Cadence Minerals Plc (LSE:KDNC) has entered into a Heads of Terms arrangement with a global shipping and trading firm to finance the restart of the Azteca Plant, part of the Amapá Iron Ore Project in Brazil, the company announced Tuesday.
Under the deal, US$4.6 million will be provided through a pre-payment offtake structure, with Cadence contributing roughly 10-15% of the total. The funds will be allocated to licensing, refurbishing, and restarting the plant, as well as covering initial working capital requirements.
The Azteca Plant is expected to generate approximately 380,000 tonnes annually of 65% Fe concentrate, using around 2 million tonnes of high-grade tailings from Dyke 5 as feedstock. The company estimates operating costs at US$37 per tonne on a Free on Board basis, rising to US$79 per tonne on a Cost and Freight basis into China, compared with current market prices near US$120 per tonne.
Cadence Minerals CEO Kiran Morzaria said: “This agreement marks an important milestone in the staged development strategy at Amapá, providing a pathway to early cash flow through the restart of the Azteca Plant. Cadence will receive a direct return on its investment as production commences, while free cash flow from Azteca will support advancement of the larger 5.5 Mtpa DR-grade project.
“Restarting operations also reinforces Amapá’s social licence to operate and demonstrates to investors and partners that the project is once again a producing asset with near-term cash flow and long-term growth potential. This operational credibility is an essential step in unlocking the full value of Amapá while delivering tangible returns to our shareholders.”
The funding package is split into two portions: US$3.45 million for plant refurbishment and US$1.15 million for working capital. Cadence anticipates the structure will yield around a 70% Internal Rate of Return on its share of the investment, with repayments tied to the tonnes of iron ore shipped.
Once operational, the Azteca Plant is expected to be cash flow positive from its first shipment, supporting the development of the larger 5.5 million tonnes per annum Direct Reduction-grade project at Amapá. First production is projected about three months after license approval, following the completion of remaining studies and permits.
Cadence currently holds a 35.7% equity stake in the Amapá Project, reflecting a total investment of roughly US$15.5 million as of June 2025.
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