By Justin Reynolds
Time for Jangada Mines to shine?
“But with interests in iron ore and metals critical for the energy transition, a consistently positive news flow, and a share price just over 2p the company seems a good bet for investors seeking access to the rare minerals and metals markets”
Many of the gleaming new technologies leading the world’s transition to cleaner energy – solar, batteries, electric cars – depend on rare metals and minerals extracted through one of our oldest industries: mining.
Vanadium, for example, a metal typically used to strengthen steel, is increasingly employed for utility scale batteries able to supplement intermittent renewable energy sources. Large tanks of liquid vanadium electrolyte can be pumped through cells to spark electrochemical reactions generating electricity. Vanadium batteries offer a promising alternative to the better known lithium-ion batteries produced by companies like Tesla.
Palladium is the silvery-white metal used in catalytic converters to limit the emissions of petrol-burning cars. Its price has soared 270pc over the past five years in response to demand from carmakers in Europe and China obliged to meet tougher emissions standards. Earlier this year the metal moved from the relative obscurity of the financial pages to the headlines when its soaring value sparked a wave of car crime in London: the average vehicle running on petrol is lined with $300 worth of palladium.
London-based Jangada Mines, trading on AIM (JAN) since June 2017, is one company seeking to profit from the world’s demand for these and other niche minerals.
Jangada is focused on realising the potential of its fully-owned exploration licence at Pitomberias, some 300km inland from the port city of Fortaleza. Earlier this year the company began a 2,500m drill programme testing a 3km structural trend within the the 1,093 hectares licence that it hopes will confirm a JORC estimate of between 40 to 60 million tonnes of vanadium, titanium and iron.
A series of market updates released over the past couple of months have reported encouraging results so far. Diamond drilling at varying depths has so far found grades of vanadium, iron and titanium in line with expectations, ranging from 0.3% to 0.6% of vanadium oxide, 40% to 55% of iron oxide, and 8% to 10% of titanium dioxide. Initial laboratory tests indicates the samples can be readily separated. Jangada expects to complete the programme in Q2, when it will publish a new estimate.
The company has also commissioned analysis identifying possible commercial channels for the the mine’s produce, which could be shipped from the Pecém and Fortaleza seaports in Ceará state to the country’s Companhia Siderurgica de Pecém refinery, and to Chinese ports.
Jangada also has a substantial interest in the palladium and platinum markets through its 25% stake in ValOre Metals, a company listed on Canada’s TSX Venture Exchange (VO). Jangada held the licence for the 48,000 hectare field – which is also in north-east Brazil – before selling it to ValOre last year to fund future work at Pitomberias.
ValOre, which also has uranium and gold interests in Canada, is embarking on a 6,000 metre core drill programme at Pedra Branca to explore a JORC estimate of 1.52 million ounces of platinum and palladium, 180Mlb of nickel, 34Mlb of copper and 9.2Mlb of cobalt.
Supplying growing markets
Jangada’s interests give it exposure to a range of commodities that will be critical for the future of world economy.
China is a particularly significant customer for iron ore and palladium. There are clear signs the Asian giant is recovering from the initial Covid-19 shock. China’s industrial production rose 4.4pc year-on-year in May 2020, following an increase of 3.9pc in the previous month as car sales and spending on services increased as the virus began to be brought under control. That recovery of course cannot be taken for granted, with recent signs of a new Covid-19 outbreak presenting a new containment challenge for authorities.
Vanadium’s prospects beyond its traditional role for hardening steel were underlined by the recent World Bank Group report ‘Minerals for Climate Action’, which listed it alongside graphite, lithium and cobalt as one of the minerals and metals whose production could increase by nearly 500pc by 2050 as the world races to meet the Paris Climate Agreement targets. Demand for vanadium could be particularly strong in developing countries without established grid infrastructures, where communities and factories are developing local power supplies by using batteries to back up with solar panels.
Palladium prices have fallen back from their extravagant highs at the start of the year as the pandemic has forced the closing of car plants around the world, and the loosening of emissions regulations for manufacturers in China and a few other countries. But the palladium market remains short of stock after nearly a decade of undersupply due to low prices for platinum and nickel (palladium is produced as a by-product from mining for these metals). Increasing demand could drive prices back up, perhaps to $3,000 an ounce next year, from the current level of just under $2,000.
Jangada Mines has much work to do. Its exploratory drilling programme is not yet complete. Current and future operations must navigate the Brazilian government’s erratic management of the pandemic, and prospective markets must be secured. But with interests in iron ore and metals critical for the energy transition, a consistently positive news flow, and a share price just over 2p the company seems a good bet for investors seeking access to the rare minerals and metals markets.