Cadence Minerals plc and its joint venture partners have executed a binding US$4.6 million prepayment off-take agreement, relating to the Amapá iron ore project, in northern Brazil.
CASHFLOW
The company, together with Pedra Branca Alliance Pte Ltd and DEV Mineração S.A., will receive the funds from its chosen off-take partner.
Repayment will be through per tonne of iron ore shipped.
Cadence said that the prepayment funds would enable the licensing and restart of the Azteca processing plant.
The plant is anticipated to generate early cashflow, which will contribute towards working capital, operations and the definitive feasibilty study for Amapá.
Over the next two months, the JV aims to complete the final items needed for the mine installation licence.
Work will include the supplementary archaeological survey and detailed engineering for the water-reticulation and sewage-treatment systems.
Formal federal and state environmental approval is expected to take a further two months.
“Executing the binding agreement is a major milestone in our staged approach to bringing Amapá back into production,” added chief executive officer Kiran Morzaria.
“With due diligence complete and initial funding now available, we can progress the final licensing items ahead of commencing the refurbishment of the Azteca plant.
“The structure ensures Cadence contributes a modest proportion of the capital while retaining full exposure to the near-term cashflow and the wider development of the project.
“We now move confidently towards the [mine] installation licence and the start of restart activities.”
Amapá, which includes a fully integrated mine, rail and port, contains a JORC-compliant mineral resource of 276 million tonnes at 38% iron.
Proven and probable ore reserves total 195.8 Mt at 39.3% iron.
FUNDRAISE
On 6 October, Cadence issued 10 million new ordinary shares, each at an issue price of £0.03, in a retail offer which raised £300,000 following “significantly higher” demand than anticipated.
The company’s issued ordinary share capital now comprises 415,631,038 ordinary shares, each with one voting right.
Cadence does not hold any ordinary shares in treasury.