palladium

  • ‘There are a number of attractive opportunities out there in stable jurisdictions’- African Battery’s Paul Johnson on his plans for freshly refinanced firm’s future (ABM)

    African Battery Metals (LSE:ABM) has been on something of a roller coaster ride over the last few months. After its shares were suspended at the end of 2018, in the face of financial uncertainty, a successful refinancing programme allowed the company to return to trading in February with no debt and a healthy cash runway. Alongside this newfound financial security, the organisation has also undergone a significant management restructuring that has seen Paul Johnson and Andrew Bell both become executive directors. 

    In the first part of our interview with Johnson, the AIM veteran discussed Bell and his reasons for approaching African Battery and their plans for the outfit’s existing portfolio. Here, he discusses the pair’s recent deal with AIM-listed Katoro gold and their plans to make the most of today’s ‘very poor’ funding climate for early-stage resource opportunities as they line up African Battery’s future.

    Haneti opportunity

    Johnson and Bell revealed African Battery’s first foray into new territory under their leadership last month, announcing an investment and option agreement with Katoro Gold (LSE:KAT). Under the contract, African Battery will be able to purchase up to 10m shares in Katoro at 1p each with three-year warrants attached. It also has the right to purchase up to 35pc in Katoro’s 100pc-owned Haneti nickel project in Tanzania, for a total consideration of up to £125,000.

    Haneti comprises tenements covering an area of around 5,000km2 prospective for nickel, platinum-group-elements, cobalt, copper, gold, and lithium. Previous work has identified grades of up to 13.6pc nickel at the project, and an exploration programme this year will aim to confirm the existence of disseminated or massive sulphide mineralisation in the area. Alongside Haneti, Katoro owns a further two gold projects in Tanzania called Imweru and Lubando. Together, these host a JORC-compliant resource of 754,980oz gold.

    As well as giving African Battery exposure to a new nickel project and a new jurisdiction, Johnson says he and Bell felt that Katoro’s looked undervalued:

    ‘Like all resource firms, Katoro has suffered recently. Its market cap currently sits at just £1m, which is unbelievably low considering that it has a large amount of gold in its portfolio, a potentially high-impact nickel project, and cash in the bank. We see plenty of upside on the stock, and think its market cap could go substantially higher.’

    Johnson also highlights parallels between Katoro and Haneti’s previous owner Kibo Mining (now Kibo Energy), into which Metal Tiger entered a joint venture in 2014 when he was chief executive. Shortly after Metal Tiger made a £150,000 equity investment and launched the 50:50 project focused on its uranium-prospective portfolio in Tanzania, Kibo’s shares shot up from below 1.5p to more than 10p in intra-day trading.

    This rise, which occurred very quickly, came after Metal Tiger’s investment supported Kibo in the delivery of a highly positive definitive mining feasibility study at its Rukwa coal to power project. With the deal earning Metal Tiger a significant profit in short order, Johnson hopes that alongside having an option over Hanet, African Battery can make a lot from its Katoro shareholding.

    Broadening horizons

    Alongside the Katoro deal, March also saw Johnson and Bell lay out their plans for African Battery’s future in a strategic and operational plan. The company said that the funding climate for early-stage resource opportunities is still ‘very poor’, thanks to depressed market conditions. As a result, it believes vendors are willing to undertake transactions on unusually reasonable terms. Using some of its remaining cash balance, the firm plans to take advantage of this by reviewing and – if appropriate – acquiring new opportunities that complement its existing portfolio and provide additional risk diversification.

    In the update, African Battery said it has already received direct approaches from third parties with assets in battery metals, precious metals, and other commodity groups. As well as looking at new commodity groups, the firm said that, although it intends to remain focused on Africa, it would be willing to enter new jurisdictions if an attractive enough opportunity arose.

    ‘We are obviously very focused on reviewing what we can do with the existing portfolio,’ says Johnson. ‘However, we are also considering investment opportunities that can boost our balance sheet, bolster our financial strength and expose us to strategically attractive areas for future business development. For example, it would be good to get diversification across a wider geographical spread in Africa, rather than focusing solely on the West of the continent. There are a number of attractive opportunities out there in stable jurisdictions before offered at good valuations.’

    Aside from maintaining and expanding African Battery’s portfolio, Johnson said another core goal for Bell and himself is to restore value for long-term shareholders. He highlights his stints at Metal Tiger, Greatland Gold, and Thor Mining as evidence of his ability to implement a successful business turnaround strategy.

    ‘African Battery has been through a period of difficulty, and it is now down to us to restore confidence in the company. There are a lot of people with personal money invested that have suffered a large capital loss. So, alongside making money for the investors that entered alongside us, we have got to try and make back as much of that cash that long-term shareholders have lost on paper as possible,’ he says.

