Cadence Minerals PLC Amapa - Formal Completion & Vesting of 20% (8148A)
February 07 2022 - 1:59AM
UK Regulatory
TIDMKDNC
RNS Number : 8148A
Cadence Minerals PLC
07 February 2022
Cadence Minerals Plc
("Cadence Minerals", "Cadence" or "the Company")
Cadence formally completes Phase One to vest its 20% in the
Amapa Iron Ore Project
Cadence Minerals (AIM/AQX: KDNC; OTC: KDNCY) is pleased to
announce that further to the announcement of December 29th 2021
(link here), all of the required contractual and regulatory
documentation has been completed and filed and Cadence now owns 20%
of the Amapa Iron Ore Project.
On the 24th December 2021, the Company alongside Indo Sino
entered into a Settlement Agreement with DEV Mineração S.A. ("DEV")
and the Secured Bank Creditors, which to become effective required
some additional contractual and regulatory documentation to be
completed and filed. As this work has now been completed, Pedra
Brance Alliance ("PBA"), the Cadence and IndoSino joint venture
company now owns 100% of the equity of DEV, which owns the
large-scale Amapa iron ore mine, beneficiation plant, railway and
private port ("Amapa Project", "Amapa"), and consequently Cadence
is a 20% owner of PBA.
Anglo American, a previous owner, valued 100 percent in the
Amapa Project at US$ 1.2 billion. It impaired the asset in its 2012
Annual Accounts to US$ 660 million for 100 percent.
The second stage of investment is for a further 7% of PBA for a
consideration of US$3.5 million. This second stage investment was
conditional on several material preconditions, which have now been
satisfied. Cadence will now vest its next 7% which will be funded
from its recent equity raise. If Cadence does not complete the
investment, Indo Sino will have a twelve-month option to buy the
shares in PBA held by Cadence for 1.5 (1 1/2 ) times the price paid
by Cadence for the shares.
Cadence CEO, Kiran Morzaria, commented: "I am pleased to report
that we have formally completed phase one of our investment into
Amapa to acquire our initial 20 percent. Furthermore, our board are
delighted that the recent fundraise to fund the second investment
phase was oversubscribed. It is clear that our vision for Amapa is
shared by new and existing shareholders alike given the high level
of interest and participation in the fundraising."
"I look forward to reporting back to you on progress in the
coming weeks."
About the Amapa Project
The Amapa Project commenced operations in December 2007 with the
first production of iron ore concentrate product of 712 kt in 2008.
In 2008 Anglo American (70%) and Cliffs (30%) acquired the Amapa
Project in 2008 as part of a larger package of mining assets in
Brazil.
Production steadily increased to 4.8 Mt and 6.1 Mt of iron ore
concentrate product in 2011 and 2012. During this period, Anglo
American reported operating profits from its 70% ownership in the
Amapa Project of US$ 120 million (100% US$ 171 million) and US$ 54
million (100% US$ 77 million). Before its sale in 2012, Anglo
American valued its 70% stake in the Amapa Project at US$ 866
million (100% US$ 1.2 billion). It impaired the asset in its 2012
Annual Accounts to US$ 462 million (100% US$ 660 million.
Cadence updated the Mineral Resource Estimate on 2 November
2020, increasing the MRE by 21%. The current MRE contains an
Mineral Resource of 176.7 million tonnes grading 39.7% Fe in the
Indicated category and Mineral Resource of 8.7Mt at 36.9% in the
Inferred category, both reported within an optimised pit shell and
using a cut-off grade of 25% Fe.
Details of the Joint Venture Agreement
The agreement with our joint venture partner, Indo Sino Pty Ltd,
is to invest in and acquire up to 27% of the joint venture company
Pedra Branca Alliance Pte. Ltd. ("JV Co"). On completion and
registration of the Settlement Agreement the equity of DEV
Mineração S.A. ("DEV") will be transferred to the JV Co, at which
point it will own 99.9% of the Amapa Project. Should Indo Sino seek
further investors or an investment in the JV Co, the agreement also
provides Cadence with a first right of refusal to increase its
stake to 49% in the JV Co.
To acquire its 27% interest Cadence will invest US$ 6 million
over two stages in JV Co. The first stage is for 20% of the JV Co
the consideration for which is US$2.5 million. The second stage of
investment is for a further 7% of JV Co for a consideration of
US$3.5 million. If Cadence is unable to complete the second stage
of the investment or not exercise its right of first refusal under
the terms of the Agreement, Indo Sino will have a twelve-month
option to buy the shares in JV Co held by Cadence for 1.5 (1 1/2 )
times the price paid by Cadence for such shares.
Cadence's investment was conditional on several material
preconditions, which as of the date of this announcement have been
satisfied. On completion of Cadence's investment (not including the
first right of refusal), our joint venture partner Indo Sino will
own 73% of JV Co. The Agreement also contains security and default
clauses which if triggered causes an upwards adjustment mechanism
to allow Cadence to either receive cash from JV Co or receive
additional shares in JV Co. In the latter case, Cadence's
shareholding in the JV Co will not go above 49.9%.
On completion of the US$ 6 million investment, Cadence will have
the right to appoint two members to a five-member board, with the
remaining three comprising of one member jointly appointed by
Cadence and Indo Sino and two appointed by Indo Sino.
- Ends -
For further information: 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
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 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 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 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.
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