Cadence Minerals (KDNC.L) released the results of the pre-feasibility study it commissioned on its flagship Amapa iron ore project in Brazil. The project is anticipated to produce just under 5.3 million tonnes of iron ore concentrate of which the majority (4.35 million tonnes) will have an average grade of 65% Fe with the remainder (about 0.95 million tonnes) having an average grade of 62% Fe, the benchmark grade. This is based on the currently known resource of 196 million tonnes at an average grade of 39.3% Fe and supports a 16 year mine life.
The company anticipates a total initial capex of US$400M and expects to be able to produce the iron ore at a cash cost of US$35.5/dmt on a FOB basis, and just under US$65/t including the shipping costs to China. The base case scenario uses iron ore prices of US$95/t and US$118/t for the two types of concentrate. With current spot prices of $126/t and $137/t respectively, the current margins would be slightly higher than what’s anticipated in the study.
In the base case scenario, the after-tax NPV10% came in at US$949M while the after-tax IRR is approximately 34%.
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