Cadence Minerals has entered a non-binding Heads of Terms (HOT) with IndoSino to acquire up to 27 percent of the Amapá iron ore mine.
Cadence Minerals (AIM:KDNC) has entered a non-binding Heads of Terms (HOT) with IndoSino to acquire up to 27 percent of the Amapá iron ore mine, beneficiation plant, railway and private port, formerly owned by Anglo American (LSE:AAL,OTCQX:NGLOY) and Cliffs Natural Resources (NYSE:CLF).
As stated in the press release:
The Amapá Project is a large-scale iron open pit ore mine with associated rail, port and beneficiation facilities and commenced operations in December 2007. Production increased to 4.8 million tonnes and 6.1 million tonnes of iron ore concentrate product in 2011 and 2012 respectively.
The HOT stipulates that Cadence, upon entering into a binding investment agreement, will have the right to acquire 27 percent of the Amapá project by investing a total of US$6 million over two stages into a joint venture company, Pedra Branca Alliance Pte Ltd. (PBA). Cadence’s investment is conditional, amongst other matters, on the approval of a judicial restructuring plan (JRP) submitted by Cadence and IndoSino to the Sao Paulo Commercial Court in Brazil, the transfer of 99.9 percent of the issued share capital of Amapá to PBA and Cadence raising the required finance. Cadence is in discussions with potential strategic investors to fund all or part of this investment via equity.
Kiran Morzaria, Cadence Minerals CEO, commented:
“It is rare in our industry to be presented with an opportunity to put forward a relatively modest investment to participate in such a project that we believe provides us with a potentially transformative asset for our company. The Amapá Project gives Cadence the potential for an exceptional ROI in the run up to full production and an opportunity to become a significant shareholder in a mid tier iron ore producer.”