Cadence shares surge on new Amapa deal
By Josh White
Date: Monday 30 Oct 2023
(Sharecast News) - Cadence Minerals shares were rocketing on Monday after it announced a memorandum of understanding (MoU) related to its Amapa Iron Ore Project in Brazil.
The AIM-traded firm said the MoU was between its joint venture entity Pedra and Branca Alliance (PBA), DEV Mineração (DEV), and Sinoma Tianjin Cement Industry Design & Research Institute (TCIDR), a subsidiary of Sinoma International Engineering.
It described the MoU as a pivotal step in ongoing efforts to advance the development of the Amapa Project.
Under the agreement, TCIDR would take the lead in finalising the definitive feasibility study (DFS) and, on its successful completion, will present a fixed-price engineering, procurement and construction (EPC) contract for the project.
However, it noted that the DFS, EPC contract and any associated services by TCIDR remained contingent on competitive pricing and approval from PBA and DEV.
Once the approvals were secured and TCIDR facilitated project financing, TCIDR would then assume the role of general EPC contractor for Amapa.
In terms of financing, TCIDR, under the terms of the MoU, would exert its best efforts to secure the necessary funding for the construction and redevelopment of the Amapa Project.
That would include seeking guarantees, project finance insurance and debt financing.
Cadence said discussions were underway with SinoSure China Export & Credit Insurance Corporation and China Development Bank regarding financing options.
Looking ahead, PBA, DEV and TCIDR would collaboratively devise a roadmap to secure funding for the DFS and subsequent project financing for Amapa.
That would also encompass a fixed-price EPC contract between DEV and TCIDR, supported by project finance, export credit insurance and credit support from TCIDR.
Additionally, Cadence Minerals said it had strengthened its foothold in the Amapa Project, with a total investment of $12.1m as of September.
That resulted in Cadence's equity stake in the project increasing to 32.6%, marking a significant milestone in the company's commitment to Amapa.
"This Cadence Minerals management team, of which I am proud to be part, have worked tirelessly with PBA and DEV, local government and contractors to bring Amapá to this point," said chairman Andrew Suckling.
"Investments of this nature are rarely straightforward, but our management and shareholders are now starting to see a tangible return from bringing this large and complex infrastructure back to life.
"Along with Kiran, I have witnessed firsthand the rejuvenating effect the recommissioning process has had on the region and community, and now, with this MoU, there is a real sense that we can re-develop this project back to its nameplate capacity."
Cadence chief executive officer Kiran Morzaria added that from a strategic standpoint, for Cadence and PBA, the MoU with TCIDR represented a "potential one-stop shop solution", coupling the requirements for final project funding with engineering, construction and technical expertise.
"Following this, our next steps will be the completion of the remaining optimisation studies followed by the definitive feasibility study."
"Our investment to date has resulted in an increased shareholding, which now stands at 32.6%, and I am both pleased and proud that having first submitted a judicial restructuring plan to creditors in 2019, we are now making rapid progress."
At 1226 GMT, shares in Cadence Minerals were up 66.19% at 8.06p.
Reporting by Josh White for Sharecast.com.
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