TIDMKDNC
RNS Number : 4059L
Cadence Minerals PLC
03 January 2023
Cadence Minerals Plc
("Cadence Minerals", "Cadence", or "the Company")
Pre-Feasibility Study Delivers Robust Economics for the Amapá
Iron Ore Project, Brazil
Post-Tax Project NPV US$949 million, Internal Rate of Return of
34% and a Project Maiden Ore Reserve Estimate of 195.8 Mt (Cadence
attributable of 58.74 Mt) at 39.34% Fe Declared
Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to
announce the completion of the Pre-Feasibility Study ("PFS") on the
Amapá Iron Ore Project, Brazil ("Amapá" or the "Project").
The PFS confirms the potential for the Amapá Iron Ore Project to
produce a high-grade iron ore concentrate and generate strong
returns over its life of mine. Completing the PFS is a significant
milestone in the Project's development, laying the foundations to
advance Amapá to eventual production.
Cadence holds a 30% interest in Pedra Branca and, consequently,
a 30% interest in the Amapá Project and has a first right of
refusal to increase its interest to 49%.
The PFS was managed by Pedra Branca Alliance Pte. Ltd. ("PBA"),
Cadence and Indo Sino Pte. Ltd. ("Indo Sino") and has been compiled
by Wardell Armstrong International ("WAI"). WAI is a leading,
globally recognised mining consultancy with a track record of
conducting all levels of technical study required on projects that
have successfully been financed and developed into mining
operations.
PFS Highlights:
Ø Annual average production after ramp-up of 5.28 million dry
metric tonnes per annum ("Mtpa") of Fe concentrate, consisting of
4.36 Mtpa at 65.4% Fe and 0.92 Mtpa at 62% Fe concentrate.
Ø Post-tax Net Present Value ("NPV") of US$949 million ("M") at
a discount rate of 10%, with profit after tax of US$2.96 billion
("B") over Life of Mine ("LOM") gross revenues of US$9.39 B over
LOM.
Ø Post-tax Internal Rate of Return of 34%, with an average
annual LOM EBITDA of US$235 M per annum.
Ø Maiden Ore Reserve of 195.8 million tonnes ("Mt") at 39.34%
Fe, demonstrating an 85% mineral resource conversion.
Ø Free on Board ("FOB") C1 Cash Costs of US$35.53/dmt at the
port of Santana. Cost and Freight ("CFR") C1 Cash Costs
US$64.23/dmt in China.
Ø After applying tax rebates, a pre-production capital cost
estimate of US$399 M, including the improvement and rehabilitation
of the processing facility and the restoration of the railway and
the wholly owned port export facility, cost estimations have a PFS
level of accuracy at +/- 25%.
Ø Key assumptions: Long-term average price for 62% iron ore
concentrate of US$95/dmt and US$23.8/dmt premium for 65.4% iron ore
concentrate, both quoted on a Cost and Freight ("CFR") basis.
Ø Opportunities: exploration target at the Tucano Mine to
further extend initial mine life and potential capital savings at
port loading facilities.
Based on the positive outcome of the PFS, the owner of the
Project DEV Mineração S/A ("DEV") intends to advance the Project.
The initial works will include optimising the capital expenditure,
optimising processing plant availability and efficiency and
developing the adjacent exploration targets to increase the mine
life, after which work on a Feasibility Study can begin.
Cadence CEO Kiran Morzaria commented: "On behalf of the Cadence
Board, we are pleased and proud to release the Pre-Feasibility
Study for the Amapá Iron Ore Project in Brazil. This study, which
we consider to be a definitive moment for our company, re-enforces
Cadence's analysis that the Amapá Project can be regenerated and
restarted on a profitable basis over an initial 16-year mine
life."
"The Study outlines a robust 5.28 Mtpa operation which can
deliver excellent cash flows, and a post-tax NPV of US$949 million
producing 4.36 Mtpa of 65.4% iron ore concentrate and 0.92 Mtpa of
62% iron ore concentrate."
"We are also pleased to declare a maiden Ore Reserve of 195.8Mt
at 39.34%, representing 85% resource to reserve conversion and
confirming the robust project fundamentals."
"The Project benefits from integrated infrastructure under the
owner's control, a well-established processing route, low capital
intensity and a quality product with an international reputation.
Along with a skilled workforce, proximity to operational
infrastructure and the potential to increase the mineral resource
means that Amapá remains an incredibly attractive investment
opportunity."
"The opportunity for DEV is to advance the Amapá Iron Ore
Project to a Financial Investment Decision. This could be completed
along with securing a strategic investor, offtake partner, separate
listing, or a combination of these options. However, we recognise
that there is still much work to complete at Amapá, which will
ultimately deliver a Feasibility Study."
"I look forward to reporting further progress across all our
projects in the coming months."
Table 1.1 Key Project Metrics (100% project basis)
Metric Unit 2022 PFS
Data
Total ore feed to the plant Mt (dry) 176.88
---------- ---------
Life of Mine Years 16
---------- ---------
Fe grade of ore feed to
the plant % 39.34
---------- ---------
Recovery % 76.27
---------- ---------
62.0% iron ore concentrate
production Mtpa 0.89
---------- ---------
65.4% iron ore concentrate
production Mtpa 4.23
---------- ---------
C1 Cash Costs FOB * US$/dmt 35.53
---------- ---------
C1 Cash Costs CFR ** US$/dmt 64.23
---------- ---------
Pre-Production capital investment*** US$M 399
---------- ---------
Sustaining capital investment
over LOM**** US$M 245
---------- ---------
Post-tax NPV (10%) US$M 949
---------- ---------
Post-tax IRR % 34
---------- ---------
Project payback Years 4
---------- ---------
Total profit after tax (net
operating profit) US$B 2.96
---------- ---------
* Means operating cash costs, including mining, processing,
geology, OHSE, rail, port and site G&A, divided by the tonnes
of iron ore concentrate produced. It excludes royalties
and is quoted on a FOB basis (excluding shipping to the
customer).
