Cadence Minerals (LSE:KDNC; OTC:KDNCY) has had a good year. Shares in the UK-based mineral resources sector investor closed for Easter at 24.00p, giving a 700% return over the past 12 months, outstripping sector peers by a factor of 10.
Growth has been in steady increments, rather than any sudden surge on the back of a press release, with growth of 61% year to date. April 2020 was the turning point for Cadence shares, after an inexorable decline stretching back to August 2014, when they peaked at 162.90p.
A large-scale iron ore project
Cadence Minerals, with Singapore-based commodities broker Indo Sino Pty and Brazilian miner DEV Mineração, currently operates the Amapá iron ore project in Brazil, which consists of a large-scale iron ore mine, beneficiation plant, railway and private port. Former owner Anglo American sold its 70% stake in the project for $462m in 2012. In September 2019, with the approval of the local authorities and creditor banks, the Amapá project debts were restructured and the railway concession renewed in December that year. As part of the deal, Cadence invested in the project, giving it a 20% share.
Historic mine plans and an independent consultant review indicate that at full production the Amapá Project has a mine life of 14 years, with a full capacity target of up to 5.3 million tonnes of iron ore per annum. The market for iron ore has been bullish over the past 12 months, with strong demand from China more than doubling the price from $80.25/tonne to $167/tonne.
On 29 March this year, the sale and shipment of 45,000 tonnes of iron ore was completed, the first iron ore from the Amapá since 2015, yielding a $10m profit, with another shipment expected in 4-5 weeks’ time. The same week, Cadence announced that it had made the final repayment due under the convertible loans announced in 2019, with no further convertible loan notes outstanding.
Alongside the Amapá project, Cadence has an interest in the Lake Giles Iron Project in Western Australia, with Australian mining explorer Macarthur Minerals (TSX-V:MMS, ASX:MIO). In January 2020, significant intersections of magnetite mineralisation were confirmed, followed a couple of months later by findings of cobalt and nickel, and work began to put in place rail access, haulage and port contracts. Cadence holds a 4.1% equity interest in Macarthur, which also has a lithium project in Nevada, USA.
Lithium for the EV battery industry
Cadence is making progress with the Yangibana Rare Earth Project, again in Western Australia, through its 30% interest in Hastings Technology Metals (ASX:HAS). Hastings has now received all relevant approvals (i.e. land tenure, Native Title Agreement, State and Commonwealth environmental permits) required for the project’s development. In Northern Mexico, Cadence owns a 30% stake in Mexalit, a joint venture which forms part of the Sonora Lithium Project.
In Europe, Cadence holds 12% of the equity in European Metals Holdings (LSE:EMH), which in April last year sold a 51% interest in its subsidiary Geomet for £25m to CEZ Group, one of central and eastern Europe’s largest power utilities. Geomet controls the mineral exploration licences awarded by the Czech government for the Cinovec project in the Krusne Hore mountains north of Prague, the largest source of lithium in Europe and one of the largest in the world. When developed, the project will produce 21,000 tonnes annually of lithium carbonate, and 1,000 tonnes annually of tin.
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Cinovec is situated within 150 miles of numerous existing or proposed end users of battery grade lithium chemicals, and is set to become a cornerstone of the e-mobility driven European battery metals landscape.