By Holly Black
News continues to flow from Brazilian platinum development project Jangada Mining. The firm has raised £1 million from investors and announced the approval of its environmental licence.
Chairman of the company Brian McMaster has come under fire for conducting the fundraising at 3p a share. This summer the chairman had said he would rather fund the development himself at 5p a share – the price at which shares floated in June 2017 – than drop to a lower level. Now McMaster has found himself facing criticism for not following through on his promise, but he says the feedback has been ‘quite unjustified’.
McMaster explains: ‘The fundraise took a little longer than we anticipated and a series of things didn’t go to plan. Raising capital at a lower price than anticipated wasn’t ideal and it wasn’t planned. But the person who is financially most aggrieved by that is me, and the person with the greatest incentive to fix the problem is me.’
Around 15 per cent of the money raised in this latest round came from the directors and he points out it would have been difficult for him to participate to a greater extent in the fundraise. McMaster and former director Matthew Wood each already hold a 23.4 per cent stake in the business, and non-executive director Luis Azevedo 22.8 per cent. McMaster explains: ‘There is a limit to how much money I can put in the business and I thought people would have understood that. If my stake goes over 30% I would have to stage a takeover.’
He adds: ‘I’m not trying to back away from my comment or make excuses, but things change.’
Other commentators have speculated that despite the latest round of funding, the business will not have enough cash to follow through on its development plans. McMaster refutes the claims: ‘That’s pure conjecture. We have a long track record at doing this, we know how to do things cheaply and efficiently. We did that at Harvest and that’s what we’re doing at Jangada.’
He says that ‘getting money into the coffers’ was the ‘right thing to do’ for the development of the business. That certainly seems to be proving correct already, with Jangada having received its environmental licence within days of the fundraise.
He adds: ‘Licences can take a reasonable amount of time to secure so, while this isn’t something we need yet, we have it in our pocket for the future and it is the last of the major approvals we need.’ The Environmental Licence is also the final requirement before Jangada can submit its application for a Trial Mining Licence.
But McMaster says that is ‘just the tip of the iceberg’ and expects a steady flow of positive news over the coming months, adding that there is already a lot of activity at the site.
He adds: ‘We raised £1 million which is not an insignificant sum. There have been a number of firms which have not been able to do that in recent months.’
The latest cash injection means Jangada can move on to the next stage in its development, with a Bankable Feasibility Study. Meanwhile, one of the more interesting developments of recent weeks is the decision of South African minerals consulting firm Consulmet to come on board in a so-called sweat equity deal. Under this agreement, the consultancy will provide its services upfront and be paid at a later date in shares. McMaster says: ‘They have done their due diligence, they’re experts in the field and they like the business enough to agree to this deal because they expect the shares to go up. Markets should see that as something to hang their hat on.’
As well as that, McMaster insists the fundamentals of the company have not changed. The Pedra Branca project in north-east Brazil had its production credentials confirmed in an independent assessment in the summer when a Preliminary Economic Assessment confirmed the findings of a scoping study, reiterating the platinum project had the potential to become a low-cost, robust operation with a very short payback period.
The mine is expected to produce 64,000 ounces of PGM and gold a year, with an expected life of around 13 years, as well as 1.2Mlb of copper, 40,000lb of cobalt and 30,000 tonnes of chrome. Now a Bankable Feasibility Study is set to further refine those conclusions.
McMaster says: ‘We haven’t seen anything that would prevent us from progressing smoothly. Two months ago, an independent consultant confirmed the value of the project and the market capitalisation of the company is less than 10 per cent of that figure. Clearly, there is only one way this thing can go.
He adds: ‘People seem to be preoccupied with the comment I made, but all we can do now is try to get the job done and get the share price back up.’
Holly Black: is an adept interviewer, news and features writer, having written for various trade and consumer titles, with plenty of broadcast experience too. she was named Investment Journalist of the Year, Newcomer of the Year and Rising Star of the Year at the Santander Media Awards and Headline Money Awards.
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The does not hold shares but was remunerated for the article