    Both Andrew Bell and I have enjoyed turnaround success at numerous businesses over the years, with good examples being Thor Mining, Metal Tiger, and Greatland Gold. We enter African Battery in a far more comfortable position than many of these examples. The company has no debt, a good strong cash balance, and some existing interests with value that can be taken forward. What’s more, we are at the bottom of the market, or at least close to it. That is the scenario you want if you are going to make a recovery. It is really a case of doing the same thing as we have done before: maintaining our strong core business model and grabbing new opportunities as and when they become available.’

    Where next?

    With one asset left to review and new projects on the agenda, the next few months are likely to see African Battery deliver plenty of newsflow for investors. What’s more, by a revitalised balance sheet devoid of debt and replete with cash complements this forward momentum. If the business’s two experienced bosses can strike the right chord with the retail market by meeting all of their strategic and operational goals, then the company could be poised for exciting growth.

    Author: Daniel Flynn

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    The article expresses the views of the Author solely and does not necessarily express the views of MiningMaven.com and Catalyst Information Services Ltd or their connected parties who are not responsible for its content or accuracy

    News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance. Readers are recommended to seek the advice of appropriate professionals when considering investments in small capital.

  • Economics for Jangada’s Pedra Branca project become even more compelling with additional nickel JORC resource (JAN)

    Jangada Mines (LSE:JAN) announces a significant improvement to the economics of its Pedra Branca project through the addition of a JORC compliant nickel and copper sulphide resource. The new resource will be included in the Bankable Feasibility Study (BFS), slated for delivery in H1 2019, and is expected to substantially improve already favourable economics.

    The company announced it had identified the mineralization in October. The new nickel resource conveniently sits below the existing target PGM resource and planned open-pit mine. Since the nickel can be processed and recovered using the same plant as the PGMs there will be minimal additional CAPEX required making extraction economical.

    Its estimated the new resource consists of around 8.2 million tonnes of mineral which the company believes could be worth an additional $110m project revenue at today’s spot price. Jangada also highlights that there is a strong chance the resource can be increased further as it is open at depth and along strike.

    Brain McMaster told MiningMaven:

    “Today’s news is highly positive for Jangada. The inclusion of our maiden nickel resource significantly improves Pedra Branca's economics, for what should be a minimal increase in the cap-ex requirement. The reason for this is that the nickel sulphide body is close to the existing PGM resource and will get processed by the same plant, so no additional plant will be required.”

    This is a great way for us to end 2018 and marks what I expect will be the beginning of a period of increased news flow, as we advance towards completing the Bankable Feasibility Study in the spring.”


    Pedra Branca covers around 48,000 hectares and Jangada estimates the project will produce around 64,000 ounces of PGM+Au per annum.

    At today’s platinum price of $787, forecast production would generate a rough ballpark figure for revenues of $50.368m. That’s a conservative calculation since Spot palladium and gold are priced significantly higher at $1250, and $1240 respectively.

    In November Jangada announced a 32% reduction in total capital expenditure required, estimating costs for year one of $81.482m. This suggests an impressive payback time on initial investment of just 1.62 years.

    Today’s JORC resource addition further enhances project economics at Pedra Branca, while fundamentals for nickel and copper continue to look strong due to decreasing supply and increased demand from new battery technologies.

    Brian McMaster, Chairman of Jangada, said: “Our ongoing work has enabled us to further understand the dynamics, scale and potential of the ore-body; the Project’s main economic drivers are palladium, platinum and nickel and the associated by-products are essentially cream on the top. “The planned processing route allows us to process and recover all metals in one concentrate from the one plant, meaning that the economics of Pedra Branca have improved substantially. We expect to demonstrate this in the upcoming BFS. Clearly, the current NPV of US$192 million against the Company’s current circa £6 million market cap demonstrates a disparity between asset and valuation; we expect this gap to close substantially as we continue to de-risk the Project.”

    Author: Stuart Langelaan

    The Author currently holds a position or positions in the stock(s) and/or financial instrument(s) mentioned in the piece.
    The Author has not been paid to produce this piece by the company or companies mentioned above.
    Catalyst Information Services Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.
    MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

     

  • Eurasia Mining geared up to move Monchetundra PGM project forward (EUA)

    Article updated 11th Dec 2018:

    Following the release of further details on its approved Monchetundra Mine permit on Wednesday 5th December, Eurasia Mining (LSE:EUA) announced on Tuesday that it has now received the official license certificate for the permit. The project is a platinum group metals (PGM) and base metals mine located near the town of Monchegorsk on the Kola Peninsula in northwest Russia. 

    Granting of the mining permit was announced by Eurasia on 20th November and is based on a previously issued discovery certificate. Eurasia is fully authorized to construct a mine at Monchetundra which contains approximately 1.9m ounces of palladium-led reserves including platinum, gold, nickel, and copper resource. The company estimates the site has a gross in-situ value of $2.1bn based on current spot prices.