** Means the same as C1 Cash Costs FOB; however, it includes
shipping to the customer in China (CFR).
*** Includes direct tax credit rebate over 48 months
**** Includes both sustaining CAPEX and deferred capital expenditure,
specifically, improvements to the railway and the installation
of conveyor belt and mine site to rail load out
Summary of Amapá Iron Ore Project PFS Results
The information in the press release contains a summary of the
PFS and its results
Introduction
The Project consists of an open-pit iron ore mine, a processing
and beneficiation plant, a railway line, and an export port
terminal. DEV and its subsidiaries own the Amapá Project. DEV is
owned by PBA, a joint venture between Cadence Minerals Plc
("Cadence") and Indo Sino Trade Pte Ltd ("Indo Sino").
The Project ceased operations in 2014 after the port facility
suffered a geotechnical failure, which limited the export of iron
ore. Before the cessation of operations, the Project generated an
underlying profit of US$54 million in 2012 and US$120 million in
2011 ([1]) . Operations commenced in December 2007, and in 2008,
the Project produced 712 thousand tonnes of iron ore concentrate.
Production steadily increased, producing 4.8 Mt and 6.1 Mt of iron
ore concentrate products in 2011 and 2012, respectively.
DEV continued to operate the Project and rehabilitate the port
up until 2014. However, due to the restricted iron ore exports, and
cash flow constraints, in August 2015, DEV filed for judicial
protection in Brazil, and operations at the Project ceased.
In 2019 Cadence and Indo Sino, alongside DEV, submitted a
judicial restructuring plan ("JRP") for approval by the unsecured
creditors. As part of the JRP, DEV sought to redevelop the Amapá
Project. This strategy includes a plan to resume operations after
plant revitalisation and modifications, aimed at improving product
quality and increasing recovery, along with recovery of the port,
railway, and support areas.
It should be noted that the Amapá Project, and Pre-Feasibility
Study ("PFS"), has been managed by Indo Sino and Cadence in
co-operation with Wardell Armstrong International ("WAI"); the
latter has reviewed the work completed and compiled the PFS. The
PFS and supporting reports, engineering designs and data are the
sole property of PBA.
The Mineral Resource and Ore Reserve statements have been
prepared in accordance with the Guidelines of the Australasian Code
for Reporting of Exploration Results, Mineral Resources, and Ore
Reserves, the JORC Code, 2012 Edition (JORC Code (2012)). Cost
estimations were prepared by DEV, with input from third-party
independent engineers and subsequently reviewed by WAI using the
internationally accepted practice for PFS-level studies.
Location
The Amapá Project is in Amapá state, northeast Brazil. Amapá is
the second least populous state and the eighteenth largest by area.
Most of the Amapá state territory is covered with rainforest, while
the remaining areas are covered with savannah and plains. The State
capital and largest city is Macapá (pop. circa 500,000), with the
similarly sized municipality of Santana (pop. circa 120,000)
located just 14 km to the southwest.
The Amapá mine is some 125 km northeast of the state capital
Macapá, and the port facility is located on the Amazon River in the
municipality of Santana, close to Macapá, as shown in the figure
here.
The port site in the municipality of Santana is located 90 km
from the mouth of the Amazon River. The nearest populace centre to
the Amapá mine is Pedra Branca Do Amapari, some 10 km west, with
the larger conurbation of Serra do Navio 18 km to the
northwest.
Amapá Project Components
The Amapá Project PFS encompasses four distinct but completely
integrated operational components that form part of the study, as
illustrated in the figure here .
Amapá Mining Complex
An open-pit iron ore mine with various open pits, an iron ore
concentration and beneficiation plant, associated waste rock dumps,
and a tailings management facility.
Railway Line
Integrated 194 km railway line connecting Serra do Navio to the
port terminal at Santana. The rail passes via Pedra Branca do
Amapari (180 km from the port), located 13 km away from the Amapá
mine and plant complex by graded road.
Export Port Terminal
An integrated industrial port site, privately-owned and
controlled by DEV, is located in Santana. The terminal had the
capacity for loading Supramax and Handymax vessels.
Transhipment Solution
A Capesize vessel is partially loaded at the berth in Santana
port and topped off in the open ocean, 200 nautical
miles from the berth.
Pre-Feasibility Study
The PFS scope covers the existing mine, plant, rail, and port.
Capital and operational estimates were developed for refurbishing
the facilities to a safe working level. The study investigates all
the design and business parameters necessary to operate the Amapá
Project, including the railway system and privately owned port for
loading vessels with iron ore concentrate. It has also included an
upgrade to the existing plant with new equipment and improved
efficiency to produce 4.36 Mtpa of Blast Furnace Pellet Feed
("BFPF") and 0.92 Mtpa of spiral concentrate, a total of 5.28 Mtpa
(on a dry basis).
Cost Estimates
The capital costs ("CAPEX") estimate is based on the layout for
all areas of the Project and is supported by mechanical equipment
lists and engineering drawings. The costs for these items have been
derived from vendor quotes for the equipment and materials or
consultant engineering databases. The CAPEX estimate is after tax
(any duties and taxes deemed to be recoverable are calculated
separately), includes contingency, and excludes escalation. The
CAPEX estimate includes all the direct and indirect costs, local
taxes and duties and appropriate contingencies for the facilities
required to bring the Project into production, as defined by a
Pre-Feasibility level engineering study.
As this is a PFS, the cost accuracy is estimated at +/- 25% and
has a base date of June 2022. Pre-Production capital cost estimates
are provided below.
