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@sakhtar786 That at some point, possibly today, the deal with the banks was expected to conclude this month. The below was reported today, but it's possible it's a summary of an update collated a few days, weeks or month or so ago. Hard to tell!

"(e) updating of the negotiation with the Bank Syndicate in order to fulfill the preceding condition of the PRJ; (f) forecast that, based on the information provided by Recuperanda, creditors will be able to receive their credits in January / 2021, the period necessary to finalize negotiations with the Union of Banks and the organization of payment;"

"The only thing I'm taking away from that" replace "thing" with "new bit of information". Anyone spot anything else new of interest?

It's complicated @Cause. The only thing I'm taking away from that with certainty is that at some point in the past (months ago, weeks ago, days ago, or perhaps even today) it was (is) thought that the deal with the banks will complete this month.

Spot:

http://www.custeel.com/en/csi.jsp
===[
Date Seaborne index 62% Fe fines Seaborne index 65% Fe fines Seaborne index 65% Fe pellets premium
2021-01-18 173.40 197.00 46.30
2021-01-15 172.60 195.50 46.30
2021-01-14 171.40 194.50 46.30
2021-01-13 168.90 191.50 45.70
2021-01-12 171.20 193.50 45.70
2021-01-11 171.00 193.20 45.70
2021-01-08 171.50 191.20 45.70
]===

Could this be the month we take our 20%? And what a month if so!

@Kiran said port watching was pretty fruitless, but he didn't say anything about court watching. ;-)

"Conclusions for Decision"...

Hopefully it was obvious that it's debt $85m, equity $30m. $2.5m of the equity is ours in escrow (DIP A) and I suppose isn't strictly part of the CapEx. It's DIP B equity, DIP C debt. If we pay $3.5m of DIP B it takes us to 27% of Amapa. Some of us believe if we pay all of DIP B it would take us to 49% of Amapa. But it's probably more complicated than that! Especially with iron ore prices as they are! LoL.

@hereandnow. You might want to take a read of my posts over the weekend. I believe the $30/40m is a gross underestimate in the light of today's iron ore spot and futures, and could go a very long way to fulfilling the CapEx, depending on how much of this the banks take.

The Judicial Recovery Plan has the details of the debt to equity split. Though this may have changed now! $30m : $85m

Original source:
https://pje.trt8.jus.br/primeirograu/Processo/ConsultaDocumento/listView.seam
20012416350764800000023996777

Translation care of @Dallas
https://drive.google.com/file/d/1t_2GNdDBpqXrb9UszfuVFa63N6s_lHIA/view

Welcome @hereandnow!

For background take a read of:

"Approval of Judicial Restructuring Plan Paves the way for the Restart of the Amapá Iron Ore Project." (30 August 2019)
http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=2887382

For the latest take a look at the January 2021 corporate presentation:

https://www.cadenceminerals.com/wp-content/uploads/2021/01/Corporate-Presentation-KDNC-JAN-2021-PUBLIC-1.pdf

I'm happy to have a go at answering any questions, as I'm sure many on here are.

Ob.

Presumably somebody wants in below 20p and the MM's are obliging. Will the shareholders though? ;-)

And lithium @Cause! ;-)

"Therefore, while gold might be a good hedge against US dollar weakness, it is not an ideal hedge against inflation.

The S&P 500 too will be a good hedge against inflation, as it has been performing well. So copper, lithium, cobalt and alternative energy stocks are good hedges against inflation."

and probably iron under the same thesis.

And we should do so fairly!

https://www.taxjustice.net/2019/07/22/terrible-transactions-how-much-does-mining-benefit-the-brazilian-state/

Great spot @tomcat! @Ivybush. Depends. If we have an option to redeem then we probably should by whatever means, which includes raising above 12p if we'd rather not sell assets. Whichever way, it's peanuts now meaning hopefully we can sleep easy at night no longer afraid that the big bad CLN will bite. LoL.

At the AGM it was stated that $250k outstanding on the CLN, which is scheduled to be fully repaid by April this year,

Indeed @jimb2. Written news of Sonora planning to produce 50ktpa should firework this share, as I'm sure most of the holders will understand the requirements to use our JV areas sooner than currently planned to meet this rate. :-)))

There are various directions a revaluation could come from, but taking 20% of Amapa following binding agreement with the banks will do it for me.

Enterprise Value to EBITDA multipliers have recently been increasing for iron ore companies. For instance:

"Cleveland-Cliffs Stock Jumps 3x In 6 Months; What’s Changed?" (JAN 8, 2021)
https://www.nasdaq.com/articles/cleveland-cliffs-stock-jumps-3x-in-6-months-whats-changed-2021-01-08
===[
Though earnings dropped, CLF’s P/E multiple increased from 6x in 2017 to 8x in 2019 mainly due to higher revenues, the company’s expansion plans, and rising iron ore prices. The multiple dropped in early 2020 to 4x following the outbreak of coronavirus. It has since then increased sharply and currently stands at 15x, as iron ore and steel prices have rebounded post the stimulus announcements. We believe that the company’s P/E multiple will decline to a more realistic level of about 9x in the near term.
]===

I thought 10x was a little high for this sector in my previous post, but perhaps not!

