REG - Cadence Minerals PLC - Amapa Iron Ore Project Update

Cadence MineralsAnnouncement

26/11/2024 07:00

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RNS Number : 5679N  Cadence Minerals PLC  26 November 2024

The company deems the information contained within this announcement 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.

 

Cadence Minerals Plc

 

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

 

Amapa Iron Ore Project Confirms Ability to Produce +67% Fe High Purity, Direct
Reduction Iron Concentrates

 

Cadence Minerals (AIM: KDNC) is pleased to announce the metallurgical test
results confirming the ability to produce high-purity, Direct Reduction grade
("DR-grade") iron concentrates at the Amapá Iron Ore Project ("Amapá" or the
"Project") in northern Brazil.

 

Highlights:

·    DR grade concentrate produced at 67.5% Fe with total silica and
alumina below 1.5%.

·    The process flowsheet has been confirmed to have a PFS level of
accuracy.

·    DR concentrate was achieved with a finer grind, magnetic separation
and reverse flotation, as outlined in the announcement on 17 September 2024
(https://irs.nbtrader.co.uk/ir/cadence/newsArticle.php?ST=REM&id=311428242692101671)
.

·    The forecast premium for DR-Grade concentrate is projected to rise to
around US$20 for each 1% iron content above 65% Fe benchmark.

·    A revised economic model based on the DR-Grade sheet is being
prepared.

CEO, Kiran Morzaria, commented: "We are excited to announce a significant
milestone in the development of the Amapá Project. We have successfully
produced a DR-Grade grade concentrate of 67.5% iron, characterised by low
silica and alumina levels. The production of DR-grade products at Amapá will
substantially improve the project's economics and allow us to further our
discussion with potential collaborators and joint venture partners."

 

"The demand for DR-grade products is essential for steel production methods
that significantly lower carbon emissions. The demand for DR-grade feed is
anticipated to increase by more than five-fold by 2050, reflecting the steel
industry's commitment to decarbonisation. Despite the current limited supply
of these products, DR-grade offerings are already commanding substantial price
premiums, highlighting their value in the market."

 

Chairman, Andrew Suckling, added: "On behalf of myself and the Board, I'd like
to record our thanks and gratitude to our shareholders and stakeholders for
their patience as we complete each milestone on the road to recommissioning
Amapa. Our ability to produce this DR-grade concentrate adds a new value
dimension to our flagship project. It gives the Board huge confidence that
Amapa can play a role in "green steel" production and the decarbonisation of
the iron and steel industry."

 

Metallurgical Test Work Programme

Cadence previously announced that Amapá had developed a process flow sheet
for producing Direct Reduction ("DR grade") concentrates with combined SiO(2)
("silica") and Al(2)O(3) ("alumina") levels below the steel industry's DR
grade standard of 2.5%. The initial results from the test work program have
validated the Project's process flowsheet's ability to produce DR-grade
concentrates.

 

The test results produced a weighted average final product with a concentrate
grade of 67.5% Fe and impurity levels of 0.6% SiO(2) and 0.8% Al(2)O(3).
Furthermore, the iron concentrate grade is expected to be higher and exceed
68% Fe by appropriately adjusting the flotation reagent process parameters.

 

Pei Si Engineering Incorporated ("PSEI") conducted the test work and designed
the flow sheet. The primary section of the flow sheet, which aims to upgrade
the 65% product to 67%, involves regrinding, magnetic separation, and
flotation. The test work was carried out on a +65% iron ore concentrate
produced from the Amapá Project.

 

The metallurgical test work established that the optimal flowsheet utilised a
regrind, which feeds into a low-intensity magnetic separator ("LIMS"). This
process produces two streams: the first stream goes to a reverse flotation
circuit, while the second stream is sent to a high-intensity magnetic
separator ("HIMS"), followed by a second reverse flotation circuit.

 

The results indicate that using a fine grinding process (with a fineness of
-0.045mm at 79.5%)-LIMS-HIMS-flotation, two types of flotation iron
concentrates were obtained: Concentrate I and Concentrate II. Concentrate I
achieved a yield of 12.31%, a grade of 69.36% Fe, with SiO(2) and Al(2)O(3)
contents of 0.10% and 0.39%, respectively, and a total iron recovery rate of
12.89%. Concentrate II yielded 70.57%, with a grade of 67.15% Fe, SiO(2)
content of 0.71%, Al(2)O(3) content of 0.92%, and a total iron recovery rate
of 71.55%. The iron concentrate grade is expected to exceed 68% with
appropriate adjustments to the flotation reagent process parameters. The test
results are presented in Table 1.