Table 1.2 Pre-Production capital cost estimates
Description (US$M)
Direct Capex Mining 2.8
-------
Direct Capex Beneficiation Plant and
Mining 155.1
-------
Direct Capex Rail 28.5
-------
Direct Capex Port 113.9
-------
Sub-total Direct Capex 300.4
-------
Sub-total Indirect Capex 65.2
-------
Environment and Community Cost 7.1
-------
Deduct Tax Credit 25.6
-------
Contingency 52.1
-------
Pre-Production Capex Cost 399.1
-------
Table 1.3 Deferred, sustaining, and closure capital costs over
LOM
Description (US$M)
Capex Tailings Storage Facility ("TSF") 9.8
-------
Capex Rail (2(nd) Phase) 20.0
-------
Capex Conveyor Belt 61.2
-------
Stay in Business 90.7
-------
Closure Costs 62.8
-------
Sustaining Capex Cost 244.5
-------
Operating expenditures ("OPEX") for the Project have been
prepared based on the Project physicals, detailed estimates of the
consumption of key consumables based on those physicals, and the
unit cost of consumables.
The periods considered are annual, and production follows the
production plan produced by DEV, based on a yearly output of 4.36
Mtpa of BFPF and 0.92 Mtpa of spiral concentrate, a total of 5.28
Mtpa (on a dry basis).
OPEX comprises physicals, labour, reagents and operating
consumables, freight and power costs, mobile equipment, utilities,
maintenance and mining contract costs, external contractor costs,
environmental, and miscellaneous/other General and Administrative
(G&A) expenses. OPEX estimates were prepared or advised by
independent consulting engineers. The estimate is supported by
engineering, benchmarking, and pricing of key consumables and costs
were derived from past production figures and informal quotes from
suppliers. The table below illustrates the operating costs
developed by discipline during the PFS. The project FOB and CFR
average cash cost per tonne of dry product over the LOM is
summarised below.
Table 1.4 FOB and CFR average cash cost per tonne of dry product
over the LOM
Cash Cost Per Discipline US$/dmt
Mine 17.05
--------
TSF 0.08
--------
Beneficiation Plant, Road / Conveyor
Transfer & Rail Loading 12.43
--------
Rail Freight 2.43
--------
Port 1.55
--------
G & A (5% total cost) 1.99
--------
FOB Cash Costs 35.53
--------
Marine Logistics 28.70
--------
CFR Cash Costs 64.23
--------
Project Financial Analysis
A PFS financial model was developed to evaluate the economics of
the Project. Summary results from the financial model outputs are
presented in tables within this section, including financial
analysis. The financial model considers 100% equity funding for the
Project, although, in reality, the financing of the Project will be
a mix of debt and equity. However, the existing obligations in
terms of principal repayment and current interest liabilities
payable have been included in the financial model. A summary of the
key financial information is presented below.
Table 1.5 Summary of key financial information for the
Project.
Item Over Life of Mine Unit 2022 PFS
Data
Gross revenue US$M 9,387
------ ---------
Freight (Maine Logistics) US$M (2,350)
------ ---------
Net Revenue US$M 7,037
------ ---------
Operating costs US$M (2,910)
------ ---------
Royalties and taxes (excluding
income tax) US$M (373)
------ ---------
EBITDA US$M 3,754
------ ---------
EBIT US$M 3,315
------ ---------
Net Taxes and Interest US$M 355
------ ---------
Net Operating Profit US$M 2,960
------ ---------
Initial, Sustaining capital
costs & repayments US$M 727
------ ---------
Free Cash Flow US$M 2,672
------ ---------
Item Unit 2022 PFS
Data
LOM Years 16
------- ---------
Discount rate % 10
------- ---------
NPV US$M 949
------- ---------
IRR % 34
------- ---------
Project Payback Years 4
------- ---------
Project Sensitivity Analysis
A sensitivity analysis was performed on key parameters within
the financial model to assess the impact of changes on the post-tax
NPV of the Project (debt-free). To examine the sensitivity of the
Project base case NPV the economic and operational conditions of
each cost factor were independently varied within a range of +/-
30%, and discount rates were changed within the 8%-15% range.
Project sensitivity analysis demonstrates that the Amapá Project
is most sensitive to a change in iron ore concentrate price,
followed by logistics costs (marine shipment charges) and operating
costs. It was least sensitive to deviation in CAPEX. The figure
here shows the results of the project sensitivity analysis.
Mineral Resource Statement
The MRE was previously reported on 7 October 2022 and is
available here . The MRE has been reported at a cut-off grade of
25% Fe constrained by a resource open pit and the topography dated
April 2014 (grey surface in the figure here ), in line with the
Reasonable Prospects For Eventual Economic Extraction (RPEEE)
principle. The MRE has been estimated, considering a product
revenue of US$120/t. The geotechnical parameters, metallurgical
recovery and updated mining costs were all provided by DEV.
Table 1.6 Summary of gross and attributable Mineral Resources
for the Amapá Iron Ore Project. Attributable tonnage to Cadence is
based on a 30% interest in the Project.
