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Indeed @degsie. And equally, an agreement can still be reached before the court date, which is sooner than some expected! Also @Dallas, did you notice that @Kiran finally clarified the movement from the private port to the public port is in June, not July :-)))

@Frankie. Research complete for now. Waiting for news which could land any day now. All looking good: Iron ore futures above $90/t out to November. USD:BRL > 5. Handymax rates < $10k/day. If you are looking for something to stimulate further discussion, why not dissect one or all of the recent interviews?

"Union Jack Oil, Cadence Minerals, BWA Group and Paul Hill" (8 Jun)
https://audioboom.com/posts/7601913-union-jack-oil-cadence-minerals-bwa-group-and-paul-hill
===[
Kiran Morzaria, CEO of Cadence Minerals #KDNC provides an Amapá Operational Update and explains what the £650,000 they've raised will be used for.
(Interview starts at 10 minutes 8 seconds)
]===

"RiverFort Global Capital Webinar Featuring Cadence Minerals plc" (20 May 2020)
https://www.youtube.com/watch?v=MgvMSxoJ8R4

"Cadence Minerals #KDNC - CEO Interview plus Q&A" (8 Jun 2020)
https://www.youtube.com/watch?v=mGhDQjFgP7k
===[
Alan Green talks to Cadence Minerals #KDNC CEO Kiran Morzaria. Kiran talks about the company's investments into the Czech Cinovec Lithium project via European Metals #EMH, Macarthur Minerals iron ore projects in Australia, plus Lithium JV's with Bacanora in Mexico and Hastings Tech Metals at Yangibana, Australia. Kiran then elaborates on the company's flagship Amapa Iron ore project in Brazil, discusses the latest developments re shipping the ore stockpile, the fundraise for the scoping study plus the value inflection points going forward. Alan and Kiran then go through a shareholder Q&A, before Kiran finally provides key takeaway points for. investors, highlighting the valuations on each of the projects.
]===

From the same article:

"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
===[
An independent survey of these stockpiles indicates some 1.39 Mt (+/- 10%) of iron ore in three stockpiles with an average Fe grade of 62.12% (+/ 10%), which based a US$80 per tonne of 62% Fe would net Amapá a forecast US$60 million net of costs.
]===

@tomcat. Since it doesn't say what parameters the $30-40m is based on in the presentation I wonder if they have cautiously decided to use $61/t to be consistent with elsewhere?

Gross would then be:

$61/t * 1.39Mt = $84.8m

Net of shipping @ $37/t is $84.8m - ($37/t * 1.39Mt) = $33m

Back to the envelope. "Shipping costs" from $80/t realising $60m from 1.39Mt would be:

((1.39Mt * $80/t) - $60m)/ 1.39Mt = $36.8/t

Ob

@tomcat, "i’m just saying if we thought the stockpiles were worth $60m... but are now worth $70m"

At $100/t the increase from 60m would be $27.8m (($100/t - $80/6) * 1.39Mt) = $88m, call it $90m as the prices are a little over $100/t at the moment.

Indeed @tomcat. And I'm countering that if that isn't the case then the only other likely explanation I can think of (surely they haven't been stolen!) is that the shipping costs are *significantly* higher than originally anticipated.

By the way back of the envelope calculations show that if we were envisaging $35m from sale of 1.39Mt of ore @80/t and assuming all costs are "shipping costs" that would result in shipping costs of:

((1.39Mt * $80/t) - $35m)/ 1.39 = $55/t.

That's approximately double the rate @Kiran suggested in one of the interviews ($27/t) which he seemed to imply would be the cost long term if we were shipping from our port but at today's shipping costs. I could be wrong though, and perhaps he meant we envisage $27/t today. In which case there is ~ $27/t * 1.39Mt = $37.5m unaccounted for. Perhaps to pay off the bankers?

Ob.

Thank's @Dallas. I took that to mean that in the light of today's prices (>$100/t) we might achieve $60m, not @80/t as was originally thought back in the summer.

