REG - Cadence Minerals PLC - LOI to acquire Projects, £1m Fundraise & Updates

Cadence MineralsAnnouncement

17/12/2024 07:00

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RNS Number : 3065Q  Cadence Minerals PLC  17 December 2024

The company deems the information contained within this announcement to
constitute Inside Information as stipulated under the Market Abuse Regulation
(E.U.) No. 596/2014, as it forms part of U.K. domestic law under the European
Union (Withdrawal) Act 2018, as amended. Upon the publication of this
announcement via a regulatory information service, this information is
considered to be in the public domain.

 

Cadence Minerals Plc

 

("Cadence Minerals", "Cadence", or "the Company")

 

Letter of Intent to Acquire up to a 40% stake in the Pompeya and Sarzedas
Tungsten, Antimony and Gold Exploration Tenements, Completion of £1 million
Fundraise and Investment Updates

 

Cadence Minerals (AIM: KDNC) is pleased to announce that it has entered into a
letter of Intent with Hesperian Metals, S.L ("Hesperian") to invest in and
acquire up to 40% two prospective tungsten, antimony, and gold exploration
packages in Spain and Portugal ("LOI"). The LOI will be funded via a placing
with predominantly institutional investors for gross proceeds £1 million.

 

The two exploration tenement packages include the Pompeya Project in Spain,
which covers a sizeable former mining province and is prospective for tungsten
("Pompeya"). The second tenement package is situated near Castelo Branco in
eastern Portugal, which also contains several old mine workings and is
prospective for antimony, tungsten, and gold ("Sarzeda"). Together, Pompeya
and Sarzeda are referred to as the "Projects".

 

Highlights

 

·      Cadence has conditionally agreed to an LOI to invest in and
acquire up to 40% of several licenses in Spain and Portugal which contain
previously unidentified tungsten, antimony, and gold exploration targets.

·       Other notable tungsten deposits in the Iberian Peninsula
include the Los Santos Mine (currently on care and maintenance with the mill
slated for restart in 2025) and the Panasqueira Mine (operating mine, almost
continuously since 1896), both owned by Almonty Industries (TSE:AII).  These
operations have mineral resources (Measured and Indicated) of 3.7 Mt at 0.19%
WO(3) and 10.0 Mt at 0.23% WO(3), respectively, according to the latest
Almonty data.

·       Tungsten is recognised globally as a critical and strategic
material due to its economic significance, supply risk, and limited
substitution alternatives. Since 2020, the price of Ammonium Paratungstate
(APT - a key intermediate in the production of tungsten carbide and tungsten
metal and the main price that tungsten is quoted in) has risen from
approximately US$210 per metric ton unit to around US$390 per metric ton unit.

·       The Pompeya project covers an area of approximately 470 square
kilometres (km²) of mining and exploration licenses, featuring multiple
mineralised skarns, and historic mine workings.

·      There has been limited exploration of tungsten in the area.
However, recent investigations at Pompeya have identified tungsten ore
(scheelite) in both the old mine workings and at the surface within skarn
deposits.

·      Rock chip sampling returned tungsten oxide ("WO(3)") grades
between 3.3% and 4.8%.

·       The Sarzedaz project covers some 57km² and contains numerous
old antimony, tungsten and gold deposits, with associated waste dumps.

·     Grab samples of the waste dumps yielded between 0.4 g/t and 109.9
g/t of gold with a median grade of 30.9g/t of gold.

·       If Cadence proceeds with this investment, the capital raised
will be used to advance the exploration of the Projects over the next six
months with the aim of identifying potential mineral resource targets.

 

Cadence CEO Kiran Morzaria commented: "As our flagship Amapá project
continues to advance and de-risk, our Board are mindful of the changing macro
landscape and our priority to ensure Cadence has maximum exposure to the
critical minerals needed for energy and technology markets. As such, we are
excited by the potential opportunity with the Pompeya and Sarzeda projects,
particularly given the increasing importance of tungsten as a strategic raw
material. I look forward to reporting back on progress at the end of the
exclusivity period with Hesperian Metals."

 

"I am also pleased to confirm the Company has successfully raised £1 million
before expenses to fund our investment into the Pompeya and Sarzeda projects
and our continued investment into Amapá."

