Cadence Minerals (KDNC) final results for the year ended 31 December 2022 saw the company's private portfolio deliver strong returns, but its public portfolio value decrease significantly as a result of its largest component European Metals Holdings (EMH) being down 49% over the year. EMH's price deprecation came off multi-year highs achieved in 2021 and followed the general risk-off trend of the AIM basic resource index.
Cadence's focus last year remained on its flagship Amapa Iron Ore asset in Brazil. The project saw steady operational progress, culminating in a robust pre-feasibility study that confirmed the project's strong economics. Cadence's investment in Amapa to date has been c. US$9.3m for a 30% interest while the pre-feasibility study estimated the NPV of the entire asset at US$949m. Next for Amapa is further progress on permitting and a search for a JV partner.
Cadence also increased investment returns by converting some passive private investments into public traded equity. This was achieved via two asset sales. First, its 31.5% interest in Lithium Technology Pty and Lithium Supplies Pty (LT and LS) was sold to Evergreen Lithium. Second, its 30% interest in the Yangibana Rare Earth Project in Western Australia was sold to operator Hastings Technology Metals.
As the above two transactions were completed post year-end, they are not reflected in Cadence's FY22 results. Cadence's sale price into the equity of the two public companies was equivalent to £7.4m, representing a 335% cumulative ROI for the £14m company.
Hastings and EMH are well advanced in their development cycle. Next on the agenda for both are the construction of the beneficiation plant at Hastings in Q3 2023 and the publication of the EMH Definitive Feasibility Study in Q4 2023.
Despite EMH's downward price movement, the overall fundamentals of Cadence's portfolio remain solid as the lithium and iron markets continue to show strength amid rocketing EV sales and China's reopening. EMH's poor performance can be attributed to a weakening in equity funds flow, being the weakest in 8 years as investors walked away from UK equity funds in 2022, selling a record £8.38bn, and buying safe havens instead.
As a result of EMH's trading, Cadence's loss for the year widened to £5.5m, with net assets at period end of £21.32m.
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%.
Follow News & Updates from Cadence Minerals: