Cadence Minerals To Acquire 27% In Amapa Iron Mine For USD6 Million

LONDON (Alliance News) - Cadence Minerals PLC said Tuesday it has entered into a non-binding ...

Alliance News 21 May, 2019 | 6:03PM
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LONDON (Alliance News) - Cadence Minerals PLC said Tuesday it has entered into a non-binding heads of terms with IndoSino Pte Ltd to acquire 27% interest in the Amapa iron ore mine, beneficiation plant, railway and private port owned by DEV Mineracao SA.

Shares in Cadence Minerals closed up 13% Tuesday at 0.16 pence each.

The deal stipulates that Cadence will have the right to acquire 27% of the project by investing USD6 million over two stages into a joint venture company, Pedra Branca Alliance Pte Ltd.

The company said it is in discussions with "potential strategic investors" to fund all or part of the investment via equity.

Cadence has the first right of refusal to acquire up to 49% of the project, located in north east Brazil.

"It is rare in our industry to be presented with an opportunity to put forward a relatively modest investment to participate in such a project that we believe provides us with a potentially transformative asset for our company. The Amapa project gives Cadence the potential for an exceptional return on investment in the run up to full production and an opportunity to become a significant shareholder in a mid tier iron ore producer," said Cadence Chief Executive Kiran Morzaria.

The Amapa project commenced operations at the end of 2007 and seen production rise to 4.8 million tonnes and 6.1 million tonnes of iron ore concentrate in 2011 and 2012 respectively.

FTSE 100-listed mining giant Anglo American PLC previously held a 70% stake in the mine, and in 2012 valued that stake, after impairment at USD462 million.

The total historic mineral resource of the mine contains an estimated 348 million tonnes of ore at 3.9% iron content.

Initial revenue from the project is expected to start in the fourth quarter of 2019, from the sale of iron ore stockpiles. Mining operations are expected to re-start in 2021.

Morzaria continued: "Our participation in the project has been ongoing for some 9 months, involving an extensive and comprehensive due diligence process. Through this we have gained a thorough understanding of the judicial restructuring process, and along with IndoSino, we have submitted the judicial restructuring plan to the courts in Brazil."

He added: "Given the nature of the asset the capital costs are estimated to be substantially lower than would be normally associated with developing a similar sized project from scratch. As the project restarts operations, it is hoped it can move rapidly forward to revenue generation by the fourth quarter of 2019, and to see the mine fully operational in 2021."

By Paul McGowan; paulmcgowan@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
Cadence Minerals PLC 0.12 GBX -4.95 -
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