Cadence (KDNC) Shares Rose on the Amapa PFS Update. What’s Next?

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Simon Mugo
Updated: 21 Mar 2022

Key points:

  • Cadence Minerals shares edged higher on Amapa pre-feasibility study update.
  • The miner just appointed Wardell Armstrong International as the PFS manager.
  • Many investors and analysts expect the PFS results to be highly positive.

The Cadence Minerals PLC (LON: KDNC) share price edged higher after the company revealed that it had appointed Wardell Armstrong International Ltd (“WAI”) to act as the PFS manager for its Amapa Project.

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The miner started conducting a pre-feasibility study (PFS) on the Amapa project in late 2021 to produce up to 4.9 million tonnes (Mt) of high-quality iron ore annually.

Also read: The Best Copper and Mining Stocks to Watch in 2022.

A previously PFS report done by SRK consulting in 2015 indicated that the mine’s operator might have to spend up to US$168.8 million on the project as capital expenditures to start producing iron ore. The figures were updated in 2019 to reflect inflation and FX rates changes.

The money would be spent on refurbishing and rehabilitating the existing port, rail, and plants. The firm also modified the beneficiation plant to produce a more significant percentage of the 65% iron concentrate, approximately 4.9 Mt.

Cadence intends to use primarily renewable energy sources to produce the iron concentrate at the Amapa project, which aligns with the goal shared by many companies of reducing their overall carbon footprint.

The company could pass on the carbon savings achieved to its customers who are keen to purchase iron and other commodities that are sourced in an environmentally friendly manner.

Cadence Minerals currently owns 27% of the Amapa project, with Indo Sino Pty Ltd owning 73%. However, cadence has the right of refusal to increase its shareholding in the project up to 49%if Indo Sino seeks other investors in the JV managing the project.

Therefore, there is a high likelihood that KDNC will increase its shareholding in the project in future.

Overall, the PFS is progressing well, and the appointment of Wardell Armstrong is likely to yield excellent results for the company and its partners. However, the reaction from investors was not as big as expected, maybe because they are waiting for more tangible progress on the PFS.

Cadence Minerals CEO, Kiran Morzaria, commented: “The Amapa Mine has all the attributes of a significant iron ore deposit, and the upgraded Mineral Resource Estimate of 176.7m tonnes grading 39.7% Fe at the Inferred category provides the Cadence board with great confidence in our investment decision.”

“As we see the world move towards decarbonisation and as manufacturers seek to minimise their carbon footprint, the planned production of a >65% Fe concentrate utilising predominantly renewable energy really does highlight the potential for the Amapa mine, rail and port infrastructure to deliver a lower emission iron ore product to our customers.”

Cadence shares look attractive at current prices and could head higher in future.

*This is not investment advice. Always do your due diligence before making investment decisions.

Cadence Minerals share price.

Cadence Minerals share price 21-03-2022
Source: IG

The Cadence Minerals share price edged 3.63% higher to trade at 18.27p, rising from Friday’s closing price of 17.63p.

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