    Eurasia later advised on Friday 7th December that it had been given notice of the payment terms for the license by Rosnedra, the Russian Federal agency responsible for mining. The total one-time payment for the license will be RUR 20,843,788 (£244,265) with 20% (RUR 4,168,758 or £48,853) to be paid within 30 days of registration of the licence at the state register of subsoil licences. The remaining 80% of the fee is payable within 5 years of the date of the licence's registration.

    With the official permit document now transferred to Eurasia and registered with the state registry of subsoil mining licences in Moscow, it is the company's intention to pay the initial 20% from available funds.  The remaining balance is expected to be met as part of the capital development of the project.

    Monchetundra Mine permit

    The Kola Peninsula, borders Finland and Norway in the far Northwest of Russia and forms the eastern margin of the archean Baltic Shield. This ancient terrane is punctuated by numerous ultramafic igneous bodies of Paleoproterozoic age, some of which are layered intrusions analogous to the Bushveld Complex in South Africa.

    Eurasia's interests lie at the contact of three such intrusions including the Nittis-Kumuzhya-Travyanaya (NKT) Massif that was extensively drilled for base metal mineralisation and mined for sulphidic copper nickel mineralisation from 1937-1971.

    Eurasia began work at the Monchetundra Project in 2006 developing the site from a green fields exploration project. This was initially as part of a joint venture with Anglo American Platinum whose interest Eurasia bought in 2014. A Feasibility study, combining open pit targets West Nittis and Lopishnune, was completed during 2015 and 2016, and the mining license was lodged in December 2017.

    Eurasia already has an Engineering Procurement Construction & Financing (EPCF) contract in place with the Chinese state-owned major infrastructure project group Sinosteel for a total value of US$176m. Sinosteel will be responsible for the debt finance of 85% of the total, i.e. US$149.6m. The loan is for a period of 10-years with early repayment permitted at an indicative interest floating rate at 6 month LIBOR plus 3.5%. A US$50m sub-contract for engineering and pit development works is specified within the contract and is assigned to Eurasia's 80% subsidiary Terskaya Gornaya Kompany (TGK), or a sub-contractor of its choosing. 

    Eurasia is engaged in discussions with potential sub-contractors with regard to contracting part of the mining operation, as well as acting as the company’s representative during the mine construction phase. The aim is to emulate the contract mining arrangement utilised at the company's operating PGM and gold mine at West Kytlim by contracting the mining operation, for a percentage of gross revenue, to a reputable international specialist company with experience in Russia, with Eurasia retaining control and ownership of the project.

    The palladium spot price recently hit all-time highs at $1253 in a rare move seeing the metal surpass the price of gold. With a 3:1 palladium/platinum ratio in favour of palladium at Monchetundra, mining economics have naturally improved as a result.

    Timeline of Development

    Christian Schaffalitzky, Managing Director and Executive Chairman for Eurasia, commented: "This is the start of a new chapter for the Company and its ambitions.  Our commercial arrangements regarding the Monchetundra Project development can now be realised at this large low cost PGM and base metals project.

    The issue of this mining permit represents a sea change for the company, as this is a major project which the company intends to develop alongside our West Kytlim PGM and gold mine, which achieved steady state industrial scale production during 2018.

    It is also significant that very few mine permits are issued for PGM projects, reflecting the lack of investment in this sector, something that we the Directors feel makes this project particularly valuable. The vast majority of permits issued in Russia are for gold projects, and it is also quite rare in the current phase of the resources cycle to find an exploration company taking a project all the way from green fields exploration through mine permitting. Now we progress onto mine development and production, at Eurasia’s second mining license, based on its own discoveries, issued in less than three years.

    As regards funding requirements, our arrangements with Sinosteel mean the Company can move forward with the project's development without recourse to further dilution of its shareholder base.

    It is our intention to offer specific timelines and objectives for the projects development through 2019 in due course."

    Author: Stuart Langelaan

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.
    Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.
    Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.
    MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

     

    Article originally published 5th Dec 2018 and updated 7th Dec 2018 to include permit cost and 11th Dec on receiving mine permit certificate.

  • Eurasia Mining reports upgraded washplant at West Kytlim Mine is now fully operational (EUA)

    Monday saw Eurasia Mining (LSE:EUA) reveal that full scale washing and production has commenced at its West Kytlim Mine in the Urals Mountains of Russia. Processing at West Kytlim is seasonal as the alluvial process relies heavily on running water. Ahead of the seasonal thaw, mining and preparations have been ongoing since January. A stockpile of around 30,000m3 of ore has been built up and will be maintained at the washplant to provide a buffer of material to ensure constant production. The firm adds that ‘ore has been and will be continuously sampled during excavation to confirm the grades’.