 

Chairman Andrew Suckling added: "With Amapa progressing well and, in
particular, its potential to feed high-grade ore for "green iron", I am
pleased that our Board remains vigilant and open to new investment
opportunities as the critical minerals landscape continues to shift. Once our
due diligence process has been completed, we fully expect the Pompeya and
Sarzeda projects to complement our other investments into the critical
minerals needed for energy and technology markets. "

 

About the Projects

Pompeya

The Pompeya project is situated in the Extremadura region of southwest Spain.
Hesperian Metals has executed an option and exploration agreement to purchase
some 470 km(2) of mining and exploration tenements.

 

Regionally, Pompeya is within the Ossa-Morena Zone of the Iberian Massif and
contains Lower Cambrian Carbonates, intruded by igneous rocks from the
Hercynian Orogeny. The physical-chemical interaction between these intrusive
bodies and carbonate host rocks rich in calcium and/or magnesium develops
mineralised skarns, which include magnetite, tungsten, copper, and gold
skarns. Skarn deposits are some of the largest sources of tungsten in the
world, with some of the largest deposits located in China.

 

The Pompeya region contains multiple historic magnetite (iron ore) mines
hosted in skarn deposits. However, the potential for Tungsten deposits was not
recognised until recently. Early surface sampling was conducted after some
mineralogical samples identified tungsten-bearing ore (scheelite) via
ultraviolet ("UV") field surveys. Scheelite, calcium tungstate (CaWO(4)), is
one of the most common tungsten minerals, representing 65% of the world's
production, and is fluorescent under short-wave UV where it appears bright
blue.

 

Figure 1 scheelite exposure under UV light at Pompeya project.

 

In addition to the UV field surveys, four rock samples were collected from
skarn outcrops; these were sent to ALS Labs in Seville and returned between
3.3% and 4.8% Tungsten Oxide. These are significant assay results and justify
further exploration.

 

Given the assay results, mineralised skarns, historic mine workings, and
previously undiscovered Tungsten mineralisation, Pompeya has substantial
mineral potential in the view of Cadence management. The next steps will be
conducting detailed geological mapping alongside a comprehensive sampling
programme and scout exploration drilling to identify potential mineral
resource targets.

 

Figure 2 top skarn outcrop at old mines working, bottom sample from out crop
under UV light.

 

Sarzeda

The Sarzeda project is in eastern Portugal, approximately 19km west of Castelo
Branco, and covers some 57km². The area contains several mineral deposits
that were intermittently mined between 1916 and 1951. Hesperian has signed an
option agreement to acquire these exploration concessions.

 

The area includes the old mines of Das Gatas (Mina do Vale da Carreira),
Barroca da Santa, Pomar (Galdins), Casalinho, Monte da Goula, and Ficalho. The
Das Gatas, Barroca da Santa, and Pomar mines were exploited from 1935 to 1951,
mainly for antimony and tungsten.

 

The Das Gatas mine was exploited in the 1930s and 1940s. The workings extend
from the surface to a vertical depth of 75 meters and 250 meters along the
strike. The local plant produced an antimony concentrate with a high gold
content; the precious metals were not recovered on-site.

 

Of particular interest are the old mine waste dumps, which were sampled and
assayed in the 1980s and yielded significant gold results. Fifteen samples
were taken, and the gold grades ranged between 0.4 g/t and 109.9 g/t, with a
median grade of 30.9 g/t.

 

The Sarzeda project is within the Variscan Iberian Antimony Belt.  The belt
includes numerous old workings and mineralised deposits and can be followed
for more than 400 kilometres W-E from central Portugal to southern Spain. Most
known deposits are hosted in the Cambrian Schist-Graywacke Complex rocks and
metasediments of Ordovician-Silurian age.

 

Tungsten

These Projects are expected to complement Cadence's other investments in
critical minerals needed for energy and technology markets.

 

Tungsten and its alloys stand out as some of the hardest metals, with tungsten
boasting the highest melting point among all pure metals at 3,422°C. This
unique combination of hardness and high-temperature resistance makes it a top
choice for a wide range of commercial and industrial applications.

 

With its economic significance and limited substitution options, tungsten
holds a strategic position in many global markets. The US, EU and UK all
recognise its critical role, and have classified tungsten as a strategic raw
material due to its economic importance, supply risks, and lack of viable
substitutes. This underscores the gravity of tungsten's role in the global
economy and its irreplaceable value.