Well, there will be much more to the negotiations than the iron ore spot prices alone. It's not so much about today's prices, it's what both parties are forecasting over the next few years, 15 even. And not just iron ore: there is the shipping costs, and what the USD to BRL might do. Additionally, the shipping costs for the first few years might be significantly higher than any of us (on here) are anticipating now that we are intending to move via road to the port and handymax'ing all the way to China.

Yes. However, the other dimension is that we'd (presumably) *really* like not to have to pay them now, and they would (presumably) *really* like that we did - so there may be an additional negotiated discount to that $40m walk away price to persuade us to agree to it. Might explain the drop from $60m estimated from the stock piles to $30-40m? i.e. we might be envisaging paying $20-30m to the bankers from proceeds of the stockpiles to see them gone?

Though, having said that, once we can demonstrate that we are able to ship the ore, their pressure to *really* want the cash now diminishes a little as their personal discount for waiting longer, in return for a greater total NPV, should decrease.

All IMHO.

LoL OK. They'll probably be arguing over what discount rate should be used for a cash equivalent walk away today. We will be arguing high (10%), they'll be arguing low (5%). I'm sure it's all very much more complicated than we are attempting to squash it down to. There are so many factors involved! Rather them than me... ;-)

NPV0 is zero discounting. I was referring to NPV10 (10%)

I can't remember if we'd (I'd!) put one and one together previously. I just spotted this:

"Heads of Terms to Acquire Interest in former Anglo American Iron Ore Mine, Amapá, NE Brazil" (21 May 2019)
http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=2790390
===[
In March 2013, before the acquisition was completed the port facility suffered a ground failure which interrupted production and mining subsequently ceased in March 2014. Anglo American completed the sale in November 2013[7]. During 2014, reconstruction work commenced at the port with some iron ore concentrate product being shipped during Dec 2013 and into 2014, via an interim barging solution The Amapá Project borrowed US$135 million senior debt from a banking group led by Intesa São Paulo and rebuilt 70% of the port.
]===

It's a bigger effective discount than 70% to their $135m @tomcat since if the banks don't come to an agreement and face being classed as unsecured creditors they face this nominal amount not only taking a haircut but also being returned over 15 years.

If I recall correctly the unsecured debt was originally R$1.5B and after haircut and discounting is estimated to be around NPV10 US$106m.

Using USD:BRL 4 that meant $375m nominal (R$1.5B / 4) would be NPV10 $106m after haircut and discounting.

So should the courts rule in our favour the $135m after haircut and discount could be NPV10 $38m (135m * 106m / 375m).

Over to you :-)

Ob.

LoL @tomcat. I'm pretty certain the banks settling now, or courts ruling in our favour would be viewed most favourably by the market as it significantly derisks the project and our (then) 20% in the project. However, as you suggest there is a silver lining that the longer they don't settle the more the project derisks around us, whilst we still have the option to pull out with our $2.5m. But in this scenario there is the continued risk that the banks manage to fail the project or stall it indefinitely.

Thanks @tomcat. I think I can understand what you are getting at. And I think it's a likely possibility: summarised as following the ruling on 14-04-2020 the project can proceed all the way to full equity element of the CapEx financing without us taking up any of our percentage holding - which stands us in great stead should the banks insist on pursuing this through the courts to closure rather than reaching an agreement within 60 days, which likely lapsed on Friday. :-)

14-04-2020 gave us the upper hand IMHO.

@tomcat. I'm not sure what you are getting at. I wonder if you have misunderstood some aspect? Or I!?

From my perspective, the announcement on 14-04-2020 was when the game swung in our favour, as it meant the project could get started without the agreements from the banks, and that the banks risked being demoted to unsecured status if they continued to stall.:-)))

And if that means going through drawn out judicial proceedings for many months, then so be it. It looks to me that the courts are on our side and just want to see the start of this project in order to help the region prosper.

Perhaps an agreement was reached on Friday?