Cadence Minerals (AIM: KDNC) is pleased to announce that, together with its partners in the Amapá Iron Ore Project (“Amapá” or the “Project”), it has signed a Heads of Terms with an international shipping and trading group (“Offtaker”). The Offtaker, a key partner in this venture, will provide most of the funding to license, refurbish, and restart the Azteca Plant in Amapá, Brazil. The agreement will be structured as a pre-payment offtake (“Prepay”).
Highlights
- Conditional Funding Secured: Heads of Terms signed for a US$4.6 million Prepay to finance the restart of the Azteca Plant and provide initial working capital.
- Shared Risk, Shared Reward: Cadence to contribute approximately 10–15% of the Prepay, earning the same economic returns on a pro-rata basis.
- Attractive Economics: The structure of the Prepay is expected to deliver a robust circa 70% Internal Rate of Return (“IRR”) on Cadence’s share of investment, with repayments made per tonne of iron ore shipped.
- Pathway to Cashflow: Once operational, the Azteca Plant is forecast to be net cashflow positive from the first shipment, providing a strong financial foundation for the development of the larger 5.5 Mtpa Direct Reduction-grade (“DR-grade”) project.
- Low Cost, High Margin: The estimated Cost and Freight (“CFR”) operating costs of US$79/t versus current market prices of approximately US$120/t[i] (65% Fe fines CFR China) ensure robust early margins, demonstrating the project’s profitability.
Kiran Morzaria, CEO of Cadence Minerals, commented:
“This agreement marks an important milestone in the staged development strategy at Amapá, providing a pathway to early cash flow through the restart of the Azteca Plant. Cadence will receive a direct return on its investment as production commences, while free cash flow from Azteca will support advancement of the larger 5.5 Mtpa DR-grade project.
Restarting operations also reinforces Amapá’s social licence to operate and demonstrates to investors and partners that the project is once again a producing asset with near-term cash flow and long-term growth potential. This operational credibility is an essential step in unlocking the full value of Amapá while delivering tangible returns to our shareholders.”
Transaction Overview
The Heads of Terms are subject to final assay results and the execution of definitive documentation. Funding will be provided through a prepayment offtake agreement with a UK-based international logistics, shipping, and trading group with over 100 years of experience in the sector. The total prepayment amount is US$4.6 million, to be provided in two components:
- Azteca Plant Financing (US$3.45 million): advanced in staged tranches, with initial instalments funding licensing and preparatory works, and further amounts conditional upon the receipt of the required environmental, operational and regulatory permits for refurbishment and recommissioning of the Azteca Plant.
- Working Capital Financing (US$1.15 million): to be drawn at the commencement of production, primarily to fund logistics associated with the first shipment of approximately 50,000 tonnes.
Cadence will co-fund the Azteca Plant Financing alongside the Offtaker, contributing approximately 10–15% of the total prepayment amount and earning the same pro-rata economic returns. Repayment of the advances will be made on a per-tonne basis from future shipments of iron ore produced. In addition, Cadence will receive a pro rata share of the marketing fee on all products produced from Dyke 5 under the offtake agreement.
Following the first shipment, the Azteca Plant is forecast to be net cash flow positive, with the funding structure expected to deliver an approximate 70% IRR on Cadence’s proportion of the investment.
Azteca Plant and Feedstock
Located within the Amapá concession, the Azteca Plant utilises a simple magnetic and spiral separation flow sheet. A recent technical review confirmed its structural integrity, process equipment and utilities. In parallel, capital and operating cost estimates have been finalised, and an indicative commissioning schedule has been established.
Dyke 5 tailings, containing approximately 2 million tonnes of high-grade material (approximately 55% Fe), will provide the initial feed. On refurbishment, Azteca is expected to produce circa 380,000 tpa of 65% Fe concentrate.
During previous operations, approximately 28 million tonnes of tailings were generated, of which an estimated 2 million tonnes have been identified in Dyke 5 as high-grade material based on historical float samples (circa 55% Fe) and plant data. Additional studies are planned to assess the viability of processing the broader tailings resource to support long-term production, supplementing the planned 5.5 million tonnes per annum (Mtpa) DR-grade (67.5% Fe) concentrate output.
Cashflow Positive Production
Once restarted, the Azteca Plant is expected to have operating costs for the initial three years estimated at an average Free on Board (“FOB”) cost of US$37/t, with CFR into China of approximately US$79/t, compared with current market prices of around US$120/t CFR China.
This combination of modest upfront capital, low operating costs, and strong market pricing is forecast to deliver positive cash flow from the first shipment, providing reinvestment capacity for the staged development of the broader Amapá operation.
Timeline and Financing
Once the binding agreement is executed, it would clear the way for completion of the remaining studies and permits, with first production from the Azteca Plant anticipated around three months after licence issuance.
The outstanding items for the mine installation licence are:
- a supplementary archaeological survey; and
- engineering designs for the water reticulation and sewage treatment systems.
Both studies are expected to take roughly two months, followed by a two-month review. Importantly, the Company does not expect the archaeological work to identify any material issues, as previous assessments found no sites that the planned development or 15-year mine life would impact.
Cadence Ownership
As of the end of June 2025, Cadence’s total investment in the Amapá Project is approximately US$15.5 million, representing a 35.7% equity stake in the Project.
About the Amapa Project
The Amapá Iron Ore Project is a fully integrated operation in Brazil, comprising established mine, rail, port, and beneficiation infrastructure. It hosts a JORC-compliant Mineral Resource of 276 million tonnes at 38% Fe and a Proven and Probable Ore Reserve of 195.8 million tonnes at 39.34% Fe. In December 2024, an updated Pre-Feasibility Study confirmed the Project’s ability to produce a 67.5% Fe direct reduction (DR) grade concentrate at a rate of 5.5 Mtpa. The revised flowsheet and mine plan resulted in a post-tax NPV (10%) of US$1.97 billion over a 15-year mine life, with pre-production capital investment of US$377 million. In August 2025 The Amapá Iron Ore Project reduced its C1 cash costs to US$27.28/dmt FOB Santana and US$55.46/dmt CFR China. Installation licence applications have been submitted, and once granted, will allow, subject to financing, the recommissioning of the Project.
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| Cadence Minerals plc | +44 (0) 20 3582 6636 |
| Andrew Suckling | |
| Kiran Morzaria | |
| Zeus (NOMAD & Broker) | +44 (0) 20 3829 5000 |
| James Joyce | |
| Darshan Patel
Gabriella Zwarts |
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| Fortified Securities – Joint Broker | +44 (0) 20 3411 7773 |
| Guy Wheatley | |
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| Alan Green |