Classification Tonnage Attributable Fe (%) SiO(2) Al(2) P (%) Mn (%)
(Mt) Tonnage (Mt) (%) O(3)
(%)
Measured 55.33 16.60 39.26 30.40 6.54 0.161 1.03
------- ------------- ------ ------ ----- ----- ------
Indicated 174.15 52.25 38.60 28.75 7.86 0.156 0.91
------- ------------- ------ ------ ----- ----- ------
Meas. +
Ind 229.48 68.84 38.76 29.15 7.54 0.157 0.94
------- ------------- ------ ------ ----- ----- ------
Inferred 46.76 14.03 36.20 27.62 10.49 0.139 0.86
------- ------------- ------ ------ ----- ----- ------
TOTAL 276.24 82.87 38.33 28.89 8.04 0.154 0.93
------- ------------- ------ ------ ----- ----- ------
Notes:
(1) The Mineral Resource is considered to have reasonable
prospects for eventual economic extraction based on an optimised
pit shell
(2) Cut-Off Grade reported within an optimised pit and above a
cut-off grade of 25% Fe applied
(3) Tonnages are reported as wet tonnes
(4) Mineral Resources are not reserves until they have
demonstrated economic viability based on a Feasibility Study or
Pre-Feasibility Study
(5) The Mineral Resource Estimate has an effective date of 31
August 2022
(6) Mineral Resources have been classified in accordance with
the Australian Code for Reporting of Exploration Results. Mineral
Resources and Ore Reserves (JORC Code 2012)
(7) The attributable tonnes represent the part of the Mineral
Resource that will be attributable to Cadence Minerals' 30%
interest in the Project
(8) The operator is DEV
As required per the JORC Code 2012, Table 1 for reporting MREs
is available here .
Ore Reserve Statement
The mine engineering and design work for this PFS, including
operational logistics, equipment requirements, mining strategy, and
Ore Reserve Estimation, have been undertaken by a Brazilian mining
consultancy, Prominas Mining Ltd ("Prominas"). These works have
been conducted at the PFS level and incorporate an Ore Reserve
Estimate for open pit mining, which was prepared under the
guidelines of the JORC Code (2012).
Under the guidelines of the JORC Code (2012), an 'Ore Reserve'
is the economically mineable part of a Measured and/or Indicated
Mineral Resource. It includes diluting materials and allowances for
losses, which may occur when the material is mined or extracted and
is defined by studies at Pre-Feasibility or Feasibility level as
appropriate that include the application of considerations to
convert Mineral Resources to Mineral Reserves. These considerations
include, but are not restricted to, mining, processing,
metallurgical, infrastructure, economic, marketing, legal,
environmental, social, and governmental factors, called 'Modifying
Factors'. Such studies demonstrate that, at the time of reporting,
the economic extraction could reasonably be justified.
Prominas has estimated the Ore Reserve for the Amapá Project at
195.8Mt at an average grade of 39.34% Fe, at a cut-off grade of 25%
Fe, as presented in the table below.
Table 1.7 Amapá Project Ore Reserve Estimate (JORC Code (2012))
valid on 5 October 2022, DEV Mineral Rights - Fe >= 25.
Attributable tonnage to Cadence is based on a 30% interest in the
Project.
Classification Material Tonnage Attributable Head Grades (%)
(Mt) Tonnage
(Mt)
Fe SiO(2) Al(2) P Mn
O(3)
----- ------ ----- ----- -------
Friable Altered
Proven Itabirite 30.3 9.09 38.88 29.72 7.29 0.169 1.19
------------------ ------- ------------ ----- ------ ----- ----- -------
Friable Itabirite 13.7 4.11 39.51 36.37 2.88 0.086 0.90
---------------------------------- ------- ------------ ----- ------ ----- ----- -------
Friable Hematite 0.7 0.21 62.53 4.40 2.23 0.227 0.39
---------------------------------- ------- ------------ ----- ------ ----- ----- -------
Colluvium 5.2 1.56 39.18 20.89 11.90 0.185 0.72
---------------------------------- ------- ------------ ----- ------ ----- ----- -------
Canga 0.8 0.24 49.99 5.81 10.53 0.964 0.19
---------------------------------- ------- ------------ ----- ------ ----- ----- -------
Sub-total 50.7 15.21 39.58 29.88 6.56 0.162 1.04
---------------------------------- ------- ------------ ----- ------ ----- ----- -------
Friable Altered
Probable Itabirite 51.6 15.48 38.34 30.63 6.84 0.174 1.25
------------------ ------- ------------ ----- ------ ----- ----- -------
Friable Itabirite 30.9 9.27 40.28 34.75 3.02 0.101 0.92
---------------------------------- ------- ------------ ----- ------ ----- ----- -------
Friable Hematite 1.5 0.45 57.22 13.11 2.30 0.114 0.43
---------------------------------- ------- ------------ ----- ------ ----- ----- -------
Colluvium 56.6 16.98 38.33 22.60 11.71 0.144 0.60
---------------------------------- ------- ------------ ----- ------ ----- ----- -------
Canga 4.5 1.35 48.68 9.03 10.12 0.587 0.22
---------------------------------- ------- ------------ ----- ------ ----- ----- -------
Sub-total 145.1 43.53 39.26 27.53 7.98 0.159 0.89
---------------------------------- ------- ------------ ----- ------ ----- ----- -------
TOTAL 195.8 58.74 39.34 28.14 7.61 0.160 0.93
------- ------------ ----- ------ ----- ----- -------
Notes:
(1) The effective date of the Ore Reserve Estimate is 5 October 2022.
(2) Ore Reserves are reported per the guidelines of the JORC Code (2012).
(3) The Ore Reserve Estimate is reported to a cut-off of 25% Fe.
(4) Ore Reserves were estimated at a selling price of US$120/t
(FOB) and include modifying factors related to geotechnical
parameters, mining cost, dilution and recovery, process recoveries
and costs, G&A, royalties and rehabilitation costs.
(5) A mining dilution factor of 3.0% and a mine recovery of 94%
has been estimated and applied for the Ore Reserve Estimate.
(6) Figures have been rounded to an appropriate level of
precision for the reporting of Ore Reserves.
(7) Due to rounding, some columns or rows may not compute exactly as shown.
(8) The Ore Reserves are stated as wet (in-situ) tonnes processed at the crusher.
(9) All figures are in metric tonnes.
The Ore Reserve contains only those Mineral Resources which are
classified as Measured and Indicated and constrained by an
economically and technically mineable engineered pit design, as
described previously. The Ore Reserve has also been constrained by
the property boundary and considering the position of existing and
planned surface infrastructure.