    The open-pit mine is the second largest alluvial PGM reserve in the world and contains palladium, platinum, iridium, rhodium and gold mineralisation. Mining at West Kytlim has moved on to the Kluchiki area where forest clearance was undertaken in February.  A number of improvements have been made at the plant to improve washing efficiency and metal recovery. Ore is now being fed through the trommel using a feeder system which is designed to ensure a more consistent flow of gravel through the plant. Additionally, a jig has also been added to the overflow of the sluice to attempt to capture more of the finer platinum bearing nuggets.

    Last year, output from the West Kytlim mine exceeded expectations with platinum production of 165kg, and during a podcast interview in April Eurasia’s chairman, Christian Schaffalitzky told MiningMaven the company is targeting similar production levels in 2019.

    Meanwhile, The company has been developing its larger Monchetundra asset towards production since it was issued a mining permit in November last year. An engineering, procurement, construction (EPC) and financing agreement is in place with Chinese group Sinosteel for the development of the mine, which is estimated to hold 2 million ounces of palladium & platinum equivalent.

    Christian Schaffalitzky, Chairman of Eurasia commented: 'We are confident of a strong second year at West Kytlim in 2019 with mining ongoing since the first quarter and with the full scale production and washing started in Q2. Our own team and that of our Contractor are building on their experience of last year with several modifications to the circuit aimed at further increasing efficiency and metal recovery. We will publish the improved grades and recovery numbers later this year, after these improvements are confirmed over longer term production period.'

    Author: Stuart Langelaan

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

  • Eurasia Mining reveals revenues of £2.57m in maiden year of production from West Kytlim (EUA)

    On Wednesday, Eurasia Mining (LSe:EUA) released its annual report and accounts revealing revenues jumped to £2.57m in its first year of production from the West Kytlim mine. The majority of sales came from mined platinum with smaller credits of gold, palladium, rhodium, and iridium.

    The firm, which is now debt free, generated a gross profit of £293k during the period compared with a loss of £34k in 2017.

    The company’s primary focusses are the West Kytlim platinum and gold mine in the Ural Mountains and the 2 million ounces of palladium & platinum equivalent Monchetundra asset on the Kola Peninsula. Last year, output from the West Kytlim mine exceeded expectations with platinum production of 165kg. Last month Eurasia’s chairman, Christian Schaffalitzky told MiningMaven the company is targeting similar production levels in 2019.

    Mining at West Kytlim has moved on to the Kluchiki area where forest clearance was undertaken in February. Seasonal preparations, including the mobilisation of machinery, have been in progress ahead of gravel washing, which is due to commence in the middle of May 2019.

    Improvements have been made to improve washing efficiency and metal recovery including the addition of a jig to the overflow of the sluice to attempt to capture more of the finer platinum bearing nuggets. Eurasia has renewed its contract for mine development with the directors and operational staff at Techstroy, who underwent a name change to Uralmetmash.

    Meanwhile, The company has been developing its larger Monchetundra asset towards production since it was issued a mining permit in November last year. An engineering, procurement, construction (EPC) and financing agreement is in place with Chinese group Sinosteel for the development of the mine.

    In the chairman’s statement published with the accounts, Mr Schaffalitzky said:

    “At the time of writing production is ramping up for the year to full scale at West Kytlim and the Directors now regard Eurasia as an established mining Company.

    The Company's strategy, as outlined since 2015/16 was to develop the West Kytlim Mine to production, and to generate sufficient revenues to allow the Company to pursue development of its further interests, while minimising possible dilution of the shareholder base.

    The Company's plans for the project's development with Eurasia's working partners at Sinosteel (one of the largest corporations in China) and the Central Kola Expedition, the key contractor in the region for both Russian and international companies, can now be progressed. The project is a more considerable undertaking than West Kytlim and could be transformational for the Company.”

    Author: Stuart Langelaan

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

  • Eurasia Mining to be granted permit to extend exploration area at West Kyltim (EUA)

    This morning, Eurasia Mining (LSE:EUA) announces it has been officially informed an exploration license for an additional 71.1km2 at its West Kytlim Open Pit Mine will be granted. West Kytlim is Eurasia's operating alluvial PGM gold mine in the Ural Mountains, Russia.

  • Jangada Mines mired in the AIM vortex, can it break free? (JAN)

    Jangada Mines (LSE:JAN) has been a very frustrating company to invest in. It has two exciting metal projects in the north east of Brazil; the Pedra Branca platinum group metals (PGM) and nickel project and Ptombeiras West, which is seeking to develop a vanadium resource. The initial estimated economics for Pedra Branca look superb, Jangada’s management team is highly credible and the firm appears to have strong in-country support. There is a lot going for the business. Unfortunately, it is also listed on AIM.

