Cadence Minerals (KDNC ) has announced its pre-feasibility study (PFS) on the 30% owned Amapa Iron Ore Project in Brazil.
The PFS found an annual average production, after ramp-up, of 5.28 million dry metric tonnes (DMT) per year of Fe concentrate, consisting of 4.36 Mtpa at 65.4% Fe and 0.92 Mtpa at 62% Fe concentrate.
Cadence reported a post-tax Net Present Value (NPV) for the project of US$949m at a discount rate of 10%, with gross revenues and profit after-tax profit of of US$9.39bn, and US$2.96bn respectively over the Life of Mine (LOM).
Additionally, Cadence reported a post-tax internal rate of return (IRR) of 34%, with an average LOM EBITDA of US$235m per year.
Amapa's maiden ore reserve is estimated at 195.8Mt at 39.34% Fe, representing an 85% mineral resource conversion.
In terms of costs, Cadence reported a free on board (FOB) C1 cash costs of US$35.54/dmt at the port of Santana, and cost and freight (CFR) C1 cash costs of US$64.23/dmt in China.
After tax rebates, Cadence expects a pre-production capital cost of US$399m, including improvement and rehabilitation of Amapa's processing facility and restoration of the railway and wholly-owned port export facility.
Cadence noted the PFS carries a cost estimate accuracy of +/- 25% and a long-term average price for 62% and 65.4% iron ore concentrate premium of US$95/dmt and US$23.8/dmt respectively, both quoted on a cost and freight basis.
Cadence said that based on this PFS data, the owner of Acampa, DEV Mineração S/A, intends to advance the project. Initial works will include optimising capital expenditures, optimising processing plant availability and efficiency, and developing adjacent exploration targets to increase mine life. Following these initiatives, Cadence will begin work on a feasibility study.
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.
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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."
View from Vox
A positive pre-feasibility study from Cadence, providing a strong indication of Acampa's future profitability over at least a 16-year LOM. Based on these positive results, the owner of the project, DEV Mineração S/A, has decided to advance the project. Cadence owns 30% of the Amapa Project, with its JV partner Indo Sino Pty owning the remaining 70%. The ownership of Amapa is via the JV company Pedra Branca Alliance, which owns 100% of the equity of DEV Mineração S/A.
Cadence says next steps for Amapa will include include optimising capital expenditure, optimising processing plant availability and efficiency, and developing adjacent exploration targets to increase LOM. Following these initiatives, work on a feasibility study will begin, which we expect to further confirm or improve on the PFS's findings.
Overall, this PFS brings Amapa one step closer to production and provides further confirmation of the project's potential to produce a high-grade iron ore concentrate and generate strong returns over LOM. Further benefiting from integrated infrastructure under its owner's control, a well-established processing route, low capex requirements, and potential to increase its mineral resource in the future, Amapa remains an attractive investment opportunity for Cadence and its investors.
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