Cadence Minerals #KDNC acquires up to 100% of Hard Rock Lithium Prospects in Argentina

Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is delighted to inform shareholders that it has executed binding investment agreements with Lithium Technologies Pty Ltd and Lithium Supplies Pty Ltd to acquire up to 100% of six prospective hard rock lithium assets in Argentina.

These transactions mark the start of the Company’s strategic shift to earn in to early stage lithium assets in well-known lithium jurisdictions where we see the potential to deliver shareholder value by investing in projects that have shorter development timeline to cashflow than a typical lithium carbonate producer.

HIGHLIGHTS

• The Vendors have claims over 55,773 hectares for six exploration permits within the known spodumene bearing pegmatite fields in San Luis Province, Central Argentina.
• Initial site visit and reviews by Cadence have confirmed multiple pegmatite outcrops across the six claims. Some of these occurrences are proximate or along strike from known mineralised pegmatites that have been previously mined for lithium minerals (such as spodumene or lepidolite).
• The pegmatite fields of San Luis have an important past record of producing mica, beryl, spodumene, tantalite (tantalum oxide), columbite (niobium oxide), and recently potassium feldspar, albite and quartz.
• Historic mines outside of the claims have produced lithium oxide (“Li₂O”) at grades ranging from 4.5% to 6.5%.
• The properties have good access and infrastructure support for exploration activities on a year-round basis.
• On grant of the exploration permits Cadence will acquire up to 49% by spending £1.1m on exploration and drilling, and by issuing £0.4 million of new ordinary shares in Cadence to The Vendors.
• Cadence has an option to acquire up to 100% by issuing a further £1.75m of new ordinary shares in Cadence.

Kiran Morzaria, Chief Executive Officer of Cadence, commented: “These assets tick all the boxes that we were looking for: located in a well-known lithium producing country and in a large pegmatite field with known lithium compound production; potential to deliver quicker and cheaper development timelines and produce lithium oxide concentrate; near-term value triggers in the form of sampling and drilling and low cost in terms of the acquisition itself and the mineral exploration.”

Andrew Suckling, Executive Chairman of Cadence, added: “After an extensive review of opportunities, this acquisition enables us to deliver on our strategic objectives.It also provides us with an excellent platform to investigate building a larger portfolio of interests in a country with an established lithium industry, good infrastructure and supportive regulatory and fiscal regimes.  The presence of operators of the calibre of SQM and others in our view is a testament to this. The next year promises to be an exciting period for Cadence, and, we look forward to providing further updates on our progress in due course.”

New lithium assets

The Vendors have claims over a total of six hard rock lithium assets in San Luis Province, Central Argentina. Combined, the total area of the six assets is 55,773 hectares which delivers Cadence a large potentially mineralised footprint to ramp up exploration activities with the target of proving up a commercially viable JORC code compliant resource.

There are over a dozen historic mines (mined between 1936-80) in the Sans Luis area which produced lithium oxide at grades from 4.5% to 6.5% Li₂O. In recent years, assay results taken from the spodumene outcrops across the region have returned results ranging from 5% up to 8.1% Li₂O. Aggregating historic estimates for the legacy mines, there is an estimated 55,000 tonnes of lithium oxide. However, with the application of modern exploration techniques, we believe that there is potentially considerable exploration upside across the six assets.

More broadly, there are several other competitive advantages:

• Readily accessible infrastructure – the assets are close to main roads, power lines, railroads, and small cities for labour and supplies; with highly competitive labour mining services available
• Relatively low topographic height range and smooth fields enabling easy access to all project areas;
• Mining friendly communities and active quarries provide advantages for exploration; and
• No cities or lakes inside project areas which mitigates environmental issues to a large degree.

Background of the Lithium – Bearing Pegmatite Fields of San Luis

The San Luis and Córdoba lithium bearing pegmatite fields belong to the Pampean pegmatite province that was defined to include the economic fields of granitic pegmatites of central and north-western Argentina. It contains more than 95% of the granitic pegmatites of the country, with mineral resources that have been mined during the past 80 years, producing most of the potassium feldspar, quartz and mica plus Be‐, Li‐, Ta‐, Bi‐ and Rb‐ bearing minerals.

Of particular importance for hard rock lithium exploration are those pegmatite districts located in San Luis and western Córdoba.

Two parallel belts of Lithium-Caesium-Tantalum (“LCT”) pegmatites are found orientated NNE-SSW. In the western belt, pegmatites are enriched with Sn, whereas in the eastern belt pegmatites are Nb-Ta rich. The Sn-enriched pegmatite bodies were exploited for cassiterite during the 1940’s. The lithium mineralisation is predominantly represented by spodumene with minor amblygonite and lepidolite.

