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I emailed info about this and got the following summary.
The claims were related to the services provided by DEV to a creditor and the movement of iron ore at Pedra Branca Do Amapari and had nothing to do with the samples to be taken as part of the 67% study.
DEV has all the necessary licenses and environmental permits for the operation. The trucking contractor involved in transportation also has all the required licenses.
The route was changed to go via Sierra Do Navio after consultation with the Municipality of Pedra Branca Do Amapari to avoid heavy machinery's impact through the town and not to prevent inspection on the weighbridge scales and DNIT.
The claim has no impact on DEV and its ability to advance the Amapa project, and the article's claims against DEV are factually incorrect.
This update is positive and sets pathway for the next 3-12 months, with I assume corresponding announcments. Assuming financing is secured, which they are making early progress and the licensing timeline stays on track, they could be in construction in 2025!! If the 67% test work is successful that would move the neddle on the NPV (+US$300 million to current NPV (DYOR).
As to the DFS - frankly a good decision, especially i it is guided by potential partners. For those that do not know after DFS there is a Implementation Phase which in itself is a furhter very detailed engineering plan and study. Rolling the DFS into the Implementation phase is not unheard off (particuarly in private companies and brownfield assets).
As to the Hastings sale, yes, it's disappointing that they got a 30% return. In the end they were at the mercy of hastings which made some bad choices and are being overtaken by the competition. The issues included - them spliting the development programme, which halved NPV of the project, newer insitu leach projects are being developed (which are cheaper, lower capex and less envrionmetally friendly), the NPDR basket also taking a dive, and with the development of newer project Hastings comparative grade is now in the bottom quartile.
Mrcautious, I'm afraid I have to disagree. I chatted recently with a HNWI and asked how he decides to invest. He looks at the projects and the management (resource companies) to determine value and then he reads the bulletin boards - his view is that if numerous posters are talking about their exit and moaning about the company, it is pretty much a turn-off for him. As he realises that any volume and price movement upwards up will be met with selling. I know it's a sample of one - but it does show that people's decision to invest is influenced by what is posted. There are other places to discuss and criticise management; share clubs, AGMs – telegraph groups etc. The sad thing from the discourse today is that we know at least two shareholders – I assume with substantial shareholdings (otherwise, why would they moan so much) are sellers at 20 pence; this would caution any new potential investor.
Yes, by my calculations, he has invested something in the order of £200,000 in KDNC from 45 pence to 4 pence. Based on his average salary on average that's 15% of his take-home pay every year for the last ten years.
Yes, it was not to fund - DFS, and I assume, given they have not published the optimisation studies, the DFS has not started. That is not to say they could not start construction without DFS, as it is up to any potential equity partners and dent funders what level of engineering is required, as you can go directly to detailed engineering. As to the shipping, AIM is funny sometimes - I think starting shipping will add more value to the stock price than any improvement to the project via a DFS or optimisation studies. Moreover, if it is a one-time settlement, which Kiran hinted at - the asset would have no security over it from third parties, removing another barrier to financing.
In the interim accounts said - "Cadence and Its joint venture partners have agreed that the lowest risk and currently best commercial approach to developing this project is to bring on a highly experienced mining operator or EPCM contractor as a joint ventur partner" at the end of October they signed a MOU with EPC contractor who will finance the debt. So I think they largely achieved the target....just that no one cared and retals shareholders sold the stock at 7 pence. Personally I think that to get the share moving they will need to start shipping again, assuming a settlement can be reached. Which I these prices it should be doable.
So from personal experience DFS can take anywhere from 6 - 24 months depending on the project and complexity. The advantages of the Amapa project is that, unless they are going to increase the mine life (eg more Ore Reserves) there is no further drilling for resources. Countering that is the port and rail which adds a level of complexity. They could probably get it done in 9 months and I would hope they can.
I do not think there will be any further updates this year, DFS proposals can take 3 months. Scope , battery limits, price negotiation etc. And in addition I think they mentioned that they want to do a process improvement study (interims) before they embark on DFS
Yes that would be great and he says “he wants to and continues to pursue a JV partner to find DFS”. In addition he says that they would like to have DFS completed at the same time as the licenses (eg DEC 2024). So I think either we will get a JV by the end of March / or a funding for Cadence to fund DFS or a Delay in DFS until funding is found.
I personally think that the bank debt needs to be completely resolved and the securities released as as a new investor in the asset would see a secured creditor could represent a risk. So either shipping starts to pay banks or they get paid out completely.
So the below is from the Interims -
Cadence and Its joint venture partners have agreed that the lowest risk and currently best commercial approach to developing this project is to bring on a highly experienced mining operator or EPCM contractor as a joint venture partner.