The Competent Person utilised project-specific technical and
economic Modifying Factors to estimate the Ore Reserves at Amapá.
Sufficient mining and metallurgical work have been completed - and
is further reinforced by historical production data - to support
the Ore Reserve Estimate.
The Competent Person understands that the Ore Reserve Estimate
can be affected by unforeseen metallurgical, environmental,
permitting, legal, title, taxation, socio-economic, marketing, or
political issues. However, concerning environmental, licensing,
legal, title, tax, and marketing considerations, the Competent
Person, has relied upon the information presented in the full PFS
report. As required per the JORC Code 2012, Table 1, needed for the
reporting of Ore Reserves, is available here .
Mine Design
Pit designs and pushbacks were generated using MinePlan(R)
software and adopting preliminary geotechnical, hydrological, cost
and density parameters. The designs include benches, berms, and
haul roads. The final pit mine design is presented in the figure
here .
A LOM production plan was scheduled using the MinePlan(R)
Scheduler Optimiser. The solids used in the mine schedule were
based on the final pit design, with an SMU (Selective Mining Unit)
of 100 m x 200 m x 4 m. The mining schedule per year is over 13
pits and is shown in the figure here .
Mining
Mining at the Amapá mine will use conventional open pit methods
involving drilling, blasting, loading, and hauling ore and waste by
a mining contractor. Operations will be conducted based on 365
operating days per year with three 8-hour shifts per day. An
allowance has been made for the weather. Ore production is planned
at an optimum rate of 12.6 Mtpa. Generally, the total rock mining
rate (ore + waste) has been kept below 20 Mtpa. Grade control
drilling will be used to delineate the ore zones for excavation as
well as low-grade material and waste. Drilling and blasting of ore
and waste rock will be required, while overburden materials will be
free digging. Ore and waste will be loaded into 100 t capacity
off-highway haul trucks to stockpiles, designated waste dumps, or
used for construction of the TSF.
Extraction, loading, hauling, and disposal of ore and waste,
internal materials handling, mining access opening and maintenance,
drainage system operation, and maintenance will all be undertaken
by, and the responsibility of, a specialist mining contractor under
the management supervision of DEV. For the PFS, DEV obtained a
mining cost quote from an experienced Brazilian mining contractor
with over 14 years of operational experience in the mining and
heavy construction markets.
Processing
Historically the beneficiation plant at the Amapá Project
produced four product iron ore concentrates. The development
strategy of DEV was to simplify the product stream and focus on
higher grade and higher value products, albeit at a lower volume
than historical production. The plan is to produce 5.28 Mtpa (dry)
of Fe concentrate, consisting of 4.23 Mtpa at 65.4% Fe and 0.92
Mtpa at 62% Fe concentrate. Due to the production history and the
metallurgical test work previously completed to achieve the
production targets, no further test work was carried out for this
PFS.
As far as processing engineering, there were two main work
programmes. The first was assessing the current condition of the
plant and infrastructure and the work required to refurbish the
plant back to its previous state. The second was the flowsheet
upgrade and improvements needed to achieve the production mix and
targets as proposed within the PFS. ECM Projetos Industriais
("ECM"), who constructed the original Amapá processing plant, was
responsible for designing and costing the required process
flowsheet modifications and upgrades. ECM conducted an independent
analysis of all the data and information available to validate it
as the basis for the process design requirements of the PFS
Study.
In summary, the process flow sheet consists of an initial
crushing, screening, and homogenisation stage. This process
produces two streams of crushed ore. The first stream is a +1mm
-12mm product fed into the first milling circuit, magnetic
separators and then to a desliming circuit before floatation.
The second stream is a -1mm product passed through a spiral
circuit to produce a 62% Fe spiral concentrate. Various other flows
from the second stream then report either back to the first milling
circuit, the second ball mill circuit or the new magnetic separator
circuit. The product from the new magnetic separator circuit is
sent back to the first milling and then onto a desliming circuit
before floatation.
The feed to the deslime circuit consists of the second milling
ground product, the first milling circuit magnetic concentrate and
the spiral concentrate dewatering screen undersize streams.
Desliming occurs via three stages of hydrocyclones. The second and
third-stage underflow streams are combined to report to the reverse
floatation circuit.
The feed from the desliming circuit is sent to conditioning
tanks, where the material is prepared for reverse floatation. The
reverse floatation consists of two rougher stages and a final
cleaner stage, where the floatation cell tails form the feed for
the next step. The final cleaner produces an iron concentrate in
which the silica and other impurities have been floated off. This
iron concentrate is fed into a concentrate thickener which
increases sedimentation. This stream then reports to the filter
plant. The filtered concentrate is conveyed to a sampling system
and then to the 65.4% Fe BFPF product stockpile. A summary of the
process flow sheet can be found here .
Infrastructure
The surface infrastructure from the previous mining and
processing operations still exists, including roads, administrative
buildings, workshops, and processing buildings. When the mine
closed, the mine's facilities, processing plant, railway and port
fell into disrepair. DEV has already begun the rehabilitation of
some of the administrative buildings. The intent is to rehabilitate
this infrastructure as part of the restart of the Amapá Project,
and the costs associated with this were included in the PFS
CAPEX.
The Amapá mine's previous demand was stated as 25 MW; the new
power requirement is 30 MW. The existing transmission line, at 69
kV voltage, which interconnects the UHE Coaracy Nunes
(Hydroelectric Dam) to Serra do Navio, will not support Amapá
mine's power requirement.
DEV has been in discussion with Companhia de Eletricidade do
Amapá ("CEA") and has been informed that CEA is upgrading the
regional transmission lines. CEA intends to construct and upgrade
the current transmission line at a voltage of 138 kV from UHE
Coaracy Nunes to Pedra Branca do Amapari, then to the plant,
connecting to a new 138 kV - 30 MVA substation which DEV will
construct. The CEA project timeline for this upgrade is in line
with the development timeline of the Amapá Project. Power to the
port is provided via connection to the Santana grid provided by CEA
and is not expected to require any significant upgrade.