Indeed @tomcat - and not forgetting the resource potential could turn this resource into a multi-decade, century even, project! 800Mt! A 10x multiplier of EBITDA might even be appropriate ;-) At today's spot $1.5B @20% ownership, let's call it £1.5B @ 27% ownership. SP of £10. Now there is a target and a half. LoL. And yes, I'm dreaming. Probably... ;-)

"Updated Mineral Resource Estimate - Amapa Iron Ore" (02 November 2020)
https://www.lse.co.uk/rns/KDNC/updated-mineral-resource-estimate-amapa-iron-ore-hs6zsvh6hytf9fs.html
===[
Resource Potential

BGS recognises an opportunity to assess the potential of the other iron-bearing domains logged and modelled as part of this update. This primarily includes the Semi Compact and Compact Itabirites along with the Canga and Colluvium that was previously included in the 2012 Mineral Resource Statement but has been excluded from this update.

It is recommended that metallurgical test work programmes on all iron-bearing material types are undertaken to assess the upgrade potential.

Canga and Colluvium material above a 25% Fe cut-off and within the optimised pit shell, but excluded from the Mineral Resource Statement totals 49 Mt of Colluvium grading 38.5% Fe, 21.5% SiO2, 12.4% Al2O3, 0.55% Mn and 0.16% P and 6.4 Mt of Canga grading 46.7% Fe, 10.7% SiO2, 11.2% Al2O3, 0.22% Mn and 0.47% P.

On a global basis, and not restricted to a pit shell or cut-off grade, BGS has modelled an additional 800 Mt of Indicated and Inferred Semi Compact and Compact Itabirite that lie predominantly below the existing Itabirite resource. This provides a significant opportunity should future metallurgical and optimisation test work show the material can be upgraded economically to a saleable concentrate.
]===

Indeed @Olderandwiser. The discussions with the banks have really drawn on! We've got agreement in principle, and now hopefully just dotting the i's and crossing the t's! As it happens, if the deal were to conclude tomorrow and we were to start shipping ASAP we'd probably be thankful of the delay as the price we'll be getting for shipping the iron ore sat at the port over the next year or so will be much higher than had we done so a year back. We could even lock it in for a decent price if you look at the iron ore futures over the next year :-))). Fingers well and truly crossed we complete soon! But then again, it's possible prices might continue to rise in which case a delay may favour us further.

As to what the EBITDA would be based on today's spot iron ore prices. There's now a bit of uncertainty over what we intend to produce at full production. Most sources suggest 5.3Mt with a 4.4Mt 65% Fe and 0.9Mt 62% Fe split, but the updated MRE at the beginning of November suggests: "4.4Mt of 65% Fe and 0.3 Mt of 62% Fe per annum.". Since 3's look like 9's, and the January corporate presentation is more recent which states: "4.4 mtpa – 65% Fe, 0.9 mtpa – 62% Fe" I'll assume the 0.3Mt is a typo, but it's not too consequential either way.

According to:

"Approval of Judicial Restructuring Plan - Amapa" (30th Aug 2019)
https://www.lse.co.uk/rns/KDNC/approval-of-judicial-restructuring-plan-amapa-i427sb3g1b3sys4.html
===[
At full production and using US$61 per tonne of 62% Fe Amapá is forecast to have:
an average net revenue after shipping of US$266 million per annum,
and an average EBITDA of US$136 million per annum.
]===

I've looked through the JRP and I believe the corresponding price for 65%Fe used in that estimate is US$80 per tonne. Additionally my conclusion was that the EBITDA of $136m is average over full life of project, including rehabilitation and ramp up, not "at full production", but I'm less certain of this. You'll have to take a look through my postings many months ago for my evidence and reasoning if you are interested.

Regardless, it's easy enough to see what the additional EBITDA would be if today's spot of $172.60/t Fe 62% and $195.50/t Fe 65% were used:

($172.6/t - $61/t) * 0.9Mt + ($195.5/t - $80/t) * 4.4Mt =
$100.44m + $508.2m = $608.64m

That's an additional $600m per year EBITDA on top of the estimated $136m, all else being equal. Truly eye-watering!

Of course all things are not equal, and it's highly unlikely prices will stay at these levels throughout the project. But it is what it is, and a metric I'll certainly be bearing in mind when we take our 20% ownership! ;-)

Ob.