Cadence Minerals (LSE:KDNC) is positioning itself for a pivotal year as it advances both its flagship Amapá iron ore project and the restart of the Azteca plant — a smaller but strategically important asset.

In a recent interview, CEO Kiran Morzaria explained how Azteca will act as a bridge toward Amapá’s full potential. While the Amapá project boasts a post-tax NPV of $1.97 billion, a 15-year mine life, and a planned production of 5.5 million tonnes of high-grade iron ore annually, Azteca is set to generate near-term cash flow. Backed by a $4.6 million offtake agreement — with Cadence contributing only 10–15% of that amount — the plant offers an efficient way to fund growth without overreliance on placings.

“Azteca is the bridge that gets us there,” Morzaria noted. “It’s a great step forward that allows us to move from Azteca to Amapá.”

Addressing Dilution Concerns

Shareholder worries about dilution remain common across the natural resources sector. Morzaria acknowledged that Cadence has, at times, relied on equity placings, but emphasized the company’s hybrid model: investment gains have historically funded much of its project pipeline.

For Azteca, the majority of financing is provided by the offtake partner rather than shareholders. The Azteca plant is expected to deliver around $32 million of cash flow, which will be reinvested directly into the development of the Amapá project. In addition, Cadence benefits from its 10–15% interest in the offtake structure, which is forecast to generate an internal rate of return approaching 70%. This creates a dual value stream: project reinvestment and exceptional returns to Cadence shareholders.

Cash Flow to Accelerate Development

The real strength of Azteca lies in its ability to produce cash from the very first shipment. Those revenues will flow directly into definitive feasibility studies, permitting, and early works at Amapá, reducing dependence on new equity. If ore volumes and recoveries outperform expectations, Azteca could even support the equity portion of Amapá’s project financing — protecting Cadence’s 36% interest in the world-class iron ore asset.

With Amapá’s scale (NPV $1.97 billion, IRR 56%) and low delivered costs to China, Cadence sees a clear value gap between its market capitalization and its stake in the project. The strategy is straightforward: generate cash, minimize dilution, and prove Amapá’s potential as a top-tier low-cost producer.

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