Cadence nails funding to restart Amapá’s Azteca Plant and kickstart near-term cash flow
Cadence Minerals has signed Heads of Terms for a US$4.6 million prepayment offtake to licence, refurbish and restart the Azteca Plant at Amapá, Brazil. The funding comes from a UK-based international logistics, shipping and trading group with more than 100 years in the game. It is conditional on final assays and definitive documents, but if completed it sets up a swift, low-capital restart aimed at generating cash from the first shipment.
The structure matters: repayment is per tonne of iron ore shipped rather than through equity. Cadence will co-fund roughly 10-15% of the prepay and receive the same pro-rata economic returns, with the company flagging an expected circa 70% IRR on its share once operations start.
How the prepayment offtake works – and why it’s attractive
A prepayment offtake is advance funding from a buyer, repaid through deliveries of product. It is commonly used in mining to bridge the gap between refurbishment and first sales, and avoids a conventional equity raise.
- Total prepay: US$4.6 million, split between plant funding and initial working capital.
- Azteca Plant Financing: US$3.45 million, drawn in stages and tied to permitting milestones.
- Working Capital: US$1.15 million, drawn at first production to fund logistics for the initial c.50,000 tonnes.
- Repayment: per tonne of iron ore shipped.
- Extras: Cadence also receives a pro rata share of the marketing fee on all products from Dyke 5 under the offtake.
In plain terms, the offtaker fronts most of the cash, Cadence chips in 10-15%, and everyone gets paid back through shipments. For shareholders, that points to a pathway to cash generation without issuing new equity in this announcement.
Azteca Plant: simple flowsheet, ready feed, fast restart
The Azteca Plant sits within the Amapá concession and uses magnetic and spiral separation – a straightforward process route. A recent technical review confirmed the structural integrity of the plant, including process kit and utilities. Capital and operating costs have been estimated and a commissioning schedule mapped out.
Feedstock will initially come from Dyke 5 tailings, where approximately 2 million tonnes of higher-grade material at about 55% Fe has been identified based on historical float samples and plant data. Post-refurbishment, Azteca is expected to produce around 380,000 tonnes per annum of 65% Fe concentrate.
Further studies are planned to assess whether the broader tailings resource – from around 28 million tonnes generated historically – can support longer-term production, alongside the development of the main 5.5 Mtpa direct reduction-grade (67.5% Fe) project.
Costs and margins: why the restart could be cashflow positive from day one
Cadence guides that, once restarted, the Azteca Plant should have average operating costs of US$37/t Free on Board (FOB) for the first three years and around US$79/t on a Cost and Freight (CFR) basis into China. Against current market prices of roughly US$120/t (65% Fe fines CFR China), that spread suggests robust early margins, recognising that shipping terms and grade adjustments will apply.
The company expects the plant to be net cashflow positive from the first shipment. Combined with the per-tonne repayment structure, that underpins the flagged circa 70% IRR on Cadence’s share.
| Key metric | Figure |
|---|---|
| Prepayment offtake | US$4.6 million |
| Azteca Plant Financing | US$3.45 million |
| Working capital | US$1.15 million |
| Cadence contribution | Approximately 10-15% of prepay |
| Expected IRR (Cadence share) | Circa 70% |
| Azteca output (post-refurb) | Circa 380,000 tpa at 65% Fe |
| Dyke 5 tailings feed | Approx. 2 million tonnes at ~55% Fe |
| Operating costs (FOB/CFR) | US$37/t FOB; ~US$79/t CFR China |
| Market price context | ~US$120/t (65% Fe fines CFR China) |
Permitting, timeline and what to watch next
Once the binding agreement is executed, the remaining studies and permits can be completed. First production from Azteca is anticipated around three months after licence issuance.
Two items remain for the mine installation licence:
- A supplementary archaeological survey.
- Engineering designs for water reticulation and sewage treatment systems.
Both studies are expected to take roughly two months, followed by a two-month review. The company does not expect the archaeological work to identify material issues, noting previous assessments found no sites impacted by the planned development or 15-year mine life.
Strategic fit with the 5.5 Mtpa DR-grade Amapá plan
Amapá is a fully integrated iron ore operation with mine, rail, port and beneficiation infrastructure. It carries a JORC Mineral Resource of 276 million tonnes at 38% Fe and a Proven and Probable Ore Reserve of 195.8 million tonnes at 39.34% Fe.
The December 2024 updated Pre-Feasibility Study confirmed potential to produce 5.5 Mtpa of 67.5% Fe direct reduction (DR) grade concentrate over a 15-year mine life, with a post-tax NPV (10%) of US$1.97 billion and pre-production capital of US$377 million. In August 2025, the Project reported reduced C1 cash costs to US$27.28/dmt FOB Santana and US$55.46/dmt CFR China.
In that context, Azteca’s restart is the near-term cash generator and credibility builder. Cash from early shipments can support staged development of the larger DR-grade project, while operating the plant strengthens the social licence to operate and demonstrates that Amapá is once again a producing asset.
Ownership and partner alignment
As at end-June 2025, Cadence’s total investment in Amapá is approximately US$15.5 million for a 35.7% equity stake. The offtaker is a UK-based international logistics, shipping and trading group with over a century of sector experience – helpful for marketing, shipping and execution. Importantly, Cadence earns pro-rata economics and a share of the marketing fee from Dyke 5 production under the offtake.
Josh’s take: positives, risks and the setup for investors
What looks positive
- Funding lined up: Heads of Terms for US$4.6 million with drawdown linked to milestones keeps discipline tight.
- Per-tonne repayment: Aligns returns with output and avoids an equity raise in this announcement.
- Economics: Low FOB costs (US$37/t) and CFR costs (~US$79/t) against ~US$120/t pricing indicate healthy early margins.
- Speed: First production targeted around three months after licence issuance points to near-term cash generation.
- Strategic: Early cash flow and operating credibility de-risk the larger 5.5 Mtpa DR-grade project with US$1.97 billion NPV (10%).
What to keep an eye on
- Conditionality: Final assays and definitive documents still to go – standard, but not done until it’s done.
- Permitting: Archaeological survey and water/sewage engineering designs must be completed and approved.
- Execution: Refurbishment, commissioning and logistics for the first ~50,000 tonnes need to run to plan.
- Market exposure: Iron ore prices can move; margins depend on realised pricing and product specifications.
- Feed and recoveries: Dyke 5’s ~2 million tonnes at ~55% Fe is a solid start, but long-term tailings processing needs further study.
Bottom line
This is a meaningful step in Cadence’s staged strategy at Amapá. The prepayment offtake backs a low-capex restart at Azteca, with cashflow expected from the first shipment and a circa 70% IRR on Cadence’s co-investment. If the conditions are met and the plant restarts on schedule, the early cash generation and operational proof-point should support momentum into the larger DR-grade development.
For now, watch for definitive agreements, permitting progress and a commissioning timetable. On delivery, this has the potential to translate into tangible cash returns while building the case for Amapá’s long-term scale.
