Cadence Minerals has received the Operating Licence (LO) for the Azteca processing plant at its 36.2%-owned Amapá iron ore project in Brazil, following completion of hot commissioning last month. DEV has commenced production at a reduced rate, with full-rate operations expected approximately two weeks after receipt of the remaining US$1.15m working capital under its existing project funding facility. Management continues to target a first shipment before year-end, subject to funding drawdown, feed access and logistics readiness. The licence grant represents an important milestone for the company as it removes a major regulatory uncertainty. We expect first sales and production ramp-up to provide additional support to the shares in the near term.
The LO grant marks another important step in de-risking the staged redevelopment of Amapá. While Azteca is considerably smaller than the planned full-scale project, successful commercial operations should demonstrate DEV’s operating capability and establish a track record that would support the next stage of development. Cash generated after operating costs and funding obligations is intended to finance the definitive feasibility study, planned to commence in 2027, and further licensing work for the wider project. With the shares up c 8% on the day of announcement, we believe the first shipment, successful ramp-up and transition to sustained commercial production should provide further support for the share price as Azteca begins to demonstrate its cash-generating potential.
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