Cadence Minerals shares jump on latest Amapa update

The AIM-traded firm holds a 34.6% equity stake in the project, which is designed to produce premium direct reduction (DR)-grade iron ore concentrate.

Its updated PFS highlighted an internal rate of return of 56%, with average annual free cash flow projected at $342m over the mine's 15-year lifespan.

Total gross revenue was estimated at $9bn, generating $4.9bn in net operating profit and $4.6bn in free cash flow.

The revised processing plant design would deliver 5.5 million metric tonnes per annum of 67.5% Fe DR-grade concentrate, supporting competitive free-on-board C1 cash costs of $33.7 per dry metric ton at the port of Santana and CFR costs of $61.9 per dry metric ton in China.

Pre-production capital costs were estimated at $377m, with the project's payback period reduced to three years due to enhanced free cash flow projections.

“This significant update to the Amapá pre-feasibility study, which includes the DR-grade concentrate flow sheet, reinforces our firm belief that the project can add substantial value to Cadence,” said chief executive officer Kiran Morzaria.

“The increased net present value of $1.97bn and improved post-tax internal rate of return reflect significant advancements in the project's robust economics.

“The Amapá Project represents a well-developed and largely de-risked opportunity, featuring established mineral reserves, advanced environmental permitting, and complete control of integrated rail and port infrastructure.”

Morzaria said the ownership and control of the infrastructure contributed to the project's low-cost base, and would enable the pursuit of regional expansion opportunities, with “substantial resources” within 30 kilometres of the existing rail line.

“In addition to the DR-grade flow sheet, the project will use 100% renewable energy sources.

“We anticipate this will help us achieve one of the lowest carbon footprints in the region while still delivering a robust and highly profitable project.

“We are excited about the potential of the Amapá Iron Ore Project and look forward to providing further updates on our progress.”

At 1024 GMT, shares in Cadence Minerals were up 22.56% at 2.82p.

Reporting by Josh White for Sharecast.com.