Time for the Bluejay to really start to fly high?
“…With a share price hovering just over 6p, Bluejay is one of the world’s more intriguing mining ventures…”
For most of us Greenland is a vast, enigmatic land, whose endless alien landscapes are contemplated from window seats during transatlantic flights. With three quarters of the surface permanently covered by ice, the world’s largest island – nine times bigger than the UK – is the most sparsely populated territory on Earth, with a population of only 56,000. But as climate change causes more of that ice to recede for longer during the brief Arctic summer, opening up coastlines and shipping lanes, the island’s geopolitical significance is coming into focus.
The Arctic Circle has long been considered the next frontier for oil and gas, but as political and economic pressures make the prospect of large scale fossil fuel extraction in the region less likely, it seems Greenland’s untapped mineral wealth may be the true prize.
The prospect of accessing the island’s vast reserves of gold, iron ore, zinc, uranium and rare earths has attracted increasing interest from the world’s superpowers. Greenland has long been in China’s sights, but the US has made most of the recent moves. Donald Trump’s notorious offer to buy Greenland last summer made headlines, but US ambitions for economic access, if not political control, are serious. The US is working with Greenland’s government to conduct a hyperspectral survey to map the island’s geology, and has established a growing political presence, with Greenland having the most US diplomats per capita in the world.
The Dundas Ilmenite Project
Listed on the main LSE market (LSE:JAY) Bluejay owns a cluster of mining assets that make it the single largest operational landholder in Greenland. The company claims its flagship asset, the Dundas Ilmenite Project, running along the shoreline of north-west Greenland – right beside the US military base at Thule – as the highest-grade ilmenite sand project in the world. Ilmenite is the most important titanium ore.
Dundas has a JORC compliant Mineral Resource of 117Mt at 6.1% ilmenite in situ, and a JORC Exploration Target of between 300Mt and 530Mt. Just two decades ago the location would only have been accessible to ships for two or three months a year, but as ice recedes a six month window has opened during which resources can be shipped to Canada for processing. Bluejay is aiming to produce an initial 440,000 and 600,000 tonnes of high purity ilmenite over the next one to two years.
As the company increased its estimate of the project’s potential resources Bluejay’s shares soared from under 1p at the beginning of 2016 to more than 25p by early 2018. The mining giant Rio Tinto entered into an agreement with Bluejay to explore the field’s capacity. The share price receded as the company embarked on the long process of securing an Exploitation Licence, but Bluejay is now moving back into the spotlight with a series of announcements charting its progress towards realising that objective.
Getting Greenland’s green light
Last August the company announced the first major bulk sample export for processing and testing at a Rio Tinto-owned smelter in Quebec. According to Bluejay the 42,000 tonne ilmenite shipment was the biggest sea transport of metal out of Greenland to date. Smelter testing of the sample, delayed somewhat by Covid-19 restrictions, is due to be completed next year. In November the company completed a placing to raise £11.5m to fund its ongoing exploration work, to which the governments of Denmark and Greenland together contributed £4m.
Earlier this year the company submitted Environmental Impact and Social Impact Assessments necessary for the Exploitation Licence application process. Now confirmation has been received that Greenland’s Ministry of Mineral Resource has opened the formal Public Consultation for the project. The decision is due in late August or early September.
Bluejay’s expectation that the company will get the green light seems likely given the consistent support the project has received from local communities and authorities eager for economic development. In 2017 the company was awarded ‘Prospector and Developer of the Year’ by the Greenland government, and Bluejay is already training potential machine operators at local colleges. Bluejay had earlier entered into a confidential MOU with a multinational trading firm in the global titanium feedstock market with offtake potential for up to 200tkpa ilmenite and possible project financing, and continues to seek additional commercial offtake agreements.
The company’s focus is very much on Dundas, but it has other interesting prospects on the island, notably two projects in south-west Greenland targeting nickel, copper, platinum, cobalt, lead, zinc and silver. Bluejay claims the Disko-Nuussuaq project, covering a 2,897 km2 area the size of Luxembourg, has potential to host similar mineralisation to the world’s largest nickel-copper sulphide mine, Norilsk-Talnakh, in Siberia. Historic exploration and Bluejay’s own sampling surveys have allowed identification of several drill sites across the licence area. The Kangerluarsuk project targets known zinc, lead, silver and copper occurrences, some of which could be up to 40m thick. Last year Bluejay increased the project area by more than five-fold to 692km2.
Advanced exploration and initial drilling campaigns at both projects earmarked for this year have been postponed due to pandemic restrictions, but desktop analysis to define drill targets has proceeded during the lockdown period. Over the past year Bluejay has purchased another two exploration licences in south Greenland focusing on base metals and gold, covering an area of 2,025km2.
Click here to read the latest reserch note from Hannam & Partners indicating a 20p price target
Bluejay’s recent run of positive news seems set to continue with the granting of the licence the company needs to begin work to prove the promise of their key asset. Success would pave the way for partnership with Rio Tinto, and, although there has been no announcement of a joint venture it is worth noting the presence of another mining giant on the island, Anglo American. Last year Anglo American secured rights to explore the West Greenland’s Upernavik region for nickel, copper and platinum group metals.
The Covid-19 outbreak will have been a particular frustration for Bluejay given Greenland’s brief field season. Exploration Operations are only possible during the three month Arctic summer, leaving little time for the company to press ahead with much of its work on the ground this year, even if the licence is granted.
But patience is a fundamental virtue for any mining venture, and especially those working in relatively uncharted territories like Greenland. Bluejay has put all the elements in place for the realisation of an intriguing set of mining opportunities: the licences have genuine promise, the capex costs are manageable, the jurisdiction is supportive, and with sealanes clear of ice for more of the year there is a viable passage to established markets. The West currently sources most of its ilmenite from Africa: a major mine in Greenland, even if accessible for only part of the year, promises to shift trading patterns to Bluejay’s advantage.
‘The opportunity in Greenland is the race for what’s left in the world’ Bluejay CEO Rod McIllree told the Financial Times last year, with the colourful turn of phrase that has characterised the company’s statements. With the likely granting later this summer of the go-ahead for operations Bluejay will have the chance to move to the front of that race.
With a share price hovering just over 6p, this is one of the world’s more intriguing mining ventures…
Click below to see why Trump has offered to Buy Greenland and in the same interview Bluejay CEO Roderick McIllree expands to Sky news on a giant “tug of war” between the US and China…