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Jangada Mines 2019

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Jangada Mines’ COO Muller on tying things together at Pedra Branca as BFS nears completion

Shares in Jangada Mines (LSE:JAN) sat at 1.73p yesterday after the business laid down its planned work schedule for the first half of 2019.

The organisation will spend the first quarter completing the final stages of a bankable feasibility study (BFS) for its flagship Pedra Branca PGM and nickel project in north-east Brazil. All being well, it then hopes to complete the design of a mine at the site before releasing the completed BFS to the market at the end of Q2.

Here, Jangada’s chief operating officer Heinrich Muller talks us through the work and why he is so optimistic about Pedra Branca moving forward.

Bringing it together

In yesterday’s update, Jangada said it expects to complete a review of Pedra Branca’s Platinum Group Metals (PGM) resource by the end of January. This will include the project’s new JORC-compliant nickel and copper sulphide resource, which Jangada released last month, for the first time. The deposit added 8MM tonnes of mineral at 0.22pc nickel and 0.04pc copper to Pedra Branca as well as 135g/t of cobalt, and 0.21g/t of PGM and gold at an equivalent nickel grade of 0.39pc.

A preliminary economic assessment (PEA) released in June last year gave Pedra Branca an NPV of $192m, an IRR of 67pc, and a 1.6-year payback period. However, Jangada believes the new JORC resource could enhance this considerably, adding c.$110m to revenues with minimal additional capex costs.

Muller tells us the firm decided to incorporate the two resources into one because the nickel and copper sulphide mineralisation is located immediately below Pedra Branca’s existing PGM resource:

‘Because the nickel and copper resource sits so close to the PGM resource we have changed our perspective slightly. We have incorporated both of those resources into one. We now plan to recalculate all of it and come up with something much chunkier than what we have previously had. This has all come at a minimal cost as well as the nickel and copper discovery did not require any additional drilling. It was all found from existing data overlooked in the past.’

Next stages

Yesterday’s update also saw Jangada reveal expected completion dates for the other remaining components of its BFS at Pedra Branca.

The business expects to complete all required legal, environmental and social work for the project by the end of February. Muller tells us this will follow on from work already completed for last year’s PEA.

The final component, metallurgy test work verification, is expected to complete at the end of March. Muller tells us this is also a continuation of work already put in place for the PEA. The firm has shipped a large sample of material from Pedra Branca to South Africa. Here, it will undergo detailed metallurgical test work that will verify a preliminary flowsheet completed as part of the PEA. Muller says he expects this new work to substantiate the flow sheet and refine it further.

Steady newsflow

Jangada plans to release updates on each component of the BFS as they complete, including information about the value any work is expected to add. If they complete all stages with success, the company plans to go on and finalise the mine design process. Muller tells us this stage should be relatively straight-forward thanks to the simplicity of Pedra Branca’s open pit mining operation. He adds:

‘The reason we are doing that at the end is that it will tie in all of the information from the component studies, which will then tie into one complete mine and operational design. From an actual mining perspective, the mine is very simple. It is a shallow open-cast operation, and we do not expect any significant design variations from our PEA projections. It is a minor component of the study as a whole, but it will be what ties everything together.’

Once this has completed, Jangada will release the full BFS, including the mine design, a new financial model, and updated economic metrics. This is provisionally due at the end of the second quarter. Although the work required to complete the BFS is yet to finish, Muller tells us he is already optimistic about the project’s progress:

‘I am bullish about the BFS for several reasons. Firstly, we will have a much larger nickel contribution than previously accounted for in our PGM resource. Alongside this, we expect the PGM resource itself to grow thanks to the additional work we have completed. Beyond the project itself, it has also been very encouraging to see a significant jump in the palladium price since we completed the PEA, as well as continued strength in the nickel price. Encouragingly, palladium dominates Pedra Branca’s basket price rather than platinum. Alongside this, at least a third – if not more – comes from nickel. We expect the price strength of palladium and nickel to impact the economics of the BFS positively. This should be attractive to new shareholders and positive for existing investors.’

Vanadium opportunity

Finally, yesterday’s update saw Jangada reveal that it expects to begin exploration drilling on its high-grade vanadium deposit at Pedra Branca this week. This is found near the PGM and nickel deposits but is geologically distinct.

The vanadium anomaly is called Ptombeiras West and extends c.2,000m north-south and c.1,000m east-west to a depth of c.200m. Previous outcrop results have returned consistent grades of 0.33pc vanadium. Jangada believes there is potential for this to be a discovery. A 300m diamond core drilling programme will confirm the continuity and extent of the deposits.

Muller told us the company expects to receive the results over several weeks in the first quarter. This will provide another source of potential newsflow for investors as the Pedra Branca BFS completes.

‘This is the first time we are going to be doing some drilling at the vanadium deposit. We think it is quite significant, and the results of our surface sampling have been fantastic and very consistent. We really look forward to seeing what comes out of the course of drilling,’ adds Muller.

‘Once the drilling has started and we start to receive results, there will be a consistent two-to-three-week cycle where we will get new information and newsflow from each drill hole as they complete. This will allow us to update the market on results as they come in. With this and BFS providing newsflow over the coming months, it is an exciting time for both Jangada’s management and its shareholders.’

In September2018 we spoke exclusively to Jangada Mines COO Heinrich Muller

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The author does not hold shares but was remunerated