Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to announce that, following the approval of the judicial restructuring plan (“JRP”) announced on August 30th 2019, along with its partners it has agreed with the State of Amapá the reinstatement of a life of mine railway concession (“Concessions”) between the Amapá iron ore mine (“Amapá” “Amapá Project”) and the port in Santana, State of Amapá, Brazil.
The Amapá Project
The Amapá Project was owned by Anglo American plc and Cliffs Natural Resources and consists of a large-scale iron ore mine, beneficiation plant, railway and private port. Before its sale in 2012, Anglo American valued its 70% stake at US $462m in its 2012 Annual Report (100% US $600m). The Amapá Project is 99.9% owned by DEV Mineração S.A. (“DEV”).
Details of Railway Concession
The reinstatement of the Concessions were agreed between Cadence, Indo Sino Pte. Ltd. (“Indo Sino”), and the government of Amapá, including the state secretary of transport, state secretary of planning, state secretary of the environment, attorney generals office and the office of the Governor of Amapá.
The Concessions are in force for the life of the mine. The Concessions allow DEV’s 100% owned subsidiary to operate the railway, for the primary purpose of the shipment of iron ore over 180 km from the mine to the private port in Santana. The railway will be maintained and improved to allow the eventual shipment of approximately 5.5 million tonnes of iron ore, along with providing a passenger and good service. The concessions also allows DEV to expand the capacity of the railway to transport other goods, should there be commercial demand.
Satisfaction of Precondition
The reinstatement of the Concessions represents the satisfaction of one of the two principal preconditions for Cadence’s investment in the Amapá Project and the release of US$2.5 million currently held in escrow in a judicial trust account.
The second principle precondition is the release of security over The Amapá Project. Along with our partners, we continue to negotiate with the secured bank creditors to reach a settlement and release the security over the Amapá Project. Once the preconditions have been met, Cadence will own 20% of the Amapá iron ore project.
On satisfaction of this, the monies held in the judicial trust account will be released for the payment of former employees and small trade creditors. On the release of the monies, the Government of Amapá will permit DEV to ship the iron ore stockpile at the port, generating early revenue for the project.
Cadence Non-Executive Chairman Andrew Suckling commented; “To echo my previous comments, in my time working with commodity projects around the world, I have rarely if ever seen a lapsed mining project with this sort of potential. The reinstatement of the life of mine railway concession is the first key step toward rehabilitation of the Amapá Project, and I speak for our board and investors when I say that we expect this to be a Company changing event. Cadence and Indo Sino, along with the Governor of Amapá and his team of Government Officials have worked tirelessly to conclude this key step, and we are grateful for all they have achieved.”
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In its previous life, Amapá’s output contributed significantly to the regional economy. It is important to consider the employment opportunities and funding for infrastructure, education and health that a rehabilitated mine will bring to this part of Brazil.”
Cadence CEO Kiran Morzaria commented; “Since the approval of the JRP in August, we have worked with Indo Sino and the Governor of Amapá to secure this first key step to bring Amapá back into production. Now we have secured the Railway concessions, once agreement has been reached with the Government of Amapá to release security over the project we can commence shipment of the iron ore stockpile. This will in turn provide approx US$ 60 million, which will be reinvested in the restart of the Amapá Project. I look forward to providing our board and investors with further progress updates.”
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For further information:
Cadence Minerals plc
+44 (0) 207 440 0647
Andrew Suckling
Kiran Morzaria
WH Ireland Limited (NOMAD & Broker)
+44 (0) 207 220 1666
James Joyce
James Sinclair-Ford
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 identified 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 the Company’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 reflect 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 the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. The Company cannot assure investors that actual results will be consistent with such forward-looking statements.