Yesterday, Jangada Mines (LSE:JAN) announced a 117% increase in the size of the company’s JORC resource at Pedra Branca. The shares have rallied, trading at 2.25p-2.4p last seen, but there is a sense the market hasn’t quite yet woken up to the significance of this news. Since last summer’s placing, the fully funded Jangada has taken substantial strides forward in advancing South America’s “largest and most advanced platinum group metals (PGM) and nickel project”. We caught up with COO Heinrich Muller to understand more about what the JORC increase means.

Starting first with the numbers and Jangada reported a 117% increase in the JORC classified ore at Pedra Branca to 78.84million tonnes (Mt). This includes 29.34Mt in the indicated category and 45.5Mt in the inferred category.

In turn, this led Minxcon Projects, the company Jangada has employed to create its Bankable Feasibility Study (BFS) for Pedra Branca, to conclude that the deposit contains 3.05 million ounces (Moz) of palladium equivalent, a 103% increase. Of this 1.24Moz is in the indicated category at a grade of 1.36grams per tonne (g/t) and 1.81Moz in the inferred category at 1.28g/t.

This all sounds great, but what does any of this mean in real terms?

Broadly speaking there are three particular areas to focus on in Jangada’s announcement. These are;

  1. The size of the estimated resource in the indicated category and what that suggests
  2. What the “palladium equivalent ounces” reveal about the quality of the project
  3. The reported grades in the context of the plan for an open pit mine at Pedra Branca

Starting first with the categorisation and this matters because it will later feed into Pedra Branca’s economic model. The crucial numbers to focus on in the short term are those in the indicated group. When it comes to calculating Pedra Branca’s bankable reserves it will be the indicated ounces that are used, so it is encouraging to see Jangada already report such strong figures. As Muller put it to us,

“The 3.05Moz figure is the piece of dough from which the cookie will eventually be cut. Not all of it will go into the final reserve model, but it is great to begin with such a large resource to work with.

The important thing is that our indicated category is almost as large as what our previous resource was. This means that the amount of material we eventually end up with in reserves will be significantly higher than what was initially anticipated based on the previous resource.

This is important because at the BFS stage, to be able to declare reserves, you need sufficient resource at sufficient confidence levels (measured and indicated categories) to prove the economic viability of the project. In our case our estimated economic modelling already looks extremely robust, so to report the gains we have is very good news.”

Moving next to the reported palladium equivalent ounces Muller explained how these were calculated and what they can tell us about Pedra Branca.

“To calculate the palladium equivalent ounces is fairly straightforward and is defined in the JORC code. We used palladium because it is the main economic driver of Pedra Branca (contributing the most ounces), and then multiplied the other elements by the pre-set modifying factor, taking into account expected recoveries.

For example, as reported in our RNS, this led us to calculate that every 1ounce of palladium was worth the equivalent of 1.834 in situ tonnes of Nickel.”

Nickel has become particularly significant for Pedra Branca, since Jangada announced the project’s maiden nickel JORC resource in December. We asked Muller to expand on this and to put into context what this means for the project:

“First look at the top table in the RNS (reproduced below) and compare the 3.05Moz palladium equivalent ounces to the 2.17Moz of PGM plus gold (AU). This shows you, from a revenue perspective, the likely future contribution of the various elements.

In broad terms, we expect PGM + AU production to account for just over two-thirds of Pedra Branca’s future revenue, with the remaining one third coming from the base metals. Since our Nickel resource dominates these we expect that this metal will account for about 30% of total project revenue, after recoveries are taken into account.

We don’t feel the market has recognised this yet, but Pedra Branca is truly a palladium and nickel play”.

Pedra Branca



Metal Content

Resource Classification


Pd Eq

Pd Eq



















Indicated and Inferred






This brings us to the reported grades at Pedra Branca. As the table above shows the palladium equivalent ounces in the indicated category are based on 1.36g/t and the inferred ounces at 1.28g/t. MiningMaven explained a little more about understanding grades in this article recently, but for Jangada the Pedra Branca grades are significant because of the company’s plans to develop an open pit mine here.

Open pit mines are generally technically less challenging than underground operations and are therefore much less expensive to develop. In November 2018 Jangada announced a 32% reduction in the cap-ex requirement for Pedra Branca $43.9m. The payback period is estimated to be within 1.6years. Now factor in the relatively good grades of the updated JORC resource (in the all-important indicated category in particular) and a very clear picture is emerging.

At 2.4p to buy, Jangada is currently valued at £5.48m. With the company having previously reported an NPV10 of $192m and IRR of 67% for Pedra Branca, a great deal of upside seems left on the table. Jangada is fully funded for its BFS and the verification phase of this is due for delivery by the end of March. Exciting times lay ahead.

Author: Ben Turney

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