    Since it debuted on the market in June 2017 at 5p, Jangada’s share price performance has been highly disappointing. The company’s stock currently trades at only 2.3p, on the mid. A mixture of self-inflicted wounds, malign market forces and poor macro conditions have combined as powerful headwinds against Jangada’s attempts to grow.

    As a result, the company has found itself mired in the lower reaches of the market and the question now is what can it do to break itself free?

    To attempt to answer this it is worth analysing what has gone wrong so far with Jangada.

    Starting first with the company’s self-inflicted wounds and unfortunately, Jangada’s management team has made several errors over the last two years in its dealings with the City. The company has missed a number of important targets, such as failing to commence trial mining within 12-18 months of listing and the lengthy delays in delivering the Pedra Branca Bankable Feasibility study. Jangada has also had communication difficulties, by releasing confusing, sometimes contradictory, sometimes inconsistent announcements.

    There really is a great story here, which at times has been lost due to a lack of attention in presenting the message in a simple, straightforward manner.

    Many resource companies suffer similar issues, so these problems aren’t unique to Jangada. However, the biggest mistake the directors made was in appointing the infamous (now defunct) Beaufort Securities as the company’s broker during the IPO.

    Beaufort’s reputation as a shoddy operator was well deserved and practically none of its clients ever delivered genuine shareholder value. Jangada’s directors should have known to have steered clear of this firm at the start. The company has never really recovered from this decision.

    The main problem for Jangada, like all of Beaufort’s clients, was that as soon as that firm was appointed it opened the door to shorters targeting its stock. Beaufort was widely known as one of the brokers of choice for closing short positions through discounted placings and, even though that firm is now dead, its infectious legacy lives on.

    Over recent months one particular market maker, Berenberg, has been consistently on the offer of Jangada. And I do mean CONSISTENTLY.

    Whether this means Berenberg is short or not is anyone’s guess, but it would be very interesting to find out if that firm has ever offered Jangada money or participated in a placing?

    Of course, Jangada’s share price woes could just be a factor of the poor macro environment. Metal prices have pulled back and stagnated over the last 18 months, having enjoyed a spectacular run in 2017. As attractive as the Pedra Branca economics look, if project funding is hard to come by it is no wonder Jangada’s share price has continued to tread water. Perhaps a turn in the tide will see the company’s stock rally, but at present it is hard to see what the catalyst might be.

    At the start of the year Jangada announced it planned to complete the verification process of the Pedra Branca BFS by the end of March. It is now mid May and the company has only just released the social, legal and environmental review. The metallurgy test work is apparently nearing completion and the company is moving towards the mine design process.

    This is encouraging, but doubts remain over the Jangada’s ability to fund itself into H2 this year. Review of the interim figures, to 31 December 2018, reveals the company had net current assets of only $382,000 at the end of last year. Although Jangada still had not drawn on the $1m loan facility from Celtic Trust Capital, the burn rate of c.$1.6m a year on admin expenses suggests cash must now be running tight at Jangada.

    In the company’s favour a number of its consultants have taken payment in stock. This certainly must help, but at some point it seems likely Jangada is going to return to market to seek new funds. As distasteful as this may be, if a market short does exist then it would probably act as a cornerstone for any raise.

    This might prove to be a blessing. Given how close the company claims to be to delivering the full BFS and mine design for Pedra Branca, the next placement could enable Jangada to break free from the AIM vortex. That is, if it is big enough.

    If Jangada can raise enough money to give it sufficient runway to secure project finance for Pedra Branca, then we could see a material uplift in the company’s share price. However, so long as funding concerns linger at the Plc level and the company remains an obvious target for the unwanted attention of short interests then expect its stock to continue to languish.

    Guest post from ValueTheMarkets
    O
    riginally published on https://ValueTheMarkets.com on 13 May 2019

    Author: Ben Turney

    The Author holds a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    The Author has not been paid to produce this piece by the company or companies mentioned above

    Catalyst Information Services Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance,

  • Jangada Mines, fully funded to deliver Bankable Feasibility Study (JAN)

    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

    The Author currently holds a position or positions in the stock(s) and/or financial instrument(s) mentioned in the piece.
    The Author has not been paid to produce this piece by the company or companies mentioned above.
    Catalyst Information Services Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.
    MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

     

  • Kavango Resources – On the road to another Norilsk in Botswana? (KAV)

    The Norilsk nickel mine sits high in the Russian Arctic plains, 1,700 miles northeast of Moscow in the permafrost of the Taimyr Peninsular.

    Here, in the Arctic Circle’s second-largest city, virtually all of Russia’s copper and Platinum Group Metals (“PGMs”) are produced. Not only that, but this polar mine accounts for 50% of the world’s palladium, some 20% of its nickel, 20% of all platinum, over 10% of the world’s cobalt, and 3% of all copper mined globally.

