Junior Mining Review

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Is there currently any value in junior miners?

Following on from our look into some of the oil and gas firms that would benefit from a sustained commodity bull market last week, we look here at the impact such conditions would have on several junior mining players.

Chesterfield Resources (CHF)

What is its share price?

4.1p

What is its market cap?

£2.54m

What is the elevator pitch?

Chesterfield is the largest holder of mineral rights in Cyprus, a historically prosperous copper mining jurisdiction that has been largely inactive since its invasion by Turkey in 1974. The business hopes to use modern mining techniques like geophysics to locate deposits that were previous unavailable to explorers

Since listing on the standard list of the LSE in July 2018, the firm has been running remote sensing, mapping, archiving, and geochemical and geophysics programming in the search for copper. It plans to begin drilling imminently across a number of prospective targets on its licences, which cover a number of former mines and prospective areas in the foothills of Cyprus’ Troodos mountains.

We covered CHF in a podcast back in July here 

What’s its latest update?

Chesterfield has struggled to gain a large amount of traction since listing, falling from highs of 7.8p to below 5p, where it has now sat for several months. The business received a welcome boost in July when it announced two now drilling targets on its Troodos West group of exploration permits. With targets now in place, the next big milestone for Chesterfield appears to be drilling itself. Will the company be able to attract the market’s attention by showing early signs of being able to deliver on its plans to make a success of Cyprus?

Eurasia Mining (EUA)

What is its share price?

0.41p

What is its market cap?

£9.97m

What is the elevator pitch?

Eurasia focuses on exploring for platinum group metals and gold and is currently centred around two major projects in Russia – West Kytlim and Monchetundra. West Kytlim is a producing alluvial platinum and gold mine based in the country’s Ural Mountains. The project helped Eurasia reach profitability last year by delivering a total of 165kg of raw platinum – far in excess of its 100kg forecast output.

Monchetundra, meanwhile, is a major palladium, platinum, gold, copper, and nickel mine with a 2MMoz reserve and resource. Although the project is currently in development, Eurasia has secured licencing for production and funding through an EPC contract in place with a Chinese group called Sinosteel.

What’s its latest update?

First of all, it is worth noting that Eurasia stands out from some of the companies on this list due to the fact it is already generating revenues. This reduced risk is reflected in its share price performance, which has been rather resilient this year in spite of volatile market conditions.

Eurasia is currently working to boost production at West Kytlim by tuning up operations, upgrading its reserves to C1 category ore, and expanding its project area majorly. Meanwhile, as detailed earlier this month, the business is continuing to advance Monchetundra towards production and has prepared a detailed project design report.

With production in full swing and a healthy macro backdrop through exposure to the exciting battery metal market, the future looks bright for Eurasia as it works towards realising Monchetundra’s huge potential.

Jangada Mines (JAN)

What is its share price?

1.05p

What is its market cap?

£2.31m

What is the elevator pitch?

Until recently, Jangada had been developing Pedra Branca as its flagship project. The asset, described by Jangada as South America’s largest and most advanced platinum group metals (PGM) and nickel project, contains a JORC-compliant resource of 1.52MMoz of platinum group metals and gold.

For reasons explained in more detail below, the organisation’s man focus is now the development of its nearby Ptombeiras project. According to Jangada, Ptombeiras contains a high-grade vanadium deposit with the potential for significant resource delineation.

What’s its latest update?

Much to the surprise of the market, Jangada announced that it planned to sell Pedra Branca to a Canadian business called ValOre Metals in May. This prompted a collapse in its share price from which it is yet to recover. The firm cited a lack of support in the UK markets for financing a PGM project, stating that it believed the asset would be better suited to the Canadian financing environment. In recognition of its continued support for Pedra Branca, Jangada has retained exposure to the project by taking a 33pc stake in ValOre alongside a C$3m payment upon sale.