 

Table 1 Grinding-LIMS-HIMS-Flotation Test Results (%)

 Product             Yield   Grade                            Fe Recovery

                                                              Rate
                     Fe             SiO(2)  Al(2)O(3)  P
 Flotation Con I     12.31   69.36  0.10    0.39       0.039  12.89
 Flotation Con II    70.57   67.15  0.71    0.92       0.089  71.55
 Flotation Middling  0.96    67.14  2.32    2.87       0.118  0.98
 Flotation Tailings  6.25    65.92  3.29    3.13       0.22   6.22
 HIMS Tailings       9.91    55.94  3.12    3.42       0.27   8.36
 Feed                100.00  66.23  1.05    1.26       0.11   100.00

 

Product Analysis

The head assays of concentrate I, concentrate II, and the calculated product
are shown in Table 2 below:

 

Table 2 The head assays of Concentrate I and Concentrate II (%)

 Product         Fe     SiO(2)  Al(2)O(3)  S       P      Cu     TiO(2)  CaO   MgO
 Concentrate I   69.36  0.10    0.39       0.0014  0.039  0.001  0.014   0.02  0.020
 Concentrate II  67.15  0.71    0.92       0.0017  0.089  0.002  0.025   0.03  0.026
 Product         67.48  0.62    0.84       0.0020  0.082  0.002  0.023   0.03  0.025

 

Upon microscopic examination of the sample, it was observed that the iron
minerals were highly liberated, reaching over 90%, with occasional
intergrowths of gangue minerals, such as quartz, alongside iron minerals like
hematite. Fine grinding can further enhance liberation, which is beneficial
for mineral processing to reduce the silica and alumina impurity content in
the iron concentrate. It was also noted that phosphorus primarily adsorbs onto
hematite, resulting in isomorphous substitutions. Given the iron content
(above 67% Fe) and the low levels of silica and alumina impurities (totalling
less than 2.5%), this product can be marketed as direct reduced ("DR") grade
iron ore concentrate 1  (#_ftn1) .

 

"Dr Grade" Concentrate Market and Price

The DR-grade feed suitable for low-emission steelmaking represents 3% of
global seaborne iron ore production. Its availability is crucial for
transitioning to "green steel" and decarbonising the iron and steel industry.
DR-grade concentrates are used as feedstock for new Direct Reduced Iron /
Electric Arc Furnace (DRI-EAF) facilities, replacing older, coal-dependent
Blast Furnace / Basic Oxygen Furnace (BF-BOF) operations.

 

High-grade Blast Furnace feed (over 66% iron) is increasingly sought during
this transition, as it lowers carbon emissions when blended with lower-grade
Direct Shipping Ores (under 62% iron). The metallurgical tests focus on
producing DR-grade Concentrates. These concentrates typically contain over
67.5% iron and low levels of impurities like silica, alumina, phosphorus, and
sulphur, with a total of below 3%.

The current premium for DR-grade iron ore is approximately US$5 for each 1%
iron content above 65% 2  (#_ftn2) . In comparison, this premium is projected
to rise to around US$20 for each 1% iron content above 65% 3  (#_ftn3) . This
change would have a positive impact on the Project's net present value ("NPV")
of US$1.14 billion. We anticipate an improvement in the NPV in our updated
economic model.

 

Next Steps

Testing has been conducted at the pre-feasibility study ("PFS") level. PSEI is
currently reviewing the flow sheet outlined in Figure 1 below. The goal is to
publish a revised economic analysis at the PFS level incorporating a product
stream with an expected purity of 67.5% and an updated NPV.

 

Figure 1 Amapa Process Flowsheet

 

About the Amapá Project and Cadence 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.

 

As of 31 August 2024, Cadence's total investment in the Amapá million was
approximately US$14.2 million, and its equity stake in the project stands at
34.5%, an increase of approximately US$0.57 million since 30 June 2024

 

 For further information contact:

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

 Zeus Capital Limited (NOMAD & Broker)                        +44 (0) 20 3829 5000
 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
crucial 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.

 

 

 1  (#_ftnref1) Page 11,
https://www.championiron.com/wp-content/uploads/2024/05/champion-may-2024-investors-presentation-final.pdf

 2  (#_ftnref2) Page 56,
https://www.angloamerican.com/~/media/Files/A/Anglo-American-Group-v5/PLC/investors/investor-presentations/anglo-american-hy24-results-presentation.pdf

 3  (#_ftnref3) Page 56,
https://www.angloamerican.com/~/media/Files/A/Anglo-American-Group-v5/PLC/investors/investor-presentations/anglo-american-hy24-results-presentation.pdf

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