    This staggering production rate won’t slow down any time soon. Recent reserve estimates suggest Norilsk’s current output rates can be maintained for upwards of another 50 years. This is thanks to 500 million tonnes of probable PGM ore reserves, including 6 million tonnes of nickel, 9 million tonnes of copper, 62 million ounces of palladium, and 16 million ounces of platinum. 

    For an idea of just how valuable this mine is, consider that Norilsk’s largest shareholder is one of the richest men in Russia.

    Oligarch Vladimir Potanin swooped in for a 34.5% stake in MMC Norilsk Nickel Ltd (Nornickel) when it was privatised by the Russian government in 1995. His net worth is now reported to be close to $24 billion.

    That’s a lot of money, but it’s not just Potanin basking in Norilsk’s riches. According to the Financial Times, Norilsk has generated the highest shareholder return of any large diversified miner over the last five years. As of 2020, the company has a market value of over $40 billion - nearly twice that of Anglo American (LSE:AAL), and $10 billion more than Glencore (LSE:GLEN).

    How exciting, then, that Kavango Resources plc (LSE:KAV) is exploring a project that could rival the best of what Norilsk has to offer.

    Kavango chief executive Michael Foster has repeatedly described the company’s targets here as “highly attractive”. However, those in the know would say that this is quite the understatement.

    Kavango holds 12 prospecting licences across the KSZ and the adjacent Ditau Project in a huge, near-7,000km2 area.  Prof. David Holwell of the University of Leicester, a world authority on magmatic sulphide deposits, describes the KSZ as “a prime setting for a magmatic Ni-Cu-PGE deposit.”

    Kavango is hard at work targeting nickel-copper-platinum-group-element deposits across the 450km length of the KSZ.

    Fig. 1. Kavango’s 3 areas of exploration

    Foster is keen to draw the Norilsk comparison for one precise reason: it’s backed by geoscience.

    The same black, granular intrusive rock that hosts Siberia’s vast metal deposits – known as gabbro - is found under the Botswana sands, exactly where Kavango is drilling.

    “We believe the results from our 2019 drilling in the KSZ have brought us closer to confirming a Norilsk-style ‘plumbing system’ through which significant quantities of metal sulphides were transported,” Foster explains.

    Copper-Nickel-PGM deposits can accumulate in vast underground ‘traps’ — as molten metal-sulphides filter down through the cooling silicate magma. As at Norilsk, these accumulations can form huge ore bodies over a prolonged period of magma flow, which appears to be the case on the KSZ.

    One of the most important results from the drilling and rock sampling by Kavango to date has been the confirmation that most of the gabbroic magma intruded into sulphur-rich coal shales.

    Why is this key?

    It tells Kavango’s geologists that the sulphur content of the magma would have increased due to the incorporation of sulphur rich coal shales into the melt. Therefore, more of the valuable metals (Nickel & Copper) would have combined with the sulphur to form sulphide accumulations.

    Magmatic sulphide specialist Dr Martin Prendergast examined the geochemistry of the gabbro samples and concluded that the silicates seem to have “lost” metals during the crystallisation of the magma whilst the ratios of Cu/Zn and Cu/Pd strongly suggest that “sulphide saturation” would have occurred leading to the formation of metal sulphides. The location of these sulphide deposits are relatively simple to confirm in geophysical surveys because they conduct electricity so easily.

    In Kavango’s recent Mineral Systems Review by Prof. Holwell it is suggested that large volumes of metal sulphides including copper, nickel and platinum could be found in trap zones associated with gabbro dykes (vertical) and sills (horizontal).

    If this is correct and the accumulations are close enough to surface to mine economically, it will then be a case of identifying the location of these deposits with ground based geophysical surveys and obtaining samples of the mineralisation.

    With so much ground to cover this is obviously a big job for Kavango, but the potential rewards are huge.

    If the company is successful and identifies commercial metal deposits then this will be transformational for the company’s stock price. This will be the main focus of Kavango’s exploration efforts well into 2021.

    Fig.2. Diagram showing how metal sulphides can accumulate within sills and dykes as the gabbroic magma ascends towards the surface. (After Barnes et al 2015)

    Wider Exploration Potential in Botswana

    It’s no surprise that fellow junior mining exploration companies are now following Kavango into Botswana.

    Notably, shares in Power Metal Resources (LSE:POW) rocketed 50% in a day in April when the London explorer announced the acquisition of a 51% stake in Kavango’s Ditau Project located 70km east of the KSZ.

    At Ditau, Kavango has been focussing on 10 or so “ring structures” identified from airborne magnetic surveys, which the company believes should contain “carbonatite” lying beneath about 70m of Kalahari Sands

    Carbonatites, are intrusive/extrusive volcanic bodies whose geochemistry is dominated by calcium or magnesium carbonate. Significantly, carbonatites represent the leading source (almost the only source) of rare earth elements (REEs). REEs are becoming increasingly important in high tech applications, particularly in the manufacture of batteries and lightweight magnets used in the motors of Electric Vehicles.

