REG - Cadence Minerals PLC - Significant Mining Cost Reduction at Amapá Project

Cadence MineralsAnnouncement

18/08/2025 07:00

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RNS Number : 6898V  Cadence Minerals PLC  18 August 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")

 

Significant Mining Cost Reduction at the Amapá Iron Ore Project

 

Cadence Minerals (AIM: KDNC) is pleased to announce the results of a review
into the mining costs of the Amapá Iron Ore Project ("Amapá", "Project" or
"Amapá Project") in northern Brazil. The updated mining costs have materially
reduced the overall Free on Board ("FOB") and Cost and Freight ("CFR") costs
compared to those announced previously. Cadence holds a 35.1% equity interest
in the Project.

 

Highlights:

·      36.7% Mining Cost Reduction: Mining costs reduced from
US$17.65/DMT to US$11.17/DMT following re-quotation from one of Brazil's
largest mining contractors.

·      FOB Costs Down 19.2%: Overall FOB costs reduced from US$33.75/DMT
to US$27.28/DMT.

·      Major Annual Savings: Estimated cost savings of approximately
US$33.3 million per annum.

·      Life-of-Mine Benefit: Total savings of around US$500 million over
the life of mine.

·      CFR Cash Cost at US$55.46/DMT - Positions Amapá among some of
the lowest cost producers.

 

Kiran Morzaria, CEO of Cadence Minerals, commented:

"These revised mining costs represent a major improvement in the economics of
the Amapá Project. With a CFR cost base of just over US$55 per tonne, we
believe Amapá is positioned among the lowest-cost iron ore operations
globally."

 

"Importantly, these savings are based on the production plan for a premium
DR-grade iron ore product, which is expected to capture higher market pricing
than standard 62% Fe products. This combination of low costs and premium
pricing potential delivers significant annual and life-of-mine savings,
strengthens our competitiveness, and further de-risks the project as we
progress towards development."

 

Mining Cost Reassessment

As part of our ongoing cost assessment, the Project identified that the mining
costs quoted by a third-party provider were disproportionately high for this
type of operation, given its low strip ratio and minimal blasting requirement
(approximately 25% of total production). Earlier this year, we invited one of
Brazil's largest mining contractors (the "Contractor") to re-quote based on
the mining schedule and volumes used in the updated PFS published in December
2024
(https://irs.nbtrader.co.uk/ir/cadence/newsArticle.php?ST=REM&id=311428241657321213)
.

 

Under the proposed arrangement, the Contractor will provide all necessary
personnel, equipment, transport, accommodation, supplies, supervision,
documentation, road works, fleet details, and organisational information.
Amapá will provide the prepared worksite, utilities, meals, plans, schedules,
licences, water, fuel, power, security, medical support, access to facilities,
and all other necessary infrastructure to enable the Contractor to perform the
works.

 

The revised costs are based on the planned production of a premium Direct
Reduction ("DR") grade iron ore product, as outlined in previous Cadence
announcements. DR-grade products typically attract a price premium in the
seaborne iron ore market.

 

The quote specified the following main production equipment (Table 1). Total
employees (direct and indirect) are estimated to be 283 personnel

 

 Equipment                                               Number
 Hydraulic Excavator HITACHI EX2500 (or similar)         3
 Haul Truck Komatsu HD 785 (or similar)                  18
 Buldozer CATERPILLAR D9 (or similar)                    5
 Drill Rig Sandvik Pantera DP 1500i (or similar)         1
 Wheel Loader CATERPILLAR 980 (or similar)               3
 Hydraulic Excavator CAT 320 (or similar)                1
 Hydraulic Excavator with Breaker (or similar)           1
 Motor Grader CAT 16H (or similar)                       3
 Water Truck 30.000 l - Mercedes-Benz AXOR (or similar)  4
 Ancillary Equipment                                     30

Table 1: Summary of Mining Equipment

 

Their quote has reduced the mining costs from US$17.65/ dry metric tonne
("DMT") to US$11.17 / DMT, with the overall FOB costs reducing from US$33.75 /
DMT to US$27.28 / DMT (Table 2). This decreased cost base reduces the annual
costs by US$33.3 million per annum, resulting in a total saving of US$500
million over the life of mine.

