Despite what seemed like positive news, shares of Cadence Minerals PLC (AIM: KDNC) plunged by 40% after the company announced plans to acquire interests in tungsten, antimony, and gold exploration projects in Spain and Portugal.
The sharp decline was primarily driven by the decision to finance the acquisition through a £1 million share placement priced at 1.5p per share, which represents a significant discount compared to Monday’s closing price of 2.76p.
The funds raised from this share issuance will be allocated to advance exploration activities at the Pompeya Project in Spain, covering 470 square kilometers of historic mining operations, and the Sarzedas Project in Portugal, which includes existing antimony, tungsten, and gold deposits.
Highlights
· Cadence has conditionally agreed to an LOI to invest in and acquire up to 40% of several licenses in Spain and Portugal which contain previously unidentified tungsten, antimony, and gold exploration targets.
· Other notable tungsten deposits in the Iberian Peninsula include the Los Santos Mine (currently on care and maintenance with the mill slated for restart in 2025) and the Panasqueira Mine (operating mine, almost continuously since 1896), both owned by Almonty Industries (TSE:AII). These operations have mineral resources (Measured and Indicated) of 3.7 Mt at 0.19% WO3 and 10.0 Mt at 0.23% WO3, respectively, according to the latest Almonty data.
· Tungsten is recognised globally as a critical and strategic material due to its economic significance, supply risk, and limited substitution alternatives. Since 2020, the price of Ammonium Paratungstate (APT – a key intermediate in the production of tungsten carbide and tungsten metal and the main price that tungsten is quoted in) has risen from approximately US$210 per metric ton unit to around US$390 per metric ton unit.
· The Pompeya project covers an area of approximately 470 square kilometres (km²) of mining and exploration licenses, featuring multiple mineralised skarns, and historic mine workings.
· There has been limited exploration of tungsten in the area. However, recent investigations at Pompeya have identified tungsten ore (scheelite) in both the old mine workings and at the surface within skarn deposits.
· Rock chip sampling returned tungsten oxide (“WO3“) grades between 3.3% and 4.8%.
· The Sarzedaz project covers some 57km² and contains numerous old antimony, tungsten and gold deposits, with associated waste dumps.
· Grab samples of the waste dumps yielded between 0.4 g/t and 109.9 g/t of gold with a median grade of 30.9g/t of gold.
· If Cadence proceeds with this investment, the capital raised will be used to advance the exploration of the Projects over the next six months with the aim of identifying potential mineral resource targets.
Cadence CEO Kiran Morzaria commented: “As our flagship Amapá project continues to advance and de-risk, our Board are mindful of the changing macro landscape and our priority to ensure Cadence has maximum exposure to the critical minerals needed for energy and technology markets. As such, we are excited by the potential opportunity with the Pompeya and Sarzeda projects, particularly given the increasing importance of tungsten as a strategic raw material. I look forward to reporting back on progress at the end of the exclusivity period with Hesperian Metals.”
“I am also pleased to confirm the Company has successfully raised £1 million before expenses to fund our investment into the Pompeya and Sarzeda projects and our continued investment into Amapá.”
Chairman Andrew Suckling added: “With Amapa progressing well and, in particular, its potential to feed high-grade ore for “green iron”, I am pleased that our Board remains vigilant and open to new investment opportunities as the critical minerals landscape continues to shift. Once our due diligence process has been completed, we fully expect the Pompeya and Sarzeda projects to complement our other investments into the critical minerals needed for energy and technology markets. “
