 100% of the equity of DEV, which owns the large-scale
Amapa iron ore mine, beneficiation plant, railway and private port ("Amapa
Project", "Amapa"), and consequently Cadence is a 20% owner of PBA.

Anglo American, a previous owner, valued 100 percent in the Amapa Project at
US$ 1.2 billion. It impaired the asset in its 2012 Annual Accounts to US$ 660
million for 100 percent.

The second stage of investment is for a further 7% of PBA for a consideration
of US$3.5 million. This second stage investment was conditional on several
material preconditions, which have now been satisfied. Cadence will now vest
its next 7% which will be funded from its recent equity raise.  If Cadence
does not complete the investment, Indo Sino will have a twelve-month option to
buy the shares in PBA held by Cadence for 1.5 (1 ½) times the price paid by
Cadence for the shares.

Cadence CEO, Kiran Morzaria, commented: "I am pleased to report that we have
formally completed phase one of our investment into Amapa to acquire our
initial 20 percent. Furthermore, our board are delighted that the recent
fundraise to fund the second investment phase was oversubscribed. It is clear
that our vision for Amapa is shared by new and existing shareholders alike
given the high level of interest and participation in the fundraising."

"I look forward to reporting back to you on progress in the coming weeks."

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.

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 27% of the 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 ½) 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 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 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 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 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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