Cadence Minerals (KDNC ) has announced this morning it will sell its 30% interest in the Yangibana Rare Earths Project tenements to Hastings Technology Metals for equity in Hastings valued at £5.1m.
The Yangibana Project contains substantial neodymium and praseodymium resources and is located in the Gascoyne region of Western Australia, 250 km north east of Carnarvon, covering approximately 650 km2 at present. It contains 9 Mining Leases, 2 Prospecting Licenses, and 19 Exploration Licenses. The Net Present Value of the Project is currently AS$1 billion or £560m. Cadence's 30% interest is in 3 Mining Leases and 6 Exploration licenses, a relatively small portion roughly equivalent to 1 year of the Project's 16-year mine life.
In return for its 30% interest, Cadence will receive fully paid ordinary shares in Hastings valued at AS$9m or £5.1m. This will in turn give Cadence 100% equity exposure to Yangibana. The transaction will result in an initial profit for Cadence of c. £4.2m:
"The net loss attributable to our 30% holdings in the tenements for 31 December 2021 is nil. As such, the net loss attributable to the Company is also nil. As of 31 December 2021, the total carrying values of the tenements in the Company's balance sheet was approximately £905,000. Based on the transaction announced, the initial profits on the sale of our interest is approximately £4.2 million." the Company elaborated in a statement.
Investors welcomed the news, with Cadence up 5.60% in early trading:
Hastings is currently developing the Yangibana Project. It has commenced site construction and plans to begin commissioning of the beneficiation plant in late 2023, with delivery of maiden production to key customers in 2024. In February, Hastings upped its NPV estimate for Yangibana by 84% to AS$1 billion. Hasting's market cap is currently A$415 million, and the company has secured a $140m loan facility from the Australian Government's Northern Australia Infrastructure Facility (NAIF). This marked the first time an Australian rare earth project has received NAIF funding.
Cadence CEO Kiran Morzaria commented: "The sale of our 30% interest in a part of the Yangibana Rare Earths Project provides Cadence with an excellent return on its initial investment and equity exposure to the entire project. Yangibana's importance as a key REE resource today cannot be overstated. We look forward to reporting on Hastings development and progress towards production as construction on the mine commences"
Two days ago we reported on Cadence's FY21 update. The Company's two main concessions are currently the Amapa Iron Ore Project in Brazil (iron ore, 27% interest) and Czech-based European Metal Holdings (EMH) (lithium, 8.1% interest). The prices of both commodities have soared in the past year and demand is not showing signs of slowing. CEO Kiran Morzaria believes Cadence's strategy of investing in assets that are "undervalued, de-risked, or have strategic advantages" will continue to pay off in the long run.
CLICK HERE TO LISTEN TO CEO KIRAN MORZARIO SPEAKING TO JUSTIN WAITE ABOUT THE LATEST DEVELOPMENTS
Mr Morzaria will join Vox for a Q&A on 1 July 2022. Make sure you follow Cadence Minerals to make sure you don't miss it and for future updates.