Amapa Iron Ore Mine

Operator: DEV Mineração S.A.

Ownership: 30% at 29/09/2023

Location:

Amapa, NE Brazil

Development Stage:

Pre-Feasibility Study

Highlights of Pre-Feasibility Study (Jan 2023)

  • Annual average production after ramp-up of 5.28 million dry metric tonnes per annum (“Mtpa”) of Fe concentrate, consisting of 4.36 Mtpa at 65.4% Fe and 0.92 Mtpa at 62% Fe concentrate.
  • Post-tax Net Present Value (“NPV”) of US$949 million (“M”) at a discount rate of 10%, with profit after tax of US$2.96 billion (“B”) over Life of Mine (“LOM”) gross revenues of US$9.39 B over LOM.
  • Post-tax Internal Rate of Return of 34%, with an average annual LOM EBITDA of US$235 M per annum.
  • Maiden Ore Reserve of 195.8 million tonnes (“Mt”) at 39.34% Fe, demonstrating an 85% mineral resource conversion.
  • Free on Board (“FOB”) C1 Cash Costs of US$35.53/dmt at the port of Santana. Cost and Freight (“CFR”) C1 Cash Costs US$64.23/dmt in China.
  • After applying tax rebates, a pre-production capital cost estimate of US$399 M, including the improvement and rehabilitation of the processing facility and the restoration of the railway and the wholly owned port export facility, cost estimations have a PFS level of accuracy at +/- 25%.
  • Key assumptions: Long-term average price for 62% iron ore concentrate of US$95/dmt and US$23.8/dmt premium for 65.4% iron ore concentrate, both quoted on a Cost and Freight (“CFR”) basis.
  • Opportunities: exploration target at the Tucano Mine to further extend initial mine life and potential capital savings at port loading facilities.

Based on the positive outcome of the PFS, the owner of the Project DEV Mineração S/A (“DEV”) intends to advance the Project. The initial works will include optimising the capital expenditure, optimising processing plant availability and efficiency and developing the adjacent exploration targets to increase the mine life, after which work on a Feasibility Study can begin

The full PFS news release can be found here

Ore Reserve Estimate

Prominas has estimated the Ore Reserve for the Amapá Project at 195.8Mt at an average grade of 39.34% Fe, at a cut-off grade of 25% Fe

History of the Amapa Iron Ore Project

The Project consists of an open-pit iron ore mine, a processing and beneficiation plant, a railway line, and an export port terminal. DEV and its subsidiaries own the Amapá Project. DEV is owned by PBA, a joint venture between Cadence Minerals Plc (“Cadence”) and Indo Sino Trade Pte Ltd (“Indo Sino”).

The Project ceased operations in 2014 after the port facility suffered a geotechnical failure, which limited the export of iron ore. Before the cessation of operations, the Project generated an underlying profit of US$54 million in 2012 and US$120 million in 2011. concentrate

Production steadily increased, producing 4.8 Mt and 6.1 Mt of iron ore concentrate products in 2011 and 2012, respectively. Operations commenced in December 2007, and in 2008, the Project produced 712 thousand tonnes of iron ore

DEV continued to operate the Project and rehabilitate the port up until 2014. However, due to the restricted iron ore exports, and cash flow constraints, in August 2015, DEV filed for judicial protection in Brazil, and operations at the Project ceased.

In 2019 Cadence and Indo Sino, alongside DEV, submitted a judicial restructuring plan (“JRP”) for approval by the unsecured creditors. As part of the JRP, DEV sought to redevelop the Amapá Project. This strategy includes a plan to resume operations after plant revitalisation and modifications, aimed at improving product quality and increasing recovery, along with recovery of the port, railway, and support areas.

Details of the Agreement with Indo Sino

Cadence owns 30% of the Amapa Project, with our joint venture partner, Indo Sino Pty Ltd (“Indo Sino”), owning the remaining 70%. The ownership of Amapa is via a joint venture company, Pedra Branca Alliance Pte. Ltd. (“JV Co”), which owns 100% of the equity of DEV Mineração S.A. (“DEV”). Should Indo Sino seek further investors or an investment in the JV Co, the Agreement also provides Cadence with a first right of refusal to increase its stake to 49%. If Cadence does not exercise its right of first refusal under the terms of the Agreement, Indo Sino will have a twelve-month option to buy the shares in JV Co held by Cadence for 1.5 times the price paid by Cadence for such shares.