REG - Cadence Minerals PLC - Cadence Signs Terms to Restart Azteca Plant

Cadence MineralsAnnouncement

09/09/2025 07:00

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RNS Number : 4889Y  Cadence Minerals PLC  09 September 2025

 

 

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")

 

Cadence Minerals Signs Heads of Terms to Fund Restart of Azteca Plant and
Near-Term Production at Amapá

 

Cadence Minerals (AIM: KDNC) is pleased to announce that, together with its
partners in the Amapá Iron Ore Project ("Amapá" or the "Project"), it has
signed a Heads of Terms with an international shipping and trading group
("Offtaker"). The Offtaker, a key partner in this venture, will provide most
of the funding to license, refurbish, and restart the Azteca Plant in Amapá,
Brazil. The agreement will be structured as a pre-payment offtake ("Prepay").

 

Highlights

 

·       Conditional Funding Secured: Heads of Terms signed for a US$4.6
million Prepay to finance the restart of the Azteca Plant and provide initial
working capital.

·       Shared Risk, Shared Reward: Cadence to contribute approximately
10-15% of the Prepay, earning the same economic returns on a pro-rata basis.

·       Attractive Economics: The structure of the Prepay is expected
to deliver a robust circa 70% Internal Rate of Return ("IRR") on Cadence's
share of investment, with repayments made per tonne of iron ore shipped.

·       Pathway to Cashflow: Once operational, the Azteca Plant is
forecast to be net cashflow positive from the first shipment, providing a
strong financial foundation for the development of the larger 5.5 Mtpa Direct
Reduction-grade ("DR-grade") project.

·       Low Cost, High Margin: The estimated Cost and Freight ("CFR")
operating costs of US$79/t versus current market prices of approximately
US$120/t i  (#_edn1) (65% Fe fines CFR China) ensure robust early margins,
demonstrating the project's profitability.

Kiran Morzaria, CEO of Cadence Minerals, commented:

 

"This agreement marks an important milestone in the staged development
strategy at Amapá, providing a pathway to early cash flow through the restart
of the Azteca Plant. Cadence will receive a direct return on its investment as
production commences, while free cash flow from Azteca will support
advancement of the larger 5.5 Mtpa DR-grade project.

 

Restarting operations also reinforces Amapá's social licence to operate and
demonstrates to investors and partners that the project is once again a
producing asset with near-term cash flow and long-term growth potential. This
operational credibility is an essential step in unlocking the full value of
Amapá while delivering tangible returns to our shareholders."

 

Transaction Overview

The Heads of Terms are subject to final assay results and the execution of
definitive documentation. Funding will be provided through a prepayment
offtake agreement with a UK-based international logistics, shipping, and
trading group with over 100 years of experience in the sector. The total
prepayment amount is US$4.6 million, to be provided in two components:

 

·    Azteca Plant Financing (US$3.45 million): advanced in staged
tranches, with initial instalments funding licensing and preparatory works,
and further amounts conditional upon the receipt of the required
environmental, operational and regulatory permits for refurbishment and
recommissioning of the Azteca Plant.

·    Working Capital Financing (US$1.15 million): to be drawn at the
commencement of production, primarily to fund logistics associated with the
first shipment of approximately 50,000 tonnes.

Cadence will co-fund the Azteca Plant Financing alongside the Offtaker,
contributing approximately 10-15% of the total prepayment amount and earning
the same pro-rata economic returns. Repayment of the advances will be made on
a per-tonne basis from future shipments of iron ore produced. In addition,
Cadence will receive a pro rata share of the marketing fee on all products
produced from Dyke 5 under the offtake agreement.

 

Following the first shipment, the Azteca Plant is forecast to be net cash flow
positive, with the funding structure expected to deliver an approximate 70%
IRR on Cadence's proportion of the investment.

 

Azteca Plant and Feedstock

Located within the Amapá concession, the Azteca Plant utilises a simple
magnetic and spiral separation flow sheet. A recent technical review confirmed
its structural integrity, process equipment and utilities. In parallel,
capital and operating cost estimates have been finalised, and an indicative
commissioning schedule has been established.

 

Dyke 5 tailings, containing approximately 2 million tonnes of high-grade
material (approximately 55% Fe), will provide the initial feed. On
refurbishment, Azteca is expected to produce circa 380,000 tpa of 65% Fe
concentrate.

 

During previous operations, approximately 28 million tonnes of tailings were
generated, of which an estimated 2 million tonnes have been identified in Dyke
5 as high-grade material based on historical float samples (circa 55% Fe) and
plant data. Additional studies are planned to assess the viability of
processing the broader tailings resource to support long-term production,
supplementing the planned 5.5 million tonnes per annum (Mtpa) DR-grade (67.5%
Fe) concentrate output.

 

Cashflow Positive Production

Once restarted, the Azteca Plant is expected to have operating costs for the
initial three years estimated at an average Free on Board ("FOB") cost of
US$37/t, with CFR into China of approximately US$79/t, compared with current
market prices of around US$120/t CFR China.

 

This combination of modest upfront capital, low operating costs, and strong
market pricing is forecast to deliver positive cash flow from the first
shipment, providing reinvestment capacity for the staged development of the
broader Amapá operation.

 

Timeline and Financing

Once the binding agreement is executed, it would clear the way for completion
of the remaining studies and permits, with first production from the Azteca
Plant anticipated around three months after licence issuance.

 

The outstanding items for the mine installation licence are:

·      a supplementary archaeological survey; and

·      engineering designs for the water reticulation and sewage
treatment systems.

Both studies are expected to take roughly two months, followed by a two-month
review. Importantly, the Company does not expect the archaeological work to
identify any material issues, as previous assessments found no sites that the
planned development or 15-year mine life would impact.

 

Cadence Ownership

As of the end of June 2025, Cadence's total investment in the Amapá Project
is approximately US$15.5 million, representing a 35.7% equity stake in the
Project.

 

About the Amapa Project

The Amapá Iron Ore Project is a fully integrated operation in Brazil,
comprising established mine, rail, port, and beneficiation infrastructure. It
hosts a JORC-compliant Mineral Resource of 276 million tonnes at 38% Fe and a
Proven and Probable Ore Reserve of 195.8 million tonnes at 39.34% Fe. In
December 2024, an updated Pre-Feasibility Study confirmed the Project's
ability to produce a 67.5% Fe direct reduction (DR) grade concentrate at a
rate of 5.5 Mtpa. The revised flowsheet and mine plan resulted in a post-tax
NPV (10%) of US$1.97 billion over a 15-year mine life, with pre-production
capital investment of US$377 million. In August 2025 The Amapá Iron Ore
Project reduced its C1 cash costs to US$27.28/dmt FOB Santana and US$55.46/dmt
CFR China. Installation licence applications have been submitted, and once
granted, will allow, subject to financing, the recommissioning of the Project.

 

 For further information, contact:

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

 Zeus (NOMAD & Broker)                                        +44 (0) 20 3829 5000
 James Joyce
 Darshan Patel

 Gabriella Zwarts

 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 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 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. 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 actual
results will be consistent with such forward-looking statements.

 

 

 i  (#_ednref1) https://www.metal.com/Iron-Ore/201804260009

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