INVESTOR PRESENTATION July 2020 - cadenceminerals.com€¦ · 10 INVESTOR PRESENTATION January 2020...

INVESTOR PRESENTATION

July 2020

DISCLAIMERThe content of information contained in this presentation (the “Presentation”) has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (“FSMA”). Reliance upon thisPresentation for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. If any person is in any doubt as to the contents of thisPresentation, they should seek independent advice from a person who is authorised for the purposes of FSMA and who specialises in advising in investments of this kind.

The information contained in this Presentation has been prepared by Cadence Mineral Plc (the “Company”) as at the date of this Presentation and is subject to updating, completion, revision, further verification and amendmentwithout notice. It has not been verified by the Company. The Company undertakes no obligation to provide any additional information or to update this Presentation or any additional information or to correct any inaccuracies inany such information which may become apparent. This document sets out certain features of the Company and does not purport to provide a complete description of the Company or the shares in the Company.

No reliance may be placed for any purpose whatsoever on the information contained in this Presentation or on its completeness, accuracy or fairness thereof, nor is any responsibility accepted for any errors, misstatementsin, or omission from, this Presentation or any direct or consequential loss however arising from any use of, or reliance on, this Presentation or otherwise in connection with it. This Presentation does not constitute, or formpart of, an admission document, listing particulars or a prospectus relating to the Company, nor does it constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase orsubscribe for, any shares in the Company nor shall it or any part of it, or the fact of its distribution, form the basis of, or be relied upon in connection with, or act as any inducement to enter into any contract therefor.Recipients and/or readers of this Presentation who are considering acquiring shares in the capital of the Company (“Shares”) are reminded that in relation to any such purchase or subscription no reliance may be placed forany purpose on the information or opinions contained in this Presentation or on their completeness, accuracy or fairness. This Presentation is purely for information purposes.

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This Presentation or documents referred to in it may contain forward-looking statements. These statements relate to the future prospects developments and business strategies of the Company and its subsidiaries (the “Group”).Forward-looking statements are identified by the use of such terms as “believe”, “could”, “envisage”, “estimate”, “potential”, “intend”, “may”, “plan”, “will” or the negative of those, variations or comparable expressions,including references to assumptions. The forward-looking statements contained in this Presentation are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materiallyfrom those expressed or implied by those statements. If one or more of these risks or uncertainties materialises, or if underlying assumptions prove incorrect, the Group’s actual results may vary materially from those expected,estimated or projected. Given these risks and uncertainties, potential investors should not place any reliance on forward-looking statements. These forward- looking statements speak only as at the date of this Presentation.

To the extent that this Presentation contains statements regarding the past performance of the Company’s Shares it should be noted that past performance cannot be relied upon as a guide to future performance.

2 INVESTOR PRESENTATION JANUARY 2020

STRATEGYInvest & Develop

•Invest up to 49% economic stake•Middle of the development cycle (Resource –Scoping Study)

•De-risk investment with structured investments, through milestones and or free carries

• Integral part of management team, work with management to drive value.

• Unique early investment strategy firm within the mineral resource sector• Identify undervalued assets with irreplaceable strategic advantages• We invest in them and help turn them into powerhouses and provide capital growth• Apply this approach across two types of assets

4 INVESTOR PRESENTATION JULY 2020

Public Listed InvestmentsDirect Project Investments

• Invest up to 20%• Middle of the development cycle (Resource –

Scoping Study)• De-risk investments with board representation or

equity liquidity• Leverage “know how” to help expedite

development

AMAPÁ IRON ORE MINE


• Mine discovered 1990’s, Amapá State, Brazil - first ore exported 2007 by 2013 the mine was producing 6 mtpa.

• Beneficiation plant, rail line and private port facilities enable this fully integrated project to produce Fe 65% & 62%.

• Total Historic Mineral Resources of 348Mt @ 38.9% Fe

• Initial Revenue from US$ 30 - 40 million of Iron Ore stockpile at dock.

• Mine life of 14 years and at 5.3 Mt of Iron Ore per annum.

• Vendor estimated EBITDA of U$136 million per annum(100%).

• Due to “rehabilitation only” the mine and existing infrastructure can be brought to market swiftly.

• Prior to its sale in 2012 Anglo American valued its impaired 70% stake in the Amapá Project at US $462m (100% US $600m).

• The total historic mineral resource contains an estimated 348 million tonnes (“Mt”) of ore @ 38.9% iron content (“Fe”).

