Highlights:
·
Shipping continues at pace - DEV Mineração S.A. ("DEV") has shipped and
sold the second batch of iron ore from the stockpiles.
·
The loading of the 48,670 wet tonnes of iron ore sinter fines (approx.
58% Fe) at Companhia Docas de Santana ("CDSA") was carried out in record
time.
·
R$7.5 million deposited into the judicial account, to be utilised to pay
ex-employees and small creditors
·
The remainder of the profit from the first shipment is being utilised as
per the Approved Court Petition
·
Key personnel have been engaged, including the head of shipping
operations and the previous general manager of mine operations.
·
Re-instatement of operating licenses is progressing with a focus on
DEV's private port concession.
Shipping
DEV has shipped and sold the
second batch of the iron ore from the stockpiles at Santana, Amapa,
Brazil. The loading of the 48,670 of the iron ore sinter fines (approx.
58% Fe) at CDSA was completed in record time (60 hours), which bodes
well for DEV's plan to increase the frequency of shipping from CDSA over
the coming months.
DEV worked with Indo Sino Pte
Ltd ("Indo Sino") and Cadence to carry out a competitive bid process for
the cargo. The buyer is one of the world's largest globally diversified
natural resource companies and a major producer and marketer of
commodities.
This shipment was approved via a
court petition ("Approved Court Petition"), details of which can be
found here, allowing DEV to export sufficient iron ore to realise a
US$10 million profit.
Part Payment of Former Employees
and Small Creditors
As part of the Approved Court
Petition, DEV undertook that it would pay certain outstanding claims
from former employees and small creditors from the net profit of the
sale of the iron ore stockpile.
In this regard, DEV has
transferred R$7.5 million to the judicial deposit account, representing
some three-quarters of the amounts owed. KPMG Brasil will manage the
payments to these creditors. Once fully paid, this will mark the
completion of a crucial step in the Judicial Restructuring Plan ("JRP")
approved by the creditors on 29 August 2019.The remainder of the profit
from the first shipment of Iron Ore (Sinter Fines 58% Fe) is being
utilised as per the Approved Petition.
Operations
Operations have continued to
progress in regard to the recommissioning of the Amapa Project.
Key personnel have been engaged.
A new head of shipping operations is now responsible for the efficient
and safe movement of the iron ore shipments.
In addition, DEV has engaged a
former general manager of mine operations. With over 27 years of
operational and managerial experience at various Brazilian iron ore and
copper mines, including the Amapa Project, the manager will be
responsible for day to day operations at the mine, and will oversee the
recommissioning of the asset.
As part of the process for
reinstatement of critical concessions and operational licenses, our
current focus is on the reinstatement of DEV's private port concession.
In this regard, DEV, IndoSino and Cadence have engaged with the relevant
authorities, highlighting the macroeconomics and the local and regional
importance of the Amapa Project. To date, feedback has been positive,
and we will update the market once further progress has been made.
Essential maintenance and
security of the mine tailings dam continues, with cost-effective and
incremental improvements ongoing. Having now engaged the previous
general manager of mining, we expect this process to accelerate, along
with the commencement of the plant engineering and conditioning study,
which is an outstanding part of the scoping study on the Amapa Project.
As part of providing reliable
iron ore stockpile data, SGS Brasil has been engaged to carry out a
re-assay of DEV's iron ore stockpiles. This, alongside a more accurate
volumetric survey, will allow DEV to confidently market the material,
and reconcile any variations to historic assays results.
Cadence CEO Kiran Morzaria
commented, "We are pleased and proud that the sale and shipment of the
second batch of iron ore from Amapa has completed so quickly. That the
customer is once again one of the world's largest globally diversified
natural resource companies is a clear signal that Amapa is very much
back in business, with keen demand for its product."
"On behalf of the Cadence board,
our gratitude and appreciation goes out once again to the men and women
working to bring Amapa back to life, and who have worked tirelessly to
complete this second shipment in a safe and efficient manner. "
Although in line with the
Approved Petition, it is nonetheless immensely gratifying to see a
substantial amount of Amapa's outstanding debts to former employees and
creditors settled with the shipment sale profits, marking a small step
along the road to improving prospects for employment and economic
activity in the region."
Cadence Interest in Amapa
Project
In early September 2020, we
announced that DEV, Indo Sino and Cadence had agreed in principle to the
settlement terms proposed by the secured bank creditors ("Bank
Creditors"). The investors and DEV remain in constant communication with
the Bank Creditors and all parties are aligned to finalise the
agreement. We have been informed of some further delays with two of the
banks (based in India), whom are experiencing staff shortages due to the
COVID-19 pandemic.
The execution of a settlement
agreement with the Bank Creditors would represent the satisfaction of
Cadence's remaining major precondition to make its initial 20%
investment in the Amapa Project. Upon completing the conditions and the
release of the Cadence escrow monies, Cadence will become a 20%
shareholder in the Amapa Project via our joint venture company, which
will own 99.9% of DEV.
After this, Cadence will invest
a further US$3.5 million to increase its stake to 27% in the Amapa
project. Cadence's investment is conditional on several material
pre-conditions, which include the grant of key operating licences.
Source: Cadence Minerals |