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Cadence Minerals sign HOT with IndoSino

Mining News - Published on Thu, 23 May 2019

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Cadence Minerals announced that it has entered into a non-binding Heads of Terms with IndoSino Pte Ltd to invest in and acquire up to a 27% interest in the former Anglo American plc and Cliffs Natural Resources Amapá iron ore mine, beneficiation plant, railway and private port owned by DEV Mineracao SA. The Amap Project is a large-scale iron open pit ore mine with associated rail, port and beneficiation facilities and commenced operations in December 2007.Production increased to 4.8 million tonne and 6.1 million tonne of iron ore concentrate product in 2011 and 2012 respectively.

The HOT stipulates that Cadence, upon entering into a binding investment agreement, will have the right to acquire 27% of the Amapá Project by investing a total of USD 6 million over two stages into a JV company, Pedra Branca Alliance Pte Ltd. Cadence's investment is conditional, amongst other matters, on the approval of a judicial restructuring plan submitted by Cadence and IndoSino to the Sao Paulo Commercial Court in Brazil, the transfer of 99.9% of the issued share capital of Amapá to PBA and Cadence raising the required finance. Cadence is in discussions with potential strategic investors to fund all or part of this investment via equity.

Cadence is currently finalising the terms of the binding investment agreement, which is expected to be entered into shortly.

Highlights

• The Amapá Project is a large-scale open pit iron ore mine with associated rail, port and beneficiation facilities and is located in the Amapá state, north-east, Brazil.

• Prior to its sale in 2012 Anglo American valued its 70% stake in the Amapá Project at USD 866 million (100% 1.2 billion) and after impairment valued it at US USD 462 million in its 2012 Annual Report ( 100% USD 600m)

• During its operation the mine generated an annual operating profit of up to USD 171 million (100%).

•The total historic mineral resource contains an estimated 348 million tonnes of ore @ 38.9% iron content ("Fe")

• The ore is beneficiated 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 million tonne of Iron Ore per annum.

• Initial revenue from the project is anticpated to start in Q4 2019 from the sale of the iron ore stockpile currently located at the Port of Santana , Brazil.

• Potential for the mine and existing infrastructure to be brought to market swiftly with mining and processing anticipated to restart in 2021 subject to the grant of the necessary permits, regulatory consents and project financing.

• Cadence is able to acquire a significant share of the mine (up to 27% of the issued share capital of PBA) for a staged equity investment of US$ 6 million and has a first right of refusal to acquire up to 49%.

• 65% Iron Ore (CFR) North China have increased from US$95.95 per dry metric tonne to USD 111.90 / dmt since early September 2018 to the middle of May 2019[4]

Cadence Minerals CEO Mr Kiran Morzaria commented "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 Amapá Project gives Cadence the potential for an exceptional ROI in the run up to full production and an opportunity to become a significant shareholder in a mid tier iron ore producer. 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."

Mr Morzaria said that "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 Q4 2019, and to see the mine fully operational in 2021. On behalf of myself and the Cadence team, we are wholly enthused by the opportunity the Amapá Project presents, and we are excited by the prospect of restarting mining operations."

Source :

Posted By : Rabi Wangkhem on Thu, 23 May 2019
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