Where next for Bluejay Mining?
Bluejay Mining has declined from nearly 14p to its current 9p this year despite delivering stellar progress at its flagship Dundas ilmenite project in Greenland. With Dundas approaching production, the ilmenite market looking healthy, and Greenland attracting strong global attention for its potential as a mining hotbed, we look at whether a rise could be on the cards for the firm.
World-class asset
Bluejay Mining is dual-listed on AIM and the Frankfurt Stock Exchange and is focused primarily on the Dundas ilmenite project in Greenland. Ilmenite is the primary ore of titanium and is mostly used to manufacture titanium dioxide, an important pigment, whiting, and polishing abrasive. It is notably used to produce white colour and brightness in paint, paper, adhesives, plastics, toothpaste, and even food.
Dundas is the world’s highest-grade mineral sands ilmenite project, with a JORC resource of 101MMts at 7.1pc ilmenite. It also boasts an additional exploration target of between 20-60MMts at between 6pc and 10pc ilmenite. Bluejay is currently advancing the project into production, a milestone it hopes to pass this year along with securing offtake agreements for ilmenite produced.
The business hopes to use any revenues generated from the project to deliver dividends to shareholders and self-fund exploration at its other projects. These include the Disko Magmatic Massive Sulphide nickel-copper-platinum project and Kangerluarsuk Sed-Ex lead-zinc-silver project, both based in Greenland.
Low momentum
The past year has seen Bluejay deliver a great deal of progress both at Dundas, including:
-The submission of an environmental impact assessment and social impact assessment;
-The delivery of resource upgrades;
-An agreement with Rio Tinto Iron to assess the asset’s commercial potential;
-An updated resource timetable for areas;
-Local workforce training;
-The submission of a pre-feasibility study (PFS) that gave the project a base case IRR of 32.8pc and post finance NPV(5) of $83.1m and an upside case IRR of 34pc with a post finance NPV(5) of $130.7MM;
-The receipt of an export permit from Greenland’s government for the shipment of the 40,000t run of mine (‘ROM’) bulk sample material which will be processed at Bluejay’s pilot processing plant in Quebec; and,
-The appointment of seasoned Greenland-based geologist Dr Bo Møller Stensgaard as an executive director.
However, in spite of this progress, the company’s shares have declined over the year from nearly 14p to their current 6.7p. Investors’ concerns have stemmed from factors including but not necessarily limited to fundraise speculation and repeated PFS delays.
Strong backdrop
So, could now be the time to buy? There are plenty of interesting macro factors at play here that could work in Bluejay’s favour.
Firstly, the global ilmenite market currently appears to be positioned in favour of producers rather than buyers. Indeed, as fellow titanium mineral producer Kenmare Resources put it in its H1 2019 results earlier this week:
‘The ilmenite market was stable in Q1 2019 and strengthened in Q2 2019, leading to higher received prices during the first half of the year, compared to H2 2018 […] Global ilmenite supply remained constrained due to the continued mining ban in India, the delayed renewal of export quotas in Vietnam, reduced production from depleting mines in Africa and Australia and no new supply or restarts of production forecast in the short term. Chinese domestic ilmenite production continued to be strong, buoyed by high iron ore prices and vanadium credits […] The ilmenite market is expected to remain tight in H2 2019, due to robust demand and lower supply.’
Secondly, Greenland appears to be attracting a significant amount of interest in the global mining community. The region – which is mostly autonomous aside from sovereign owner Denmark controlling its defence and foreign policy – has been attracting increasing investment from Chinese firms for some time now.
For example, the Kvanefjeld Project in southern Greenland is a planned uranium and REE mine overseen by Australia-based Greenland Minerals in partnership with China’s Shenghe Resources. Likewise, a Chinese firm is also in a partnership with Australian firm Ironbark for a zinc mining project in north Greenland and a Hong Kong company currently owns the mining rights for an iron deposit in the region. Elsewhere, China National Petroleum Corp and China National Offshore Oil Corp have expressed interest in bidding for onshore oil and gas blocks opening up for surveys in western Greenland in 2021, according to The Diplomat.
Greenland’s prospectivity as the next significant mineral mining jurisdiction has become so intense that Donald Trump has even pitched in, recently expressing an interest in buying the area. How this would work and the possible implications of US ownership on the country remain to be seen.
Regardless, this increasing interest in Greenland and positive macro backdrop add up to create the feeling that Bluejay is very much in the right place at the right time. It also has a decent amount of cash to boot, with its coffers being lined to the tune of £7.2m as at 3 June.
Bluejay is currently backed by well-known institutions like Prudential, Capital Group, and ING, and management also holds an encouraging 25.24pc stake. With production supposedly on the horizon, it could be worth joining these parties in taking a bet of Bluejay’s bright future.
You can see some footage from a heli-flyover of the companies assets here
The author was remunerated but does not hold shares in the company
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