    At the time of the acquisition by Power Metals, chief executive Paul Johnson said the purchase offered “a great deal of promise for highly prospective” targets of carbonatite magmatism.

    Across these targets, the Kavango/Power Metal Joint Venture hopes to discover economic deposits of REEs as well as niobium – a ductile metal used to create heat-resistant superalloys for jet engines. 

    Just 25km to the north of the project area, three carbonatites were discovered by Falconbridge Exploration in the 1970s.

    One of these was reported to contain high grades of Niobium.

    Once the Covid-19 lockdown is over, the JV partners plan to carry out orientation surveys on the Falconbridge carbonatites before undertaking an exploration exercise to identify carbonatite within the ring structures. Once carbonatites have been confirmed, shallow drilling will be employed to test for REEs and other economically viable minerals.

     

    Rising demand paints a positive picture for Copper, Nickel, REE and PGM producers

    As Kavangopushes forwards, demand for rare earths and PGMs is also soaring. More and more of the world’s technologies are coming to rely on these highly sought-after minerals

    Increasing quantities of palladium are being sought by world’s carmakers, who use the rare metal to manufacture green catalytic converters. Meanwhile, rare earths are critical in everything from medical equipment and electric car motors to lithium-ion batteries, computer hard drives, solar panels, and wind turbines.

    The net result has been a surge in prices over recent months. Palladium soared to record highs above $2,795 an ounce in January 2020.  Spot prices have remained at 25-year highs in spite of the Covid-19 pandemic.

    The reason?

    Auto manufacturers are struggling to find new suppliers and tough new emissions standards have come into force around the globe.

    Nickel, meanwhile, has jumped 18% since March.  A large driver here has been an export ban on the commodity in Indonesia – one of the world’s leading suppliers.

    So, while prices of key metals take off across the globe, and Kavango finds precisely the same underground structures that made billionaires of Norilsk investors, the company now has a huge opportunity to match this exploration potential and enrich its early investors.

    Author: Mark Sheridan

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    MiningMaven Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    MiningMaven Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and MiningMaven Ltd are not responsible for the article's content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

     

  • MiningMaven Podcast 103 - with Chairman of Eurasia Mining, Christian Schaffalitzky (EUA)

    Today’s guest is Christian Schaffalitzky, Chairman of Eurasia Mining (LSE:EUA).  Eurasia is a palladium, platinum, rhodium, and gold producer with a number of producing and exploration projects in Russia. The company’s primary focusses are the West Kytlim platinum and gold mine in the Ural Mountains, and the 2 million ounces of palladium & platinum equivalent Monchetundra asset on the Kola Peninsula. Last year, output from the West Kytlim mine exceeded expectations with platinum production of 165kg. With seasonal preparations well underway and the washplant expected to re-start shortly, Mr Schaffalitzky says Eurasia is targeting similar production levels in 2019.

    This interview was recorded on 23rd April 2019.

    All opinions expressed are those of MiningMaven and the respective guests, unless otherwise stated and should not be construed as investment advice or a recommendation to buy shares in any featured Company. From time to time MiningMaven principals may take equity positions in companies featured. Listeners are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of a qualified investment adviser or stockbroker as they deem appropriate. MiningMaven.com is a trading division of Catalyst Information Services Limited. Registered in England no. 06537074 (Registered Office Address 3rd Floor Ivy Mill, Crown Street, Manchester, M35 9BG) #gold #mining #investing

    Author: Stuart Langelaan

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    The Author has been paid to produce this piece by the company or companies mentioned above.

    Catalyst Information Systems Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Systems Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Systems Ltd are not responsible for its content or accuracy. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

     

     

  • MiningMaven Q&A: Eurasia Mining’s Christian Schaffalitzky on his firm’s ambitious plans for 2019 (EUA)

    MiningMaven recently caught up with Eurasia Mining’s (LSE:EUA) chairman Christian Schaffalitzky to discuss the Russia-focused exploration firm’s plans following a busy news period.

    Last month saw the business announce that preparatory work, including tree felling, had begun ahead of this year’s production at its West Kytlim mine in Russia’s Urals region. This is expected in April once the seasonal thaw sets in.

    Meanwhile, the company is also continuing to make progress at its 80pc-owned Monchetundra project in the Kola Peninsula, where first palladium, platinum, and gold production is targeted in 2021. The business received a mining licence for the project in December 2018, and can now look to advance the project through construction.

    Read on for more details on Schaffalitzky’s plans at its principal assets over the coming year as well as his views on the platinum market and Russia as an operational jurisdiction:

    MiningMaven: Can you give us an overview of your plans at West Kytlim now that operations have re-started?

