Cadence Minerals (KDNC ) said Macarthur Minerals has signed an MOU with Southern Ports Authority, providing a pathway for agreeing a potential access and operating solution for the export of Macarthur's high-grade magnetite iron ore product via the Port of Esperance. 

While the MOU is non-binding, Cadence said it establishes ‘a clear pathway’ to support the delivery of Macarthur’s current Feasibility Study for the Lake Giles Iron Project this year. 

The MOU also represents ‘a substantial step’ towards Macarthur securing access to the Port of Esperance and completing a fully contracted route-to-market contract for the project. 

The pathway process in the MOU is intended to align with the completion of Macarthur's Feasibility Study for Lake Giles during the current calendar year so that the Company can target commencement of first shipment of iron ore from the site in Q1 2024. 

"The MOU with Southern Ports Authority represents a substantial step towards Macarthur securing eventual access to the Port of Esperance and completing a fully contracted route to market for the Lake Giles Iron Project,” said Andrew Bruton, CEO of Macarthur Minerals. 

The Port of Esperance is a deep-water port south of Lake Giles which is accessible via an existing rail network and has the capability to handle large 'Cape' size iron ore vessels. 

In July 2020, Macarthur received a proposal from Arc Infrastructure, a transport infrastructure owner in Western Australia, for an agreed pathway to develop a Commercial Track Access Agreement for below rail capacity from Lake Giles to the Port of Esperance. 

The MOU would enable the design of a 300,000 tonne iron ore storage shed and this unloading solution at the Port by Macarthur which is proposed to be an Australian-first Helix rail car unloading solution and associated tube conveyor referred to as the “Helix Dumper”. 

With high speed throughput design capacity potential, it is believed that a proposed Helix Dumper unloading solution would bring 'state of the art' rail unloading technology to the Port. 

Subsequently, the MOU would provide a pathway to the approval of the shed and Helix Dumper designs by Southern Ports; as well as the identification of suitable land by Southern Ports for the construction of the shed and Helix Dumper within the Port of Esperance. 

Any binding commercial agreements in relation to the shed, Helix Dumper and ship loader access will be conditional upon agreed milestones being met by Macarthur Minerals, including financing for its Lake Giles Iron Project, the Company told investors this morning. 

Cadence detailed that Southern Ports is presently undertaking a broader master planning process at the Port of Esperance. It said Southern Ports has stated that Macarthur's access and operating solution will need to align with the Group’s master-planning objectives.  

The Company says the MOU would provide optionality for Southern Ports to broaden access to any un-utilised capacity in the Helix Dumper by examining the potential for a hybrid design that may grant it a "dual function" with bottom-dump rail wagon capability.  

The examination of these options could potentially deliver ‘increased business through the Port and benefit both the Esperance community and the Western Australian economy.’ 

In this morning’s statement, Bruton told investors that Macarthur “is committed to working diligently with Southern Ports towards ensuring that any agreed infrastructure model can be supported by a workable operating solution that will meet the requirements of the Port.” 

He added, “With a clear framework in place, we now have a process to accelerate our engagement as Macarthur aims to deliver new iron ore business through the Port." 

As a result of dilutions Cadence now holds c. 1% of the issued equity interest in Macarthur, which is an Australian mining exploration company focused primarily on iron ore, nickel, lithium and gold in Western Australia. It also has a lithium project in Nevada, USA. 

In a recent quarterly update, Macarthur said it is ‘well placed’ to deliver on its stated 2021 goals for Lake Giles, which include completing a feasibility study, concluding a route-to-market contract and advancing terms of financing the project commencing 2023. 

It seems the current iron ore demand is in China with UBS economics forecasting its GDP growth rate at 8.2% in 2021. UBS said this growth is being driven by domestic and export- focused production, with exports of finished products to grow at 11-12% over the 2021 year. 

Analysts at Morgan Stanley are also holding to a bullish scenario for iron ore prices in the years ahead. In a recent report, analysts laid out a ‘plausible scenario’ of iron ore prices trading at more than $US165 per tonne ($216/tonne) for a three-year period out to 2024. 

Shares in Cadence Minerals have increased by over 13% in value since the beginning of January 2021 to open 3.13% higher this morning at 16.5p following the announcement. 

Reasons to Follow 

Amapá – 30% (once final agreement with bank creditors has been completed)  

Candece plans to rehabilitate Amapá, including commissioning the studies required of bank finance, shipping of the iron ore from the stockpile and the restarting of full operations.  

The historic mine plan would mean that Amapá would produce at steady-state production an estimated 4.4 Mt of 65% iron and 0.9 Mt of 62% iron per annum for approximately 14 years.  

Cinovec – 16%  

Cadence holds around 12% of the equity in European Metals, which, through its subsidiary, Geomet, controls the exploration licences awarded for the Czeach Cinovec Lithium Project. 

Cinovec, which is the largest hard rock lithium deposit in Europe, is strategically located to produce lithium for Europe with the goal of contributing to a sustainable supply chain for a world leading centre for electric vehicle development and manufacture in Europe.  

Diego Pavia, CEO of EIT InnoEnergy, said he views Cinovec as “critical” to the development of Europe's energy storage industry and in meeting the EU's climate goals of electrification of mobility and large-scale development of renewable energy storage.  

Last week, the ongoing nineteen hole resource drilling programme at the Cinovec Project returned strong drilling results. Cadence’s Chief Executive, Kiran Morzaria told investors that the encouraging results ‘serve to highlight the overall quality of the Cinovec project.’ 

Yangibana – 30%  

Last year, Cadence unveiled ‘outstanding’ rare earth oxide grades in a report which highlighted positive drilling results at the Yangibana rare earth project in Australia, exceeding its expectations for its planned 20,000 metre 2020 exploration drill program.  

Cadence, which owns 30% of three mining leases and six exploration licences which form part of the Yangibana Rare Earth Deposit, expects to advance the programme until Q420.  

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