The water supply for the processing plant will come from the
accumulated water in the TSF's water retention ponds. In addition
to the TSF return water from normal operations, fresh water will be
taken from a local creek and pumped to the TSF. A separate line
from the TSF's return water supply will supply the potable water
plant for potable water requirements.
Logistics
As mentioned, DEV owns or has concessions over the key logistics
from the mine site to loading vessels at the Port of Santana on the
Amazon River. The key logistical components are shown in the figure
here .
The access haul road, approximately 13 km in length, is used to
access the mine and haul concentrates between the concentrate
stockpiles and the railhead at Pedra Branca do Amapari. The option
to construct an overland conveyor belt to replace the truck haulage
operation is viewed as the best way forward, and this has been
included in the process plant upgrade work undertaken by ECM. This
work will be completed in the initial two years after start-up.
The rail infrastructure is standard gauge and is 194 km in
length, with a distance of 180 km between the railhead and the
port. The capital expenditure on the railway will occur over two
stages, the latter occurring as deferred CAPEX. Once the second
stage of investment is completed, the estimated cargo handling
capacity of the railway is estimated to be 6.4 million wet tonnes
of ore.
The original port facility was constructed in the 1950s to
handle manganese ore and consists of a rail loop, dual bottom-car
dumper, central out load conveyor with stacker and reclaimer
connected to a floating dock. In March 2013, the port suffered a
failure. After the failure, DEV engaged an EPCM contractor to
oversee the design and reconstruction of the port facility and
associated works. Phase one of the work was completed; however, due
to the iron ore price, the construction work stopped shortly after
in 2014. Since operations ceased, the port was abandoned and fell
into disrepair. The PFS study and CAPEX anticipate the continuation
of the works per the EPCM contractor design. The repair of the
jack-up rig and the rehabilitation of the port facilities. The
figure here shows the planned materials handling and ship loading
at the Santana port.
Mineral Title / Permitting
DEV and its subsidiaries own the Amapá Project and its licenses,
mining rights and concessions. As the Project was previously
operating, it held all the necessary permission to operate.
However, since it ceased operations, many have lapsed.
DEV owns four Mining Concessions. The first three concessions
are for iron ore, and the last is a gold extraction license. DEV
has a joint venture with Mina Tucano Ltda ("Mina Tucano"), which
allows Mina Tucano to mine gold and allows DEV to mine iron ore
from Mina Tucano's license. None of the historical mineral
resources on license Mina Tucano is included as part of this
PFS.
Although DEV owns the Mining Concessions, it does not currently
have a Mine Extraction and Processing Permit. To do so, DEV must
obtain an Operational License ("LO") from the state environment
authority. Once this has been completed, DEV will apply for Mine
Extraction Permit. Since the Project was acquired by its current
owners in 2022, DEV has been making the required regulatory filings
and embarking on studies and maintenance works to comply with the
National Mineral Agency requirements.
Before the suspension of mining, the Project had numerous LOs
across the mining, rail, and port operations. These LOs expired
between 2013 and 2018. In 2022 DEV began the regularisation of the
expired environmental permits. In consultation with the Amapá State
Environmental Agency, and the relevant state authorities, DEV has
requested that the requirement for an environmental impact study be
waived. This request for a waiver was on the basis that the
previous LOs were granted on an operation that is substantially the
same as is currently planned and remains applicable to future
operations. DEV proposes that the company submit an Environmental
Control Plan - "PCA" (Plano de Controle Ambiental); and
Environmental Control Report - "RCA" (Relatório de Controle
Ambiental). DEV has begun its proposed permit pathway for the
Project based on the above requirements of a PCA and RCA.
The proposed permit pathway for the Project has both legal and
practice precedent and is a reasonable approach, given the Projects
status and level of development.
The state owns the railway line and associated land; therefore,
for the Project to utilise this, it requires both the LO and a
concession agreement with the State of Amapá. The previous
operators of the Project were granted this concession in 2006 for
20 years under specific terms and conditions. The reinstatement of
this concession to one of DEV's 100% owned subsidiaries was in
December 2019 and was extended to 2046. The concession allows DEV's
100% owned subsidiary to operate the railway to primarily transport
iron ore from the mine to its port in Santana. The State of Amapá
owns the surface rights associated with the railway, and under the
Railway Concession, DEV has been granted use over these surface
rights.
In addition to the LO detailed above, the company's port is
regulated by the Agencia Nacional de Transportes Aquaviários
("ANTAQ"). As a result of the change of ultimate beneficiary of
DEV, a change of control request was filed. This change of control
was granted in November 2021. As part of the port change of
control, ANTAQ has agreed to cease the recommended abrogation of
the port concession. DEV owns the surface rights associated with
the port.
The principal surface rights applicable to the Project are those
above the mining concessions, those associated with the railway
from the mine to the port and those associated with the port in
Santana, Amapá. The surface rights above the Mining Concessions
cover approximately 5,580 ha. DEV has lease agreements which cover
this area.
Competent Person's Statement
The information that relates to Mineral Resources and Ore
Reserves is based on information compiled by Geraldo Majella, who
is an associate of Prominas and a Member of the Australian
Institute of Geoscientists (AIG). Geraldo Majella has sufficient
relevant experience to the style of mineralisation and type of
deposit under consideration and to the activity for which he is
undertaking to qualify as a Competent Person as defined in the 2012
Edition of the "Australasian Code for reporting of Exploration
Results, Exploration Targets, Mineral Resources and Ore Reserves"
(JORC Code). Geraldo Majella consents to the inclusion in the
announcement of the matters based on their information in the form
and context in which it appears and confirms that this information
is accurate and not false or misleading.