The firm will now use the money to develop Ptombeiras, which it expects to receive more support due to ‘strong appetite amongst UK and international investors’. A NI 43-101 compliant CPR is already underway for the project, and is expected to be completed is expected to complete in the current quarter.

Jangada is now a very different company to the one it was several months ago. Where it goes next depends on how prudently its puts its recent sale proceeds to use, how well it can develop Ptombeiras, and what ValOre can do with Pedra Branca.

Bluejay Mining (JAY)

What is its share price?

6.38p

What is its market cap?

£52.45m

What is the elevator pitch?

Bluejay’s primary focus is on advancing the advanced stage Dundad Ilmenite project in Greenland into production. According to the firm, Dundas is the highest-grade mineral sand ilmenite project globally and boasts huge amounts of exploration potential. For reference, ilmenite is the primary ore of titanium, a metal needed to make a variety of high-performance allows. Bluejay hopes that production revenues from Dundas will enable it to self-fund exploration across its wider portfolio and return dividends to shareholders.

What’s its latest update?

A number of key developments at Dundas had failed to grab the market’s attention this year, with Bluejay falling from above 13p since January. These updates included an agreement with Rio Tinto for the analysis of Ilmenite and a maiden exploration target for the project’s offshore region. Notable, they also included the submission of a completed pre-feasibility study – details of which can be found here.

This disappointing run came to a close last week when the business rose from a multi-year low of 5.1p to its current price in a matter of days. The trigger for the firm having bottomed appears to have been the news that it has been granted an export permit from the Government of Greenland for the shipment of a bulk sample material from Dundas.

If this upwards swing can translate into a sustained change in sentiment, then it will be interesting to see where the stock goes from such low levels as more news flow is delivered. It will also be vital to monitor the company’s performance if Trump acts on his recently publicised desire to purchase Greenland.

Shanta Gold (SHG)

What is its share price?

9.7p

What is its market cap?

£77.16m

What is the elevator pitch?

Shanta Gold is an East Africa-focused gold producer focused on its flagship New Luika mine in Southwest Tanzania. New Luika is a high-grade, low-cost project that produced 42.2koz of gold in H1 2019,  generating adjusted EBITDA of $22.6m. The project is on track to produce 80-84koz this year with an AISC of $750-780/oz thank to low cash costs, which recently came in at $530/oz.

What’s its latest update?

Aside from the favourable gold price environment, Shanta has been boosted massively this year by newsflow. In March, the firm rocketed after announcing the intersection and mining of Ilunga underground development ore at New Luika ahead of schedule. Its underground mine has since reached commercial production on schedule and on budget. Meanwhile, the firm enjoyed another surge of interest in June after announcing that it had intersected high-grade mineralisation over significant widths at Bauhina Creek, an active source of ore at New Luika. All-in-all, its shares have risen from 5.4p since the beginning of the year.

With more drilling ahead, the business expects to be in a net cash position by mid-2020 and has recently entered a $10m loan facility contingent on it raising $15m in an IPO on the Dar es Salaam stock exchange. Will all of these potential sources of newflow help the business’s bull run to continue? 

Bushveld Minerals (BMN)

What is its share price?

20.75p

What is its market cap?

£235m

What is the elevator pitch?

Bushveld currently supplies around 3,000mtVpa to the global vanadium market, a figure it plans to increase to more than 8,400mtVpa within the next five years. Its operations are split between a production arm and an energy storage solution division, focused primarily on vanadium-based energy storage systems.

What’s its latest update?

The company has struggled to ignite the market this year, with shares falling from highs of 48p in November to their current 20.75p. However, Bushveld claims that its share price is driven largely by M&A, something it has not done a huge amount of this year. With vanadium generating heightened interest in recent times thanks to its potential use in the burgeoning electric vehicle market, perhaps some more deals can prompt a reversal of sentiment.

Mickey Fulp: “Junior Mining Stocks Have Bottomed Out! (March 2019)

The author was remunerated but does not hold shares in the companies mentioned 


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