 

Tungsten carbide, with a hardness that rivals that of diamond, is a common
choice for cutting tools and wear-resistant materials. Tungsten also finds
applications in a diverse range of industries, including transportation (such
as aircraft manufacturing and railways), mining, construction, defence,
medical (for X-ray tubes and radiation shields), consumer electronics (like
smartphones), and chemical products. Furthermore, tungsten and tin-based
materials are currently under evaluation for potential use in lithium-ion
batteries.

 

Details of the Letter of Intent with Hesperian

The LOI outlines the principal terms of the earn-in agreement to acquire up to
40% of Pompeya and Sarzeda. The decision to invest and investment stages are
outlined below.

 

Hesperian and Cadence have agreed to an exclusivity period terminating in the
Q1 of 2025. Cadence will complete its full due diligence during this period,
and both parties will look to finalise a definitive investment agreement. As
part of the exclusivity Cadence will issue 1,666,667 new ordinary shares to
the introducers of the Projects, which will be subject to a 12-month lock in.
Cadence will update the market as and when necessary.

 

Subject to a successful outcome to the due diligence and at Cadence's option,
Cadence will invest €430,000 over 6 months to fund early exploration costs,
including surface mapping, initial scout drilling and sampling over Pompeya
and reconnaissance exploration work at Sarzeda ("Phase 1 Exploration"). In
addition, Cadence will issue Hesperian €175,000 of new ordinary shares in
Cadence upon entering into a definitive investment agreement with Hesperian.
These shares will be subject to a 12-month lock-in. In consideration of the
Phase 1 Exploration investment and the issue of shares, Cadence will receive
15% interest in the Projects via such an interest in the relevant project
licences.

 

After the completion of Phase 1 Exploration, and at its option, Cadence can
invest a further €2 million over 24 months to fund advanced exploration
costs, including drilling priority targets and, if applicable, mineral
resource development ("Phase 2 Exploration"). In addition, Cadence will issue
Hesperian €600,000 of new ordinary shares in Cadence, which will be subject
to a 12-month lock-in. In consideration of the Phase 2 Exploration Investment
and the issue of shares, Cadence will receive a further 25% interest in the
Projects at licence level.

 

If Phase 2 Exploration is successful, Cadence will have a first right of
refusal to enter into a joint venture with Hesperian to explore and develop
the Projects further.

 

Fundraise

Cadence intends to finance the potential investment into the Projects via an
institutional placing and as has raised, subject to Admission, £1 million
before expenses (the "Placing") by way of a placing arranged by Fortified
Securities of 66,666,667 new ordinary shares (the "New Ordinary Shares") in
the capital of the Company at a price of 1.5 pence per Ordinary Share (the
"Issue Price"). In addition, Cadence will issue 1,666,667 new ordinary shares
to the introducers of the Projects for a consideration of £0.025 million,
which will be subject to a 12-month lock in ("Introducer Shares").

 

The Issue Price represents a discount of approximately 42% per cent to the
closing bid price of 2.6 pence per ordinary share on 16 December 2024, the
latest practicable business day before the publication of this Announcement.

 

Application will be made for the admission to trading on the AIM market
("AIM") of London Stock Exchange plc ("LSE") for the New Ordinary Shares and
the Introducer Shares ("Admission"). Admission is expected to occur at 8.00
a.m. on or around 24 December 2024. The New Ordinary Shares and Introducer
Shares will represent approximately 23 per cent of the Company's issued share
capital immediately following Admission.

 

Following Admission, the Company's issued and fully paid share capital will
consist of 295,971,038 Ordinary Shares, all carrying one voting right per
share. The Company does not hold any Ordinary Shares in treasury. The figure
of 295,971,038 Ordinary Shares may be used by shareholders as the denominator
for the calculation by which they will determine if they are required to
notify their interest in, or a change to their interest in, the share capital
of the Company under the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority.

 

The New Ordinary Shares will be issued fully paid and will rank pari passu in
all respects with the Company's existing Ordinary Shares.

 

Use of Funds

The net proceeds of the fundraising will be used to fund Cadence's investment
in Hesperian Metals and, its continued investment in the Amapá Iron Ore
Project in Brazil and associated working capital.

