Cadence Minerals plc (LON:KDNC) has provided an update on its investment in the Amapá Iron Ore Project, Brazil.
Settlement of Bank Creditors
In early September this year, we announced that DEV Mineração S.A’s, Cadence and Indo Sino Pty Ltd agreed in principle to the settlement terms proposed by the secured bank creditors. The legal drafting of the settlement agreement and supporting documents continues, and we look forward to updating the market once these documents are executed.
The execution of a settlement agreement with the Bank Creditors would represent the satisfaction of the remaining major precondition for Cadence to make its initial 20% investment in the Amapá Project. On completion of the conditions and the release of the Cadence escrow monies, Cadence will become a 20% shareholder in the Amapá Project via our joint venture company, which will own 99.9% of DEV.
Operations
While work on the settlement agreement has been ongoing, operations have continued to progress at the Amapá Project. This work includes updating the assessment of mineral resources, advancing the scoping study, updating its mining rights and investigating the installation of an interim shipment facility outside the public port to increase the capacity associated with the shipment of the iron ore stockpiles.
As previously announced, there was a historic mineral resource published by Anglo American in 2012 which was prepared under the Australasian Code for Reporting of Exploration Resources and Ore Reserves 2004 edition; however, given the passage of time, the investors needed to update the assessment of the mineral resources.
We are pleased to report that despite the constraints of COVID-19, the Investors have been able to update the mineral resource under NI 43-101 a national instrument for the Standards of Disclosure for Mineral Projects within Canada. A summary of the mineral resource is being announced today immediately after this announcement. The mineral resource will be utilised to generate an optimised pit and mine schedule, which will form part of the scoping study.
The scoping study continues to advance. Alongside the preparation of the mine schedule, we will be preparing a condition and engineering study on the beneficiation plant and a review of the tailings storage facilities. The Investors have appointed Wardell Armstrong LLP (“Wardell Armstong”) to supervise and prepare the scoping study. We anticipate, subject to travel restrictions associated with COVID-19, to have the scoping study completed after we execute our final settlement with the Bank Creditors.
DEV has also continued to make progress with the Amapá Project. In particular, DEV is liaising with Agência Nacional de Mineração (“ANM”) in Brazil, to start updating its mining licenses, which is one of the precursors to obtaining the operational permits to begin mining and processing. Additionally, DEV is investigating installation of an interim shipment facility for shipment of iron ore from the stockpiles to compliment the planned shipments from the public port. If successful, and once shipments have commenced this will allow DEV to increase the rate of iron ore stockpile shipments, providing a temporary solution while DEV’s private port is fully refurbished as part of the Amapá Project recommissioning process.
Non-Executive Chairman Andrew Suckling commented:
“On behalf of our board, I am delighted to report progress with the legal drafting of the settlement agreement with the Amapá bank creditors. Bringing Amapá out of administration and into the recommissioning phase is a complex and detailed process, and I would like to thank all those involved for their tireless efforts in making this happen, despite the severe restrictions imposed by COVID-19.”
“The excellent developments on the operational front move us ever closer to bringing Amapá back to life, and along with the updated mineral resource statement, we see the value, both in the project and also on a macro level, the potential for prosperity and employment in the Amapá region, increase exponentially.”
Cadence Minerals CEO Kiran Morzaria commented:
“I have said on many occasions that putting together and executing a transaction to bring Amapá out of administration is a complex and protracted progress. Nonetheless, we have made excellent progress in bringing this previously abandoned iron ore mine back to life and towards completion of the first phase of our investment. Once made, this investment will mark a historic milestone for Cadence, and as our Chairman has pointed out, it will potentially transform the prospects for employment and prosperity in the region of Amapá. I look forward to updating the market on further progress.”
“I would also like to put on record my sincere thanks to the board and our team on the ground, who have worked tirelessly to bring us to this point amidst the unprecedented disruption created by COVID-19.”