• Cadence acquiring a significant share of the mine (27%) for an staged equity investment of US$ 6 million;• US$2.5 million is escrow to acquire 20%,• US$3.5 million for a further 7% (27%)• First right of refusal to increase to 49%

AMAPÁ IRON ORE MINE

10 INVESTOR PRESENTATION January 2020

• Commenced Operation in 2007, In 2012 mine produced, exported and sold 6.1 Mt of iron ore

• Products are well known and regarded in China• Total Historic Mineral Resources of 348Mt @ 38.9% Fe• Mineral Rights and Licenses extend over 5,556 hectares • Mineralisation - folded BIF at surface

Classification Tonnes (Mt) Fe (%)

Measured 62.9 39.7%Indicated 233.4 39.2%Measured and Indicated 296.3 39.2%Inferred 52.3 37.0%Total 348.6 38.9%

Mine and Resources

PROPOSED TIMELINE – (Mine Plan) - 2020


PROPOSED TIMELINE – (Mine Plan) – (2035)


RECOMMISSIONG TIMELINE (Estimated)


Business Development

Iron ore shipment from stockpiles

Commissioning Study

Ratification of JV recovery plan

Production

US$ 24 mm – Project Equity

2019 2020 2021

FinancingRecovery

Operations

Recommissioning

US$ 30 -40 m IndoSino Fe Stockpiles

2022

Satisfaction of pre-conditions

US$ 140 -150 mm Project Financing

US$ 6 mm (2 tranches Cadence Equity 27%

CORPORATE STRUCTURE


Capital Structure

Directors

SHARES ON ISSUE

WARRANTS

129,264,891

2.5 million @ £0.10 (Ave.)

OPTIONS 2.6 million @ £0.46 (Ave.)

MARKET CAP £ 12.47 million

Non-Executive Chairman

Chief Executive Officer

Andrew Suckling

Kiran Morzaria

Finance Director Donald Strang

Non-Executive Director Adrian Fairbourn

APPENDIX - AMAPÁ TAILINGS DAM


In the wake of the Marinana and Brumandinho tailings dam disasters mining legislation is changing in Brazil to ban “Upstream”tailings design. Amapá has “Downstream” tailings design which is a safe form of tailings design. “Upstream” are more suitableto dry environments – circa 50% of the identified 3,500 dams around the world are “Upstream” design.

Amapá Downstream Schematic• The downstream design was developed to reduce the risks

associated with the upstream design, particularly when subjected to dynamic loading

• The installation of impervious cores and drainage zones can also allow the impoundment to hold a substantial volume of water directly against the upstream face of the embankment without jeopardising stability.

• An advantage to the downstream design is that the raised sections can be designed to be of variable porosity to tackle any problems with the phreatic surface of the embankment.

• The downstream design is very versatile for a range of site specific design parameters and behaves similarly to water retention dams.

• An advantage is that the downstream design can have unrestricted heights due to each raise being structurally independent of the tailings.

APPENDIX - HISTORY OF THE AMAPÁ ASSET


• Amapá was first developed by former Brazilian billionaire Eike Batista with the first ore shipped in December 2007;

• Anglo American acquired Amapá in 2008 as part of a larger package of mining assets. It never intended to hold Amapá long term but invested $1.0bn to prepare it for sale. As early as 2011, Amapá was valued at $1.5bn in Anglo American’s accounts;

• A cyclical decline in the iron ore price led Anglo American to sell Amapá for $266mn in December 2012 to Zamin Ferrous, a company owned by Indian billionaire Pramod Agarwal. This price was ultimately reduced to $130mn to adjust for needed repairs to the port;

• Amapá produced 4 – 6 million tons of iron ore annually from 2011 -2014. In 2014 – Amapá’s last full year of production – 4 million tons were mined and 1.8 million tons were sold;

• The Santana port was damaged by an industrial accident in early 2013 and exports from Amapá were drastically reduced. See https://www.bbc.com/news/world-latin-america-21971513 and https://www.reuters.com/article/brazil-mining-anglo-accident-idUSL2N0CM0FI20130330;

• Amapá borrowed $135mn senior debt from a banking group led by Intesa Sao Paolo and rebuilt 70% of the port. It ran into financial difficulties before work was completed;

• Amapá filed for Judiciary Protection in August 2015 in Brazil. Mining at Amapá was suspended and all its staff were dismissed.;

• In April 2017, DPJ (Jindal) Group agreed to invest. However, the transaction was never completed. Amapá is now back in the hands of the court as defined primary creditors (employees) filed a petition against DPJ Jindal for its lack of investment and failure to pay its obligations under the agreed restructuring plan approved by the court in April 2017;

• In January 2018, a judicial order offered investors the opportunity to place US$2.5m in escrow (to ultimately benefit priority local Amapá creditors) in return for an exclusivity period to conclude debt restructuring negotiations and fully acquire Amapá

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