Cadence Minerals shares soared on Tuesday after the company announced positive results from an updated Pre-Feasibility Study for its Amapá Iron Ore Project in northern Brazil, where it holds a 34.6% equity stake.
The study, incorporating a Direct Reduction grade flow sheet, reveals a substantial increase in the project’s post-tax Net Present Value (NPV10%) to US$1.97 billion, with an internal rate of return of 56%.
Cadence Minerals shares jumped over 20% in early trade on Tuesday as investors cheered the improved outlook for the company’s flagship asset.
The project is estimated to generate average annual free cash flow estimated at US$342 million from start-up through to closure.
Over its 15-year mine life, the Amapá Project is expected to deliver US$9 billion in gross revenues, US$4.9 billion in net operating profit, and US$4.6 billion in free cash flow.
The processing plant has been redesigned to produce high-grade iron ore concentrate at 67.5% Fe, with an average production rate of 5.5 million metric tonnes per annum.
The project demonstrates strong cost efficiency, with Free on Board C1 Cash Costs of US$33.7 per dry metric tonne at the port of Santana, and Cost and Freight C1 Cash Costs of US$61.9 per dry metric tonne in China.
The pre-production capital requirement is set at US$377 million, with an attractive payback period of just three years, shortened by the increased free cash flows.
“This significant update to the Amapá Prefeasibility Study, which includes the DR-grade concentrate flow sheet, reinforces our firm belief that the project can add substantial value to Cadence. The increased net present value of $1.97 billion and improved post-tax internal rate of return reflect significant advancements in the project’s robust economics,” said Cadence CEO Kiran Morzaria.
“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. This ownership and control of the infrastructure contribute to the project’s low-cost base and will enable the pursuit of regional expansion opportunities, with substantial resources located 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.”