a year of great success
Cadence Minerals (LSE: KDNC; OTC: KDNCY) had a good year. Shares of the British mineral resources investor closed at Easter at midnight, offering a 700% return over the past 12 months, outperforming industry peers by a factor of 10.
Growth has been in steady increments, rather than a sudden surge following a press release, with growth of 61% year-to-date. April 2020 was the turning point for Cadence shares, following an inexorable decline dating back to August 2014, when they peaked at 162.90p.
A large-scale iron ore project
Cadence Minerals, along with Singapore-based commodities broker Indo Sino Pty and Brazilian miner DEV Mineração, currently operates the Amapá iron ore project in Brazil, which includes a large-scale iron ore mine, plant enrichment, a railway and a private port. The former owner Anglo American sold its 70% stake in the project for $ 462 million in 2012. In September 2019, with the approval of local authorities and creditor banks, the debts of the Amapá project were restructured and the railway concession renewed in December of the same year. As part of the deal, Cadence invested in the project, giving it a 20% stake.
Historical mining plans and a review by an independent consultant indicate that at full production, the Amapá project has a lifespan of 14 years, with a full capacity target of up to 5.3 million tonnes of iron ore per year. . The iron ore market 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 March 29 of this year, the sale and shipment of 45,000 tons of iron ore was completed, Amapá’s first iron ore since 2015, generating a profit of $ 10 million, with another shipment expected in 4 to 5 weeks. That 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.
Along with the Amapá project, Cadence has a stake 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 mineralization were confirmed, followed a few months later by discoveries of cobalt and nickel, and work began to put in place rail access, transport and port contracts. . Cadence owns a 4.1% stake in Macarthur, which also owns a lithium project in Nevada, United States.
Lithium for the electric vehicle battery industry
Cadence is progressing with the Yangibana Rare Earth project, also in Western Australia, thanks to its 30% stake in Hastings Technology Metals (ASX: HAS). Hastings has now received all relevant approvals (i.e. land tenure, Aboriginal title agreement, state and Commonwealth environmental permits) required for the development of the project. In northern Mexico, Cadence owns a 30% stake in Mexalit, a joint venture that is part of the Sonora Lithium project.
In Europe, Cadence owns 12% of the capital of European Metals Holdings (LSE: EMH), which in April last year sold a 51% stake in its subsidiary Geomet for £ 25 million to CEZ Group, l one of the largest electric utilities in Central and Eastern Europe. . Geomet controls the mining exploration licenses 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 most important in the world. Once developed, the project will produce 21,000 tonnes per year of lithium carbonate and 1,000 tonnes per year of tin.
Cinovec is located within 150 miles of many existing or proposed end users of battery grade lithium chemicals, and is fast becoming a cornerstone of the European battery metals landscape driven by electric mobility.