Cadence Minerals (KDNC) noted an announcement by its investee company Hastings Technology Metals that the former has executed an EPC contract (Engineering, Procurement, Construction) with GR Engineering Ltd for delivery of the beneficiation plant at Yangibana rare earths project in Western Australia.
The agreement follows the terms signed in May 2023, including the contract value of US$210m covering the beneficiation plant and associated infrastructure. It includes a process guarantee which aligns with Hastings' planned ramp up of the plant, supported by all testwork completed to date.
GR Engineering will work with Hastings on engineering and procurement until mobilisation to site in Q4 2023 to follow finalisation of project funding. Construction is planned to complete in Q1 2025 with first concentrate on truck in Q2 2025.
Investors should note that the EPC contract minimises risk of capital cost increases and provides guarantees on project schedule, product throughput and plant recovery.
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The signing of the EPC contract between Hastings and GR Engineering for the delivery of the beneficiation plant at Yangibana marks a key milestone in the development of the rare earths project.
Cadence gained ownership in Hastings in exchange for 30% of its stake in Yangibana in a restructuring initiated last year and completed on January 23 2023. The move resulted in Cadence owning 1.9% of Hasting's share capital, worth AS$9m (£5.17m). This consideration was a premium over the NPV of the Cadence portion of Yangibana, based on a definitive feasibility study updated by Hastings on 21 February 2022. Through its ownership in Hastings, Cadence retains full equity exposure to Yangibana.
The Yangibana project holds substantial neodymium and praseodymium resources with an NPV of £570m. Hastings recently upgraded the project's ore reserve by 25% to 20.95Mt at 0.90% TREO grade, increasing its mine life to 17 years. Hastings has engaged Boston Consulting Group to assist in further investigating the merits of an integrated mine-to-magnets strategy and exploration of partnership opportunities at Yangibana.
The EPC contract's US$210m price is in line with Hastings' established staged development strategy for Yangibana, with a fixed price component of US$180m for the beneficiation plant and a provisional US$30m mainly for the plant and TSF earthworks. The fixed price contract and strong credentials of GR Engineering should give investors high confidence in the timely delivery of the plant and associated infrastructure ahead of first rare earth concentrate production in Q2 2025.
Cadence's growing portfolio should soon enable it to rely solely on its investment cycle for funding rather then external capital. Over the past 3 years, the company has been getting closer to that goal. Currently, the realised profit since inception from Cadence's current public portfolio is £5.27m and total unrealised and realised gain is 338%.
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