Kiran Morzaria has also reviewed and approved the technical
information in his capacity as a Qualified Person under the AIM
Rules.
Opportunities
The PFS identified several opportunities that DEV intends to
investigate further before the start of the feasibility study.
Mina Tucano Exploration Target
DEV has a right to explore mine for iron ore on Mina Tucano's
licenses. In 2011 DEV evaluated all the historical drilling on this
license and further explored the license. DEV evaluated some 986
holes to establish a mineral resource estimate. The mineral
recourse was estimated at a 25% Fe cut-off, 142.51 Mt at 36.77% Fe.
This estimate covered measured, indicated, and inferred mineral
resources. This historical mineral resource estimate cannot be
considered a mineral resource estimated under JORC 2012.
The initial data and core will need to be reviewed and audited
to develop this exploration target, and additional resource
drilling will need to be carried out. From this, if applicable, a
JORC 2012mineral resource could be estimated.
Port Loading Configuration
As part of a trade-off study on port loading, consulting
engineers identified a modification of the railway loop and a
change in the stockpile arrangement and associated product
transportation. If these could be achieved, it would substantially
reduce the retaining wall costs, as the rail loop would be moved
approximately 100 m further away from the riverbank.
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.
Cautionary and Forward-Looking Statements
Certain statements in this announcement are or may be deemed to
be forward-looking statements. Forward-looking statements are
identi ed 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 re ect 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.
The Ore Reserve and Mineral Resource Estimate have been prepared
by Competent Persons, with Competent Person's Statements at the end
of the release. The Ore Reserves and Mineral Resources that
underpin the production target have been prepared by a Competent
Person that meets the requirements of the JORC Code.
The PFS developed engineering designs to provide costs at a +/-
25% level of accuracy. The company has concluded that it has a
reasonable basis for giving the forward-looking statements and
forecasted financial information included in this announcement.
This announcement has been prepared in accordance with JORC code
2012 and AIM listing rules. All material assumptions relating to
production and financial forecasts are detailed in this report.
Material and economic assumptions are summarised in the body of
this release. Rounding may cause some computational discrepancies
for totals in the tables in this announcement.
The information contained within this announcement is deemed by
the company to constitute Inside Information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014, as it forms part of
UK domestic law under the European Union (Withdrawal) Act 2018, as
amended. Upon the publication of this announcement via a regulatory
information service, this information is considered to be in the
public domain.
For further information
contact:
Cadence Minerals plc +44 (0) 20 3582 6636
Andrew Suckling
Kiran Morzaria
WH Ireland Limited (NOMAD
& Broker) +44 (0) 207 220 1666
James Joyce
Darshan Patel
Glossary
Al(2) O(3) Aluminium oxide is a chemical compound of aluminium
and oxygen
C1 Cash Costs Means operating cash costs, including mining, processing,
geology, OHSE, rail, port and site G&A, divided
by the tonnes of iron ore concentrate produced
Canga An iron-rich rock formed where material weathered
from an original iron ore deposit has been cemented
by iron minerals.
Colluvium Loose, unconsolidated material that accumulates
above the weathering iron ore bodies.
Core A cylindrical section of a naturally occurring
substance. Most core samples are obtained by drilling
with special drills into the substance, such as
sediment or rock, with a hollow steel tube called
a core drill . The hole made for the core sample
is called the "core hole."
Cut-off grade The lowest grade of mineralised material that qualifies
as ore in a given deposit or rock of the lowest
assay is included in an ore estimate.
Discount The interest rate is used in discounted cash flow
rate analysis to determine the present value of future
cash flows.
Drillhole A drill hole is formed by the act or process of
drilling boreholes using bits s the rock-cutting
tool. The bits are rotated by various types and
sizes of mechanisms motivated by steam, internal
combustion, hydraulic, compressed air, or electric
engines or motors.
EBITDA Earnings before interest, taxes, depreciation,
and amortisation is an alternate measure of profitability
to net income. By stripping out the non-cash depreciation
and amortisation expense as well as taxes and debt
costs dependent on the capital structure, EBITDA
attempts to represent cash profit generated by
the company's operations.
EPC means a company is contracted to provide engineering,
procurement and construction services by the owner.
The EPC contractor has direct contracts with the
construction contractors.
EPCM means a company contracted to provide engineering,
procurement and construction management services.
The owner contracts other companies directly to
offer construction services, and they are usually
managed by the EPCM contractor on the owner's behalf.
Fe Chemical symbol for iron. It is a metal that belongs
to the first transition series and group 8 of the
periodic table . It is, by mass, the most common
element on Earth , right in front of oxygen (32.1%
and 30.1%, respectively), forming much of Earth's
outer and inner core . It is the fourth most common
element in the Earth's crust .
Feasibility This study is the most detailed and will determine
study definitively whether to proceed with the Project.
A detailed feasibility study will be the basis
for capital appropriation and will provide the
budget figures for the Project. Detailed feasibility
studies require a significant amount of formal
engineering work, are accurate to within 10-15%
and can cost between 1/2 -1 1/2 % of the total
estimated project cost.
Final Investment FID is the point in the capital project planning
Decision process when the decision to make major financial
("FID") commitments is taken. At the FID point, major equipment
orders are placed, and contracts are signed for
EPC
Floatation is a standard technology for concentrating a broad
circuit range of minerals and wastewater treatments. Froth
floatation is based on differences in the ability
of air bubbles to adhere to specific mineral surfaces
in a solid/liquid slurry.
Flowsheet The flowsheet or a process flow diagram ("PFD")
is commonly used in chemical and process engineering
to indicate the general flow of plant processes
and equipment. The PFD displays the relationship
between major plant facility equipment and does
not show minor details such as piping details and
designations.
