TIDMKDNC
RNS Number : 4696J
Cadence Minerals PLC
14 April 2020
Cadence Minerals Plc
("Cadence Minerals", "Cadence" or "the Company")
Amapá Iron Ore Project Given Court Approval to Commence Iron Ore
Shipments
Highlights
In a significant development in Cadence's Brazil's iron ore
interests:
-- Brazil's Commercial Court of São Paulo has ruled that DEV
Mineração S.A., owner of the Amapá iron ore project ("DEV") can
commence the shipment of the iron ore stockpiles situated at DEV's
wholly-owned port in Santana, Amapá, Brazil.
-- Independent surveys of these iron ore stockpiles indicate
that some 1.39 Mt of iron ore in three stockpiles are available for
immediate export with an average Fe grade of 62.12%.
-- Permission to export the iron ore was granted as a result of
a petition filed by DEV supported by judicial trustee and creditors
committee.
-- The net proceeds of the iron ore sales will primarily be used
to pay labour and small creditor and to bring the Amapá iron ore
project ("Amapá Project") back into production.
-- Iron ore exports are targeted to re-commence in the coming months.
Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) advises that the
Amapá Project has been granted permission by the Commercial Court
of São Paulo ("Court") to begin the shipment of its stockpile from
the port of Santana, located in the Amapá Province of Brazil.
Next Steps
DEV, with Cadence's and Indo Sino's ("JV Partners") support, are
liaising with local authorities to obtain the required licenses and
permits to rapidly commence exports, and have already received
federal authorisation to export the iron ore. In addition, the JV
Partners are in detailed discussions with potential offtake
partners and local contractors so that the Amapá Project can begin
shipment as quickly as possible.
Currently, we estimate that the first shipment from the
stockpile should be in late Q2, early Q3 of this year. These
timelines are, of course, dependent on the ongoing and future
impacts of COVID 19 on associated movement and activities.
An independent survey of these stockpiles located at the port
indicates that some 1.39 million tonnes ("Mt") of iron ore in three
stockpiles with an average Fe grade of about 62.12% are available
for export.
Cadence Amapá Project stake
As mentioned in previous announcements there remains only one
major precondition for Cadence to make its investment in the Amapá
Project and release the sum of US$2.5 million currently held in
escrow in a judicial trust account ("Escrow Monies").
This precondition requires DEV to reach a settlement agreement
with the secured bank creditors. On satisfaction of the
prerequisites and the release of the Escrow monies, Cadence will
become a 20% shareholder in the Amapá Project via our joint venture
company which will own 99.9% of Dev.
C adence's rights over the Amapá Project have been formalised in
the Judicial Restructuring Plan of DEV and ratified by the São
Paulo Bankruptcy court. Dev officers have been appointed in the
Judicial Restructuring Plan, with acceptance of creditors.
While we await the settlement with the secured bank creditors,
The JV Partners will work with DEV to advance the restart of the
Amapá Project using the proceeds of the iron ore, accelerating the
production from the Amapá Project.
About the Project
The Amapá Project was owned by Anglo American plc and Cliffs
Natural Resources and consists of a large-scale iron ore mine,
beneficiation plant, railway and private port. In 2012 the
operation produced 6.1 Mt of iron ore concentrate and reported
operating profits from their 70% ownership in the Amapá Project of
US$120 million (100% - US$171 million). Before its sale in 2012,
Anglo American valued its 70% stake at US$462m in its 2012 Annual
Report (100% - US$600m).
As previously announced, the total historical mineral resource
contains an estimated 348 Mt of ore @ 38.9% iron content ("Fe") .
The ore is beneficiated at the mine to 65% Fe Pellet Feed and 62%
Fe Spiral Concentrate. Based on available historic mine plans and
an independent consultant review, it is expected that at full
production the Amapá Project has a mine life of 14 years and at
full capacity is targeting to produce up to 5.3 Mt of iron ore per
annum.
Court Petition
The permission to export the iron ore was granted by the Court,
as a result of a petition filed by DEV and supported by the
judicial trustees of DEV, KMPG Brazil and the creditors
committee.
The Court ruled that DEV is permitted to export sufficient iron
ore to realise a US$10 million profit from the Amapá stockpiles at
the port (after the deductions of all logistical, regulatory,
shipping and sale costs).
The first of the net revenues from the sale of the stocks shall
be used to pay historic small and employee creditors (US$2.5 m).
Thereafter funds will be used to begin recommissioning studies on
the asset including plant, railway and port and to start
maintenance and monitoring of the current tailing dam facilities (
US$ 6 m) and provide ongoing working capital and historic finance
obligations.
DEV also filed a further petition which requested the release of
R$400,000 (US$78,000) currently held in a judicial account to be
used for essential maintenance at the wholly-owned private port and
the removal of the secured bank creditors liens ("Bank Liens") over
DEV and its assets. The Court ruled to release the funds. In
addition, the Court has requested that the secured bank creditors
reach an agreement with the JV Partners and DEV within 60 days or
the Court might rule on the annulment of the Bank Liens an d
consider the banks as unsecured creditors. As unsecured creditors,
the bank's credit will be subject to restructuring plan limits and
discounts and be paid from free cash flow from DEV, which may be
over fifteen years.
Cadence Chairman Andrew Suckling commented; "The ruling from
Brazil's São Paulo court marks a significant milestone for the
re-opening of the Amapá iron ore project and its long-term benefits
for stakeholders and the region. I would like to put on record my
sincere thanks and gratitude for the tireless efforts by Cadence
management, IndoSino and DEV and its advisors. This ruling brings
the Amapá Project back to life.
Despite the severe disruption created by COVID-19, management
has remained focused on delivering the Amapá Project as planned,
all the while supported by a robust iron ore market that continues
to justify the opportunity. Regardless, our primary concern at this
time has been to ensure the safety and wellbeing of all our staff,
and it is my fervent hope that employees, shareholders, contractors
and their families continue to remain safe and secure through this
challenging time."
Cadence CEO Kiran Morzaria commented; "For Cadence, this a
significant step forward for the redevelopment of the fully
integrated Amapá iron ore project. We are truly entering the
operational phase of the asset, and despite the current turbulent
and volatile market conditions, the iron ore prices remain robust.
The whole Cadence and JV team have been active in delivering an
excellent outcome for Amapá.
The shipment of the iron ore stockpile at the port of Santana
will now trigger long overdue payments to hundreds of local
ex-employees and small creditors. It will assist with funding the
necessary recommissioning studies required to re-open the mine,
which will, in turn, will rejuvenate the regional economy and
provide significant employment, health and educational benefits for
its people."
Our Chairman has previously referred to Amapá as a "Company
Changing" project for Cadence, and it is now on its way to deliver
this goal. With this in mind, I now look forward to providing
shareholders with further updates as the recommissioning process
moves forward."
- Ends -
For further information:
Cadence Minerals plc +44 (0) 207 440 0647
Andrew Suckling
Kiran Morzaria
WH Ireland Limited (NOMAD & Broker) +44 (0) 207 220 1666
James Joyce
James Sinclair-Ford
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
identi ed 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 re ect
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. 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 actual results will be
consistent with such forward-looking statements.
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END
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