Lots of opportunities for this Jangada
“…A busy 2022, however, would seem to be on the horizon for Jangada. The completed Pitombeiras DFS is due in Q1, paving the way for production…”
Jangada Mines (AIM:JAN) has spent this year quietly building towards what may prove a breakthrough year in 2022, in which it hopes to bring its fully-owned Pitombeiras Vanadium Project into production.
The Project, which covers 1,093 hectares about 300 kilometres inland from the port city of Fortaleza in north-eastern Brazil, is prospective for the vanadium titanomagnetite (VTM) mineralisation increasingly in demand for use in flow batteries. Routes to market include the country’s Companhia Siderurgica de Pecém refinery and two major Chinese ports. Early this year Jangada supplemented its Pitombeiras interest by taking a 3.6pc stake in Fodere Titanium Limited, a UK green tech startup seeking to commercialise the production of titanium dioxide and vanadium from waste materials. Fodere has secured capital to begin building its first industrial production facility, with a capacity of more than 22,000 tonnes, and is currently in discussion with industrial offtakers.
Jangada, led by Executive Chairman Brian McMaster, founder of the Australian-listed potassium company Highfield Resources, has spent 2021 working to clarify the extent of the VTM mineralisation at Pitombeiras, which before this year’s exploration had a NI 43-101 compliant resource estimate of 5.70Mt at an average grade of 0.51pc vanadium pentoxide (V2O5), 10.09pc titanium dioxide (TiO2) and 50.42pc of ferric oxide (Fe2O3).
Exploratory work over the spring and summer focused on evaluating VTM mineralisation over a structural trend underlying three targets, Pitombeiras North and South, and Goela. The work was supported by CAD$2.79m raised though the sale of nearly all of Jangada’s 17.68pc interest in ValOre Metals (TSX‐V:VO), a Canadian company pursuing a palladium, platinum and nickel project, also in north-eastern Brazil.
By July Jangada was was able to announce that drilling had allowed it to upgrade the Project’s Total Mineral Resource Estimate (MRE) by 45pc to 8.26Mt, with 62pc of the resource now classified at the higher confidence Measured & Indicated Mineral Resources category. The Mineral Resource classification stated Measured & Indicated Resources of 5.10Mt at 0.46pc V2O5, 9.04pc TiO2 and 46.06pc of Fe2O3, and an Inferred Resource of 3.16Mt at 0.44pc V2O5, 9.00pc TiO2 and 45.86pc of Fe2O3. VTM mineralisation continues to be open, with drilling to date limited to three of eight known targets.
In light of the positive MRE Jangada said it would move directly to a Feasibility Study (FS) rather than an upgraded Preliminary Economic Assessment (PEA). The company had completed an initial PEA at the start of the year which offered promising evidence for the Project’s robust economics, forecasting a post-tax Net Present Value of $106.5m, a 317.8pc post-tax Internal Rate of Return, and three-month payback. The company said it was hopeful of proceeding to mine development and first production ‘as early as H1 2022’. A trial mining license, allowing for the extraction of up to 300,000 tonnes of Ferrovanadium (FeV) bearing material per year from