3 Reasons to add Jangada Mines #JAN to your Watchlist - Vox Markets
Back

3 Reasons to add Jangada Mines #JAN to your Watchlist

The content of this blog (or content associated with it) is not intended as investment advice. The author holds an interest in the company mentioned. Please do your own research.

Jangada Mines #JAN
Share Price: 4.625P
Market Capitalisation: £9.14M

Jangada Mines is focused on developing the Pedra Branca Platinum Group Metals (PGM) Project, one of the largest undeveloped PGM projects outside of Africa.

To hear my interview with Brian McMaster, Chairman of Jangada Mines…

3 REASONS TO ADD JANGADA MINES #JAN TO YOUR WATCHLIST

Whenever I research a company I look for a significant milestone, in the not too distant future, that hasn’t already been priced into the shares.

The company only listed in June but management have progressed a number of work streams and as a result have moved several milestones forward. The most significant of which is the pre-feasability study, expected to be completed by late Q4 2017.

This will demonstrate the economic potential of the project and going by the scoping study, which was published on 31st October, it’s shaping up to be quite impressive. It boasts an 80% internal rate of return (see below).

After the PFS, the next major milestone will be trial production in early 2018. So within 12 – 18 months of listing Jangada Mines will be already progressing through to mining.

 

The Pedra Branca Project is the largest and most advanced PGM project in South America and currently has a JORC (2012) compliant resource of approximately 1 million ounces of PGM+Au at a grade of 1.3 g/t, 109 Mlbs of nickel, 23 Mlbs of Copper, 6.4 Mlbs of cobalt and 670kt of chrome.

The project is located approximately 280 km from the port city of Fortaleza in the northeast of Brazil and holds three mining licenses and 43 exploration licenses over an area of approximately 50,000 ha.

Previous operators (including Glencore, Rio Tinto & Anglo American) have spent more than US$35 million on exploration and development activities, which include 30,000 meters of diamond core drilling, geophysical surveys and metallurgical tests.

THE RECENT SCOPING STUDY CONCLUDED:

– The project has the potential to produce an Internal Rate of Return (IRR) of 80% and a payback period of 1.3 years.

– The study indicates, low capital expenditure requirement of US$38.4m for the construction of the mining operation, processing plant and the associated infrastructure

– At a production rate of 1.1Mt per year, the operation will have a potential life-of-mine (‘LOM’) of 13 years at a very low 1.07 strip ratio producing 34,000 ounces of PGM+Au per annum

– A multi-commodity ore suite, mined at an average grade of 1.22 g/t PGM+Au with additional credits from nickel, copper, chrome and cobalt, yields an NPV of US$158.4m at a 10% discount rate.

The pre-feasability study will further underline the compelling economics of this project but an IRR of 80%, a payback rate of 1.3 years and an NPV of $158.4m, which is 13 times Jangada’s current market capitalisation, is pretty convincing.

It’s also worth noting, if they’re producing 34,000 ounces of PGM per annum with an 80% IRR and are able to payback the capital expenditure of $38.4m in 1.3 years then this would suggest they’ll be generating $28.8m (£21.9m) of free cash flow per year. Therefore one of year free cash flow will be more than double their current market capitalisation. 

 

Jangada will be mining the platinum-group metals (PGM). The platinum group metals are made up of six platinum-group metals which are ruthenium, rhodium, palladium, osmium, iridium, and platinum but the project also has additional credits from nickel, copper, chrome and cobalt.

Firstly it’s worth pointing out that Jangada have more palladium than platinum according to their scoping study results.

A recent article in the FT stated:

“The palladium price broke through the $1,000 mark, last month, for the first time since 2001, as a backlash against diesel cars in Europe buoyed demand for a metal used in petrol-based vehicles.

Hurdling the $1,000 level took the palladium price further beyond its sister metal platinum, which is mostly used in diesel-based cars. The palladium price last month rose above platinum for the first time in almost two decades.”

As mentioned above, the project also has by-product credits of chrome, cobalt, nickel copper and vanadium, which according to Chairman, Brian McMaster, “has a significant positive impact on the economics and underpins our belief that Pedra Branca has the potential to be a ‘free platinum’ operation, where by-product credits cover the costs of PGM production.”

WHAT ABOUT THE EFFECT OF EV REVOLUTION ON PLATINUM & PALLADIUM?

While it now seems increasingly invetible that we shall all be driving electric vehicles in the future, it’s the speed of change that is harder to predict.

We’re still in the early stages but “pure electric vehicles will not begin to gain serious traction in most global markets until after 2025 and will likely account for only 14 percent of total global vehicle production by 2030, according to a study released recently by Boston Consulting Group“.

In the meantime…

GLOBAL PLATINUM PRODUCTION IS DECREASING

A forecast platinum deficit for 2016 has been revised by 64,000 ounces from 455,000 ounces to 520,000 ounces by the World Platinum Investment Council.

South Africa (RSA), the world’s largest producer of PGMs, is forecast to decrease output by 6% year on year. The country produced 5.5 million ounces in 2006, 4.19 million ounces in 2016 and is expected to produce >4 million ounces in 2017.

RSA capital investment in platinum production has also fallen from $4 billion to $1 billion over the past 7 years.

GLOBAL PLATINUM DEMAND IS INCREASING

Platinum demand is expected to reach 9 million ounces by 2025, leaving a substantial supply gap without substantial increases in production capacity.

Demand for platinum jewelery in India expected to increase 20% year over year and autocatalysts demand for PGMs as major markets continue to implement emissions controls and new regulations on auto emissions.