 

 Cash Cost Per Discipline                                    Updated DR Grade PFS Dec 2024  Updated Costs (Mining) August 2025
                                                             US$/DMT                        US$/DMT
 Mine                                                        17.65                          11.17
 TSF                                                         0.09                           0.09
 Beneficiation Plant, Pipeline, Transfer & Rail Loading      10.50                          10.50
 Rail Freight                                                2.26                           2.26
 Port                                                        1.52                           1.52
 G & A                                                       1.74                           1.74
 FOB Cash Costs                                              33.75                          27.28
 Marine Logistics                                            28.18                          28.18
 CFR Cash Costs                                              61.93                          55.46

Table 2 - Updated FOB and CRF Costs

 

Competitive Positioning

For context, major iron ore producers report CFR-equivalent costs broadly in
the range of US$58-65/DMT. For example, Rio Tinto's Pilbara operations
recorded 2024 unit cash costs of US$23-24.5/DMT FOB. 1  (#_ftn1) , which, when
adjusted for freight 2  (#_ftn2) , equates to around US$58-60/DMT CFR. BHP's
cost support range for iron ore is estimated at US$80-100/DMT CFR 3  (#_ftn3)
, while Vale's Northern System CFR costs are around US$60/DMT 4  (#_ftn4) .

 

Against this backdrop, Amapá's updated CFR cash cost of US$55.46/DMT is well
positioned in the global cost curve, offering a clear margin advantage over
most major producers.

 

Mining Schedule

The mining schedule used in the cost reassessment is the same as that applied
in the revised PFS published in December 2024. The annual feed rate ("ROM") is
13.99 Mtpa (wet base). Mine engineering and design were undertaken by Wardell
Armstrong International at PFS level, incorporating an Ore Reserve Estimate
prepared in accordance with the JORC Code (2012).

 

The Ore Reserve for Amapá is 195.8 million tonnes at an average grade of
39.34% Fe and a cut-off grade of 25% Fe. A Life of Mine ("LOM") production
plan was scheduled using Deswik.Blend® Scheduler Optimiser based on the final
pit design with a Selective Mining Unit of 100m x 200m x 4m. The LOM schedule
supports 15 years of production, with a strip ratio of approximately 0.4:1
(waste:ore) and an average ore delivery to the plant of 13.99 Mtpa. A site
plan of the pits and phases is outlined in Figure 1.

 

Figure 1 Open Pit Design Phases

 

Cadence Ownership

As of the end of June 2025, Cadence's total investment in the Amapá Project
is approximately US$14.8 million, and its equity stake in the project stands
at 35.1%.

 

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. 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 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) Rio Tinto - 2024 unit cash costs (Pilbara, FOB, US$/wmt):
https://docs.publicnow.com/viewDoc.aspx?filename=38005%5CEXT%5C7D1C3296E9201932463FECF59F2BB06A0A31A898_10EC183AC157CD9D0ADE0635BEA9959D58927997.PDF
(https://docs.publicnow.com/viewDoc.aspx?filename=38005%5CEXT%5C7D1C3296E9201932463FECF59F2BB06A0A31A898_10EC183AC157CD9D0ADE0635BEA9959D58927997.PDF)

 2  (#_ftnref2) Capesize freight, Port Hedland → Qingdao, examples
~US$10-12/t (June 2024), PDF:
https://www.hellenicshippingnews.com/wp-content/uploads/2024/06/Bancosta-Weekly-2024-22.pdf
(https://www.hellenicshippingnews.com/wp-content/uploads/2024/06/Bancosta-Weekly-2024-22.pdf)

 3  (#_ftnref3)  BHP - WAIO C1 unit costs (FY24/FY25e), PDF:
https://www.bhp.com/-/media/documents/media/reports-and-presentations/2024/240827_bhpresultsfortheyearended30june2024.pdf
(https://www.bhp.com/-/media/documents/media/reports-and-presentations/2024/240827_bhpresultsfortheyearended30june2024.pdf)

 4  (#_ftnref4)  Vale - 2024 C1 cash cost guidance (US$/t dmt), PDF:
https://www.latibex.com/docs/Documentos/esp/hechosrelev/2024/Vale%27s%20Performance%20in%203Q24.pdf
(https://www.latibex.com/docs/Documentos/esp/hechosrelev/2024/Vale%27s%20Performance%20in%203Q24.pdf)

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