The MOU brings on a EPC contractor who intends to finance the debt portion of the development programme, I do not think we are going to see anything more this year on this front.
There is no statement that KDNC cannot sell EMH, it is in escrow however an escrow can work in many ways. E.g the escrow could sell the EMH shares as long as the proceeds are held in the escrow account for the benefit of the loan note holder. I suspected this to be the case as this would allow cadence to sell EMH to service the loan and sell other stocks to fund Amapa. We will know in the interims which are due at the end of next week. On the website they also shown a decrease in percentage of EMH, which of course is in part due to the EMH placings, however back calculating you work out they have sold some since last presentation in summer. So I disagree with bannor - they can and have sold EMH to service the debt.
Although Sonora has great potential, our area is much later in the mining plan, and a resolution to populist policies to garner votes is hard. As long as the policy gets the votes, it's hard to see a commercial resolution in the short term. For me IMHO, this will go down the legal route and will take time.
Again, this is a blanket statement - I was not specific about the sale of which investments. Overall, it was not a sale for Peanuts -and this is harder to decipher - my calculations of the overall sale price using a combination of announcements and presentation is that they paid an average price of 0.55 (my estimate) and sold around 0.49 - it is a loss not probably as significant as others might think. The biggest mistake in my opinion (in hindsight) was the acquisition of £4.5 million of BCN at £1 for the attempted takeover. This meant the sale of BCN shares to service and repay the debt (eventually EMH shares).
However, even if Cadence had not done this - it would have not transformed the company back to over £80 million as the SOTP of the public equity was not worth that and the private stuff at the time (Mexalit / Megalit + Yangibana) were at book value. Basically, when it was £80 million REM was hugely overvalued and the market ran away with itself...
@ Bannor - The evidence does not bear out your statement that discounted placings paid down the debt. Of the £10.3 million due, circa £1.3 was paid back via a placing at 22% discount & circa £1.3 million was converted into equity (at a premium to the market). Therefore circa £7.7 million was from cash - which as outlined below was from the sale of our investments.
The summary details are below -
-September 2016 - Cadence took out a loan of US$15 million, circa £10.3 million (YE 2016).
- By the end 2018, this loan balance had reduced to £3.7 million. Without equity placings! However, circa £1.3 million of the loan was converted into equity, not at a discount, as the conversion price was 65 pence / and the price during these conversions was from 64.5 pence to 58 pence.
- Therefore, they had reduced their liability by £6.6 million with a conversion of £1.3 million at a premium, and the remainder came from the sale of their investments.
- From Jan 2017 to Dec 2018 - they sold circa £8.8 million of investments, of which they invested £1.6 million.
From -2019 - is more nuanced in terms of cash flow.
From Jan 2019-to Dec 2021
Cadence Reduced the Balance of its Debt from £3.7 million to 0. (It did restructure them again in 2019.)
Invested some £5 million in investments (of which Amapa was the largest investment.)
Operating cash burn was £3.3 million over the period
So a total - outflow of circa £12 million
This was funded by
£ 5.3 million in placings in 2019 and 2020, all at increasing share prices. With the stated uses of funds, the majority of it (4 million) was stated for use as Amapa and what was to become Evergreen (£1.3 was stated to pay back the loan).
£8.1 In sales of its investments.
The Mexican loan was largely paid back in cash, there was a couple of conversion to equity. Repayment was done on 2021. I spoke to Kiran a couple of AGM ago iand he stated that funds were involved - given the similar voting pattern, I assume that these funds are still present.
Actually - we do have a director that advices / represents a couple of funds - speaking to Kiran a couple of AGM ago - Adrian Fairbourn advises three funds that hold circa seven percent, and I assume those funds have not voted off any board members
@Dalladaz - Yes, that is the section that I was also referring to - My understanding and happy to be proved wrong, is that his reference to the
"Next stage" refers to the next stage after the PFS. Not that the next stage after the licensing is the DFS. Therefore, I understand that the DFS can be started while the licensing is ongoing (however, it won't be started until they have funding, which they are seeking a JV to provide). The target of having the DFS with the project fully licensed reduces uncertainties. The reality is that projects embark on licensing through project development, with the licensing often not being completed before the DFS. So, Cadence's approach is a good one, and often, the cost of these studies is lower cost than a DFS. For some background, I am involved in the mineral extractive industry, a miner by training and have been involved in project development (albeit for a much larger entity).
Re-board change, you are in a minority opinion as those shareholders who voted at the last AGM, 99.6% approved the accounts and the strategy of the company contained, and 98.7% - approved the re-appointment of a director. I assume no shareholders proposed any other resolution at the meeting.