 

Update on the Amapá Project

Cadence and our joint venture partners continue to have productive
conversations with potential partners and/or project equity financiers to
complement the project debt financing as outlined in our announcement AIM 30
October
(https://irs.nbtrader.co.uk/ir/cadence/newsArticle.php?ST=REM&id=311428232513600167)
2023. Cadence management believes that developing the DR-grade flow sheet will
further these discussions. Once a binding material contract is in place,
Cadence will inform shareholders.

 

In April and September of this year, the Amapá Project submitted all the
requested applications and environmental studies for Amapá's mine, railway,
and port. This application was in the form of the Environmental Control Plan,
"PCA" (Plano de Controle Ambiental), and an Environmental Control Report,
"RCA" (Relatório de Controle Ambiental). These applications and submissions
are a pre-requisite for the Amapá State Environmental Agency ("SEMA") to
grant the Amapá Project its installation licenses, which are required to
commence the rehabilitation and construction of the Amapá Project.

 

Our joint venture has continued to engage with SEMA and other relevant
authorities. SEMA recently requested that the Amapá project obtain standard
clearances from federal, state, and municipal authorities for the railway
license. These have been submitted, and we are awaiting responses. We have
requested an update regarding the timeline and will inform the market once
SEMA has provided guidance.

 

Amendment to Loan Facility

The Company has agreed to an amendment to the loan facility, which was
announced on AIM 26 May 2023
(https://irs.nbtrader.co.uk/ir/cadence/newsArticle.php?ST=REM&id=311428233724142674)
. The amendment varies the repayment profile and maturity date. The amended
loan facility has a principal repayment holiday until March 2025, with the
remaining balance being paid in eight equal instalments ending in November
2025. The Loan Facility has an effective annual interest rate of 9.5%.

 

About Hesperian Metals, S.L

Hesperian Metals, S.L. is a privately owned company dedicated to the
exploration and development of antimony and critical mineral projects across
the historic Iberian Peninsula. Their mission is to address the modern-day
supply shortfall of essential minerals through sustainable and innovative
mining practices.

 

With a diverse and experienced team, Hesperian Metals leverages in-depth
regional knowledge to unlock the rich endowment of historic mines in Iberia.
They are committed to meeting the global demand for critical commodities,
particularly antimony, which plays a vital role in various industries.

 

Their approach is rooted in sustainability and innovation, ensuring that our
operations not only contribute to the global supply chain but also promote
environmental stewardship and community engagement.

 

Further information on Hesperian can be found here
(https://hesperianmetals.com/) .

 

 For further information contact:

 Cadence Minerals plc                                         +44 (0) 20 3582 6636
 Andrew Suckling
 Kiran Morzaria

 Zeus (NOMAD & Broker)                                        +44 (0) 20 3829 5000
 James Joyce
 Darshan Patel

 Fortified Securities - Joint Broker                          +44 (0) 20 3411 7773
 Guy Wheatley

 Brand Communications                                         +44 (0) 7976 431608
 Public & Investor Relations
 Alan Green

 

Qualified Person

Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the information
contained in this announcement. Kiran holds a Bachelor of Engineering
(Industrial Geology) from the Camborne School of Mines and an MBA (Finance)
from CASS Business School.

 

Cautionary and Forward-Looking Statements

Certain statements in this announcement are or may be deemed to be
forward-looking statements. Forward-looking statements are identified by
their use of terms and phrases such as "believe", "could", "should",
"envisage", "estimate", "intend", "may", "plan", "will", or the negative of
those variations or comparable expressions including references to
assumptions. These forward-looking statements are not based on historical
facts but rather on the Directors' current expectations and assumptions
regarding the company's future growth results of operations performance,
future capital, and other expenditures (including the amount, nature, and
sources of funding thereof) competitive advantages business prospects and
opportunities. Such forward-looking statements reflect the Directors' current
beliefs and assumptions and are based on information currently available to
the Directors.  Many factors could cause actual results to differ materially
from the results discussed in the forward-looking statements, including risks
associated with vulnerability to general economic and business conditions,
competition, environmental and other regulatory changes actions by
governmental authorities, the availability of capital markets reliance on key
personnel uninsured and underinsured losses and other factors many of which
are beyond the control of the company. Although any forward-looking statements
contained in this announcement are based upon what the Directors believe to be
reasonable assumptions. The company cannot assure investors that actual
results will be consistent with such forward-looking statements.

 

 

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