Jangada Mines (LSE:JAN) released an operational update on Monday detailing its plans for the first quarter of the year. The company is focussed on developing South America's largest and most advanced platinum group metals (PGM) and nickel project, Pedra Branca. Having already reported compelling economics for Pedra Branca, there were some concerns in the market that perhaps Jangada didn’t have enough funds to see it through to its Bankable Feasibility Study (BFS). This morning’s announcement dispels any such concerns.
Pedra Branca around 48,000 hectares and includes 3 mining licenses covering 52% of the current resource, with 42 exploration licenses. Fundamentally, the project looks very attractive with the company stating a Net Present Value (NPV) of US$192 million and an estimated average annual production of 64,000 ounces of PGM+Au.
A Bankable Feasibility Study (BFS) for the project is currently underway, and Jangada is aiming to complete the verification stage for all aspects of the BFS during Q1. This process should prove the economic and technical viability of the Project and results are expected in Q2 by which time it is anticipated the mine design phase will be complete
Jangada agreed a fundraise of £2.1m in September 2018 to advance the Pedra Branca project. This included a £1.05m placing at 3p per share, together with a 12-month unsecured loan facility from Celtic Capital Pty Limited. Today’s share price of 1.8p offers a considerable discount to the raise, in which directors Brain McMaster and Luis Azevedo subscribed for a total 3.33m shares, equating to an investment of £100,000.
Much of the resource sector suffered strong price declines during the wider market pullback in Q4 last year, however it does appear that concerns over funding have also been weighing down on Jangada’s share price. In today’s update, the company reassures investors its current work programme is fully funded.
Speaking exclusively to MiningMaven, McMaster told us, “Today we’ve addressed any speculation about Jangada’s funding. One of the key aspects of Pedra Branca is that it has such a low cap-ex requirement, with an NPV of US$192 million, an IRR of 67% and a 1.6 year payback. There just aren’t many projects of this size, with such favourable economics, anywhere in the world.
There have been suggestions that last September’s fundraise left us with a shortfall. Originally the plan was to raise £1.5m, but it was agreed that if the demand existed we would go higher, maybe as high as £4m. The idea was that any extra funds would help expand an exploration programme. As things developed we decided the extra exploration wasn’t needed at this stage and the original £1.5m estimate was accurate. We then closed a total package of £2.1m. So clearly the speculation is wrong. We are progressing without impediment. In addition to the money we raised in September, we also agreed with Consulmet, the firm producing our BFS, that it would receive its fee in stock. This is a highly positive endorsement of the clear potential at Pedra Branca.
We are delivering the work programme we’ve outlined today, including delivery of the verification stage of the BFS and additional exploration we are planning to test the high-grade vanadium deposit we have identified.”
A look at the timetable show’s there is plenty of newsflow to follow over the coming months with a review of the PGM resource and a hydrology study due by the end of January. The PGM resource review could be particularly exciting, especially if there is any upgrade there. It’s expected legal, environmental and social factors will be wrapped up by the end of next month and Metallurgy Test Work Verification is due in March.
Further exploration is also underway at the high-grade vanadium deposit identified at Pedra Branca. Drilling is due to commence this week, with the results due to follow in March. According to the company, there is potential for this to be a significant vanadium discovery, offering yet further upside to an already exciting project.
All eyes will now be on what Jangada delivers by the end of this month, with particular attention focused on the PGM Resource Review.
Author: Stuart Langelaan
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