GLOBAL PALLADIUM PRODUCTION IS DECREASING

There are very few palladium producing regions worldwide and few known economically viable ore bodies.

Forecasts indicate that Russia (38% share) and South Africa (40% share) will account for three-quarters of global palladium mine production (source Johnson Matthey, 2016).

Growth in mine supply is constrained, largely owing to:

– Political, infrastructure and cost issues in South Africa;

– Relatively constant palladium production in Russia; and

– The very small number of new projects on the horizon in the near future.

 

GLOBAL PALLADIUM DEMAND IS INCREASING

Demand is primarilydriven by the automotive sector that consumes nearly 80% of world palladium supply for the manufacture of catalytic converters in cars that help reduce toxic emissions into the environment.

The demand for palladium in the automotive industry has more than doubled in the last ten years due to an increase in global automotive production and the tightening of emissions standards worldwide, resulting in steady growth in the use of catalytic converters.

The primary driver of growth in the automotive sector is from the emerging economies, especially Asia, where there is emerging affluence, very low penetration of vehicles per capita, and where the affordability factor is high due to low interest rates and leasing programs.

It maybe early stages but Jangada Mines’ Pedra Branca project is already shaping up to be economically compelling.

Their scoping study shows an IRR rate of 80%. As a comparison, two other companies I’m invested in, who I also consider to have compelling projects, are Asiamet Resources and Horizonte Minerals. Their pre-economic assessment’s display IRR’s at 38.7% (ARS) and 26.4% (HZM).

More will be known about the project when the pre-feasability study is released, before the end of the year but an NPV of US$158.4m, 13 times their current market cap, leans toward a very profitable venture.

The management team are also progressing through the projects milestones well ahead of schedule in a Brazil, a stable country with European-oriented culture and business practices, which the management have experience in.

Brain McMaster, is also Chairman on Harvest Minerals located in Brazil and the COO, Peter Heinrich Muller was employed by Anglo American Platinum, which included, between 2012 and 2015, time as the Managing Director at the Pedra Branca Project.

Jangada floated on AIM on 29th June at 6p, since then, despite a decent flow of news the share price has drifted to 4.625p. Before the end of the year they will have released their pre-feasability study and I will be very suprised if either this or the start of trail mining, in early 2018, doesn’t propel the share price closer towards Beaufort Securities current target of 11p.

To add Jangada Mines #JAN to your Vox Markets Watchlist, click here and tap the, “Follow”, button

The content of this blog (or content associated with it) is not intended as investment advice. The author holds an interest in the company mentioned. Please do your own research.

my-previous-blog-posts


To subscribe to my blog click here

 

Our, “£1,000 to £100,000 in 50 Trades of Less” Experiment

Our 3rd Trade in our, “£1,000 to £100,000 in 50 Trades or Less” Experiment

 

ars-small
To read my blog post on Asiamet Resources #ARS click here

 

One More Reason to add Berkeley Energia #BKY to your Watchlist 

3 reasons to add Berkeley Energia #BKY to your watchlist

 

3 Further Reasons to add Energiser Investments #ENGI to your Watchlist

2 Overlooked Companies, That Could Be About to Release Signficant News

 

evr-holdings-logo-small
To read my blog post on EVR Holdings #EVRH click here

To read my follow up article on #EVR Holdings click here

 

3 Reasons to add Flybe #FLYB to you Watchlist

 

3 Reasons to add Flying Brands to your Watchlist

1 Further Reason to add Harvest Minerals to your Watchlist

Another 3 reasons to add Harvest Minerals to your Watchlist

3 reasons to put Harvest Minerals on your Watchlist

 

One Further Reason to add Horizonte Minerals #HZM to your Watchlist

To read my blog on Horizonte Minerals click here

3 Reasons to add Hurricane Energy #HUR to your Watchlist

 

5 Reasons to put Savannah Petroeum #SAVP on your Watchlist

 

3 reasons to add Stellar Diamonds #STEL to your Watchlist

 

tlou-small
To read my blog post on #TLOU Energy click here

To read, “5 Reasons I bought more Shares in Tlou Energy This Week” click here

11 Quick Reasons to add Tlou Energy #TLOU to your Watchlist

 

4 Reasons to add Westminster Group #WSG to your Watchlist

5 More Reasons to add Westminster Group #WSG to your Watchlist

 

upl-small
To read my blog post on Upland Resources #UPL click here

To read my follow up article on Upland Resources: The Sensible and Sexy Asset Strategy, click here

2 Overlooked Companies, That Could Be About to Release Signficant News

 

1 Further Reason to add Utilitywise (UTW) to your Watchlist

3 Reasons to add Utilitywise (UTW) to you watchlist

 

2 Further reasons to add Versarien #VRS to your Watchlist

3 reasons to add Versarien #VRS to your Watchlist

 

yolo-small

One Further reason to add Yolo Leisure & Technology to your watchlist
To read my blog post on Yolo Leisure and Technology #YOLO click here
To read my blog post on Yolo’s Electric Jukebox Investment click here

Vox App Image
How to get company RNS releases sent straight to the front screen of your smartphone, as soon as they release them (for free) in 3 easy steps.

1. Download the Vox Markets app by clicking here (for either iPhone or Android).
2. Search for a company you want to receive the RNS’s from.
3. Click, “Follow” on that company’s page.

If you find this podcast useful please could you give it a 5 star rating and review on iTunes by clicking here and I’ll return the favour by giving you a mention on the podcast!

The content of this podcast (or content associated with it) is not intended as investment advice and people featured may hold positions in the companies they talk about. Please do your own research.