    Christian Schaffalitzky: We are waiting for the ice to melt so we can start the washing process. If things go well, we could begin to produce in April. It depends on when the thaw kicks in because we need running water to wash the gravel.

    The preparatory work required ahead of mining is relatively straightforward. First of all, the site contains ‘pay gravels’ that contain ore. We can start working on clearing forest and non-ore from above these gravels because we have identified where the platinum-bearing gravels are. Forest is removed, overburden is stripped back, and this is work that can be undertaken in winter and early spring. So that’s the immediate work plan.

    We are actually mining sediments that are in an active river system. So, once the river is flowing, we redirect it for the section on which we are working and also the terraces on the side of the river, from earlier river systems. Those terraces are also platinum bearing, giving us several generations of sand and gravel that are potentially platinum-bearing. That is what we are looking for when we are exploring.

    MM: Did the company deliver its production targets last year?

    CS: We did, yes. We had an informal target of around 100kgs of platinum, and we produced 165kgs. So, we were delighted with our performance in spite of difficult conditions in the platinum market, where prices remained very weak as gold and palladium roared ahead.

    MM: On that note, do you think platinum prices are basing and are ready to move up shortly?

    CS: There seems to be a perception in the market that there is an excess of platinum globally, which is pushing prices down. This is because the metal is used primarily in catalytic converters in diesel engines, which are expected to suffer declining demand over the coming years.

    Personally, I don’t buy into the idea that this dynamic is this simple. At current prices, around 80pc of the platinum mines in the world – or at least in South Africa – are operating below breakeven. They cannot keep working on negative income. You also have to remember that many of the underground mines in South Africa are old and, as such, are not mechanised. This could ultimately cause them to close, which would also throw up serious geopolitical concerns as they employ thousands of people who cannot be fired overnight. New mines are coming, of course, but as these older mines close, it will be a big problem for supply.

    MM: So, with South Africa’s potential issues in mind, is the area of Russia you are based in prolific for mineralisation?

    CS: Yes. If we focus on the Urals, it is famous for platinum. In fact, it was the first place in the world where platinum was discovered and then worked commercially. The Russians discovered significant platinum nuggets at the beginning of the 19th Century, and work has been going on since. Over this period, 16Mozs of the metal has been worked, so it really is prolific.

    There are both small-scale and large-scale platinum mining operations in the river system. What you do not find in the Urals are hard rock platinum mines, which are present in South Africa. In other words, in the current environment, the only economic platinum that we see in the Urals is as alluvial deposits like our West Kytlim Project, which are also very low cost operations, relative to the South African mines.

    At Monchetundra the focus is on Palladium as our identified ore bodies are at least 2:1 Pd:Pt. There are several other licences adjacent to our current permit and further afield, which we are reviewing. We believe Kola can be a really hot area on the global PGM map in years to come.

    MM: Moving away from the Urals, what can you tell us about developments at the Monchetundra project?

    There are a lot of elements in place at Monchetundra and a lot of things that we are currently doing. It is a complicated, big project, that very well may be a company maker for us. To recap, we have now completed a Russian style feasibility study to apply for a mining licence. This has now been granted and covers c.2Moz of palladium-rich mineralisation with platinum and gold as well as copper and nickel.

    We now have to have the mine development approved by the government, and also by ourselves. In other words, we need to get the engineers at work now, to put together the actual construction of the mine, and to make the planned detailed engineering for the mine.

    As part of this, we signed a contract back in 2016 with Sinosteel, a large Chinese engineering group to do an Engineering, Procurement, and Construction contract. They did an estimate at the time that said it would cost about $178m to construct the mine in roughly two years. They estimated that it could produce 130,000oz of palladium mineralisation per annum.

    To do the project, they would finance 85pc of the $178 million, and they would carry that loan on their books until the plant was fully operational, or commissioned and handed over. And then it goes on to Eurasia's books. The remaining 15pc, which is roughly $24 million, is our bill- our equity contribution to the development of the mine.

    However, at the same time, there is a cashback element to the project whereby Sinosteel sub-contract to us to do specific preparatory work. All that part of the work is subcontracted back to Eurasia.  So, what this means is that we have to come up with $24m now, but we get $50m back, we believe less than what it costs to do the work. We've pretty much estimated that this will actually generate positive cashflow for our development.

    MM: Excellent, so can you give shareholders any indication of when more information will be available?

    CS: Right now, we are preparing the plans for all of this work and are making sure we have the licensing schedule organised with the government, and so on. There is a lot of paperwork involved in all of the aspects of the deal, and it does take time. We have to do it right, and we are a small company, relatively speaking, and this is a massive project, so we have to get it right. We will be providing further information to the shareholders in stages over the coming months with an update due soon.

    Interview by Stuart Langelaan

    The interviewer does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.