Itabirite Itabirite is a banded quartz hematite schist, very
similar to banded iron formation in appearance
and composition. Friable Itabirite is extensively
weathered, leading to disaggregation of the individual
mineral grains comprising the rock;
Internal is a method of calculating an investment's rate
Rate of Return of return. The term internal refers to the fact
that the calculation excludes external factors,
such as the risk-free rate, inflation, the cost
of capital, or financial risk.
Haematite An iron oxide mineral with the chemical formula
Fe(2) O(3) ;
Hydrocyclone is a type of cyclonic separator that separates
product phases mainly on the basis of differences
in gravity with aqueous solutions as the primary
feed fluid
Grade Relative quantity or the percentage of ore mineral
or metal content in an ore body;
Indicated That part of a Mineral Resource for which tonnage,
Mineral Resources densities, shape, physical characteristics, grade,
and mineral content can be estimated with a reasonable
level of confidence. It is based on exploration,
sampling and testing information gathered through
appropriate techniques from locations such as outcrops,
trenches, pits, workings and drillholes. The locations
are too widely or inappropriately spaced to confirm
geological and/or grade continuity but are spaced
closely enough for continuity to be assumed;
Inferred That part of a Mineral Resource for which tonnage,
Mineral Resources grade and mineral content can be estimated with
a low level of confidence. It is inferred from
geological evidence and assumed but not verified
geological and/or grade continuity. It is based
on information gathered through appropriate techniques
from locations such as outcrops, trenches, pits,
workings, and drill holes which may be limited
or of uncertain quality and reliability;
Kt Thousand tonnes;
Measured The part of a Mineral Resource for which tonnage,
Mineral Resources densities, shape, physical characteristics, grade,
and mineral content can be estimated with a high
level of confidence.
Metallurgical This is the process of testing how the resource
test work material will respond to standard metallurgical
processes, such as floatation, gravity concentration
and leaching. They are conducted on coarse assay
reject material using standard test conditions.
The objective is to determine how the resource
material reacts to commonly accepted recovery processes
and gain a preliminary estimate of metal recoveries.
Mine planning A plan or schedule of the extraction of ore to
optimise the return (of profit) on investment through
capital investment, design, extraction scheduling,
and preparation of the mineral product according
to specifications.
Mineral Reserves The economically mineable part of a Measured and/or
Indicated Mineral Resource. It includes diluting
materials and allowances for losses, which may
occur when the material is mined. Appropriate assessments
and studies have been carried out and include consideration
of and modification by realistically assumed mining,
metallurgical, economic, marketing, legal, environmental,
social, and governmental factors. These assessments
demonstrate at the time of reporting that extraction
could reasonably be justified. Ore Reserves are
subdivided in order of increasing confidence into
Probable Ore Reserves and Proved Ore Reserves.
Mineral Resource A concentration or occurrence of material of intrinsic
economic interest in or on the Earth's crust in
such form, quality, and quantity that there are
reasonable prospects for eventual economic extraction.
The location, quantity, grade, geological characteristics,
and continuity of a Mineral Resource are known,
estimated, or interpreted from specific geological
evidence and knowledge. Mineral Resources are subdivided,
in order of increasing geological confidence, into
Inferred, Indicated and Measured categories.
Mn Chemical symbol for Manganese. It has the atomic
number 25. It is not found as a free element in
nature; it is often found in minerals in combination
with iron .
Modifying The term 'modifying factors' is defined to include
factors mining, metallurgical, economic, marketing, legal,
environmental, social and governmental considerations.
Net present This is the difference between the present value
value of cash inflows and the present value of cash outflows
over a period of time. NPV is used in capital budgeting
and investment planning to analyse the profitability
of a projected investment or Project.
Open pit An excavation or cut made at the surface of the
ground for the purpose of extracting ore and which
is open to the surface for the duration of the
mine's life
Ore is natural rock or sediment containing one or more
valuable minerals, typically metals, that can be
mined, treated and sold at a profit.
P The chemical symbol for Phosphorus with atomic
number 15.
Pellet feed Iron ore fines used to produce pellets
Pit Optimisation A process whereby a series of optimised shells
for open pits are generated, each corresponding
to a specific commodity price assumption.
Pit shell A design of an open pit obtained from the process
of open-pit optimisation
Prefeasibility It is more detailed than a Scoping Study. A Prefeasibility
study study is used in determining whether to proceed
with a detailed feasibility study and as a " reality
check " to determine areas within the Project that
require more attention. Prefeasibility studies
are done by factoring known unit costs and by estimating
gross dimensions or quantities once conceptual
or preliminary engineering and mine design has
been completed. Prefeasibility studies have an
accuracy of 20-30%.
Proven Ore is the economically mineable part of a Measured
Reserve Mineral Resource. It includes diluting materials
and allowances for losses which occur when the
material is mined. A Proven Orel Reserve represents
the highest confidence category of Mineral Reserve
estimate. It implies a high degree of confidence
in the geological factors and a high degree of
confidence in the Modifying Factors.
Probable is the economically mineable part of an Indicated
Ore Reserve Mineral Resource and, in some circumstances, a
Measured Mineral Resource. It includes diluting
material and allowances for losses which may occur
when the material is mined. A Probable Mineral
Reserve has a lower level of confidence than a
Proved Mineral Reserve but is of sufficient quality
to serve as the basis for a decision on the development
of a deposit.
SiO(2) Silicon dioxide, also known as silica, is an oxide
of silicon most commonly found in nature as quartz
and in various living organisms. In many parts
of the world, silica is the major constituent of
sand .
Spiral concentrate Iron Ore product produced from the beneficiation
plant.
t Tonnes
- Ends -
([1]) Anglo American (2012), Annual Report (pp.89)
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END
DRLSSFFAEEDSESF
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January 03, 2023 02:00 ET (07:00 GMT)
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