Future Work Program

We are looking to evaluate and define the most prospective targets across the six areas. Initially, this will focus on geological mapping, mineralogical studies of exposed pegmatites and the mapping and any newly identified historical workings. We anticipate we will be able to start this in Q1 of 2018.

This will be followed by an extensive sampling programme to identify any potential mineralisation, after which we can develop a drill programme with a target of identifying a JORC code compliant economic resource.

Argentine Background

Since 2015, reformist economic and political policies have placed Argentina back on the radar as a favourable investment destination: the economic landscape is improving while inflation is being tamed. Further, a US free trade deal has been negotiated, while debt issues are mostly resolved, and exchange controls eliminated, which has seen credit ratings improve.

For the mining sector, the government has eliminated export taxes on metals and allowed foreign-owned mining groups to repatriate profits overseas. More recently, the government signed a mining deal with 20 provincial governors to harmonise taxes and regulations to attract mining investment away from Chile and Peru.

Argentina is a growing lithium producer, and since 2015 Argentina has received more investment than any other country in the ‘lithium triangle’.  It is currently the world’s third-largest producer, with at least five new projects slated to come into production over the coming years.

Details of the Assets

Lithium Technologies Pty Ltd and Lithium Supplies Pty Ltd each own 100% of Argo Mining S.A (“Argo”) and Mining and Metals (S.A) (“MinMet”) respectively. On grant of the exploration permits, Argo and MinMet will become the titleholders of the exploration permits. Further details of exploration permits are outlined below.

Details of the Transactions

Cadence can acquire 100% of the interest in the exploration permits and will initially earn 49% via staged investments of cash spent on exploration and development and the issue of new ordinary shares in Cadence to The Vendors. Ninety percent of the cash investment and all of the share consideration is contingent on the grant to the titleholders of the exploration permits. Cadence also has a one-year option to acquire the remaining 51% of the interest in the exploration permits. Key details of transactions are contained in the table below.

The vendors will retain a 1.5% net smelter royalty on products produced from the assets. The royalty will be deferred and only become payable upon the repayment of the capital and any debt associated with establishing a mineral processing facility.

Lithium Technologies Pty Ltd and Lithium Supplies Pty Ltd reported a loss of A$ 31,950 and A$ 4,680 respectively for the 5-month period ending 30 November 2017.

– Ends –

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. 

About Cadence Minerals

Cadence is dedicated to smart investments for a greener world. The planet needs rechargeable batteries on a global scale – upcoming supersized passenger vehicles, lorries and buses – require lithium and other technology minerals to power their cells. Cadence is helping find these minerals in new places and extracting them in new ways, which will meet the demand of this burgeoning market. With over £25 million vested in key assets globally, Cadence is helping us reach tomorrow, today.

Cadence invests across the globe, principally in lithium mining projects. Its primary strategy is taking significant economic stakes in upstream exploration and development assets within strategic metals. We identify assets that have strategic cost advantages that are not replicable, with the aim of achieving lower quartile production costs. The combination of this approach and seeking value opportunities allows us to identify projects capable of achieving high rates of return.

The Cadence board has a blend of mining, commodity investing, fund management and deal structuring knowledge and experience, that is supported by access to key marketing, political and industry contacts. These resources are leveraged not only in our investment decisions but also in continuing support of our investments, whether it be increasing market awareness of an asset, or advising on product mix or path to production. Cadence Mineral’s goal is to assist management to rapidly develop the project up the value curve and deliver excellent returns on its investments.

Technical Glossary

The following is a summary of technical terms:

Lithium Classification and Conversion Factors

Lithium grades are normally presented in percentages or parts per million (ppm). Grades of deposits are also expressed as lithium compounds in percentages, for example as a per cent. lithium oxide (Li₂O) content or per cent. lithium carbonate (Li₂CO₃) content.

Lithium carbonate equivalent (“LCE”) is the industry standard terminology for, and is equivalent to, Li₂CO₃. Use of LCE is to provide data comparable with industry reports and is the total equivalent amount of lithium carbonate, assuming the lithium content in the deposit is converted to lithium carbonate, using the conversion rates in the table included further below to get an equivalent Li₂CO₃ value in per cent. Use of LCE assumes 100% recovery and no process losses in the extraction of Li₂CO₃ from the deposit.

Lithium resources and reserves are usually presented in tonnes of LCE or Li.

The standard conversion factors are set out in the table below:

Table: Conversion Factors for Lithium Compounds and Minerals