REG - Cadence Minerals PLC - Completion of LT & LS sale & Amapa Project Update

Cadence MineralsAnnouncement

27/06/2022 07:01

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RNS Number : 1479Q  Cadence Minerals PLC  27 June 2022

Cadence Minerals Plc

 

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

 

Completion of sale of Cadence's 31.5% Equity Stake in Lithium Technologies and
Lithium Supplies and Amapa Project Update

 

Cadence is pleased to announce that further to its announcement of 30 March
2022, the Company has completed the sale of its 31.5% stake in in Lithium
Technologies and Lithium Supplies ("LT and LS") to Evergreen PTY Ltd
("Evergreen" or the "Buyer"). Evergreen is an unlisted Australian company
which is intending to list on the Australian stock exchange.

 

Highlights:

•             Cadence and all LT and LS shareholders have
completed the sale of 100% of LT and LS for up to A$21.05 million (£12.08
million)

•             Cadence owns 31.5% of LT and LS and has received
AS$3.16 million (£1.81 million) in Evergreen shares.

•             Subject to Evergreen achieving performance
benchmarks Cadence would receive a total consideration of  A$6.63 million
(£3.80 million)

•             Evergreen will spend a minimum of A$4 million over
the next three years on the exploration of the prospective Litchfield lithium
prospect ("Litchfield") in Northern Australia.

 

Cadence CEO Kiran Morzaria commented: "On behalf of the Cadence board and
other LT and LS shareholders, we are pleased to report the completion of the
sale of our investment in LT and LS"

 

"Recent exploration and sampling work at the Litchfield project, along with
the project's proximity to Core Lithium's assets have led us to believe that
Litchfield has considerable potential to host lithium mineralisation."

 

"For Cadence, this transaction provides an excellent opportunity to retain
exposure to the booming hard rock lithium market in Australia. The
consideration is being paid entirely in shares, and given that Evergreen
intends to list on the Australian Stock Exchange, we will potentially have
exposure to any future upside. Hard rock lithium assets have seen excellent
returns of late, plus we also have a commitment that Evergreen will spend at
least A$4 million to explore the primary assets."

 

Background to Transaction

 

The consideration for LT and LS is up to A$ 21.05 million (£11.82 million).
Cadence has 31.5% of LT and LS and will receive up to A$ 6.63 (£3.80
million).

 

Evergreen is unlisted public company in Australia which has been specifically
incorporated for the acquisition of lithium assets. The acquisition of LT and
LS is its first acquisition. It raised AS$ 6 million to pursue this strategy.
Evergreen now plans to list on the Australian Stock Exchange.

 

During the completion process and in consultation with the applicable
regulatory bodies, Evergreen was restricted from offering cash consideration,
therefore the consideration will be entirely settled in Evergreen shares.

 

 

As such the consideration that has been paid is AS$3.16 million (£1.81
million) in Evergreen shares, or 15,830,136 shares at A$0.20 per share which
represents 13.16% of Evergreen.

 

Once the performance milestones are achieved (which can be found here
(http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=311428221695889680)
), the consideration would also be paid in Evergreen shares, of which Cadence
would receive an additional AS$3.47 million (£1.99 million). The pricing of
Evergreen shares associated with this consideration is based on a defined
pricing mechanism linked to the VWAP and date at which the performance
milestones are achieved.

 

If the performance targets are met the total consideration for Cadence's
equity stake in LT and LS would be AS$6.63 million (£3.80 million).

 

LT and LS, through their subsidiaries, are the holders of two exploration
licenses in the Northern Territory, one granted and one in the application
phase. LT and LS further hold seven exploration license applications in
Argentina.

 

All of the licenses and applications target potential hard rock lithium
deposits. The most significant of these is the Litchfield lithium prospect,
which is contiguous to Core Lithium's (ASX: CXO) strategic Finniss Lithium
Project (JORC compliant ore reserves: 7.4Mt @ 1.3% Li2O).

 

The Buyer has committed to spending at least A$4 million on the exploration of
Litchfield during the three years post the completion of the sale. Should the
milestones not be achieved during this period, the respective consideration
will not be payable.

 

The net loss of LT and LS were A$1,560 and A$1,306, respectively, for the year
ended 30 June 2021. As such, the net loss attributable to the Company (being
31.5% of LT and LS) was A$903 (£516). As of 31 December 2021, the total
carrying values of LT and LS in the Company's balance sheet was approximately
£803,000. Therefore based on the current share price of Evergreen, the
initial profits on the sale of our equity in LT &LS is £1.01 million,
with the potential for this to increase to £2.99 million should the
performance milestones be achieved.

 

In relation to the equity in Evergreen received for the consideration, the
Company will be bound by an escrow agreement with the Buyer as per the
regulatory authorities in Australia, which could be up to 2 years. It will be
in the form and substance consistent with the ASX Listing Rules. After the
lapse of the escrow arrangement, Cadence will retain or dispose of these
shares as per our investment strategy, which is available here
(https://www.cadenceminerals.com/about/strategy/) .

 

Amapa Project Update

 

Operations at the Amapa Iron Project continue to focus on delivering the
Pre-Feasibility Study ("PFS"). Over the last month, all the significant
contractors were at Amapa to review and analyze their respective engineering
areas. Wardell Armstrong International were also on-site as part of their role
in the publication of the PFS. We expect to publish a Maiden Ore Reserve on
the Amapa Iron Ore mine followed by the PFS.

 

Elsewhere the Amapa Project has been focusing on the relevant environmental
permitting, compliance with Brazilian legislation in relation to Tailing
Storage Facilities and implementing the policies, structures and controls
required for a developing company. All of these should stand us in good stead
when we move past the PFS stage.

 

- Ends -

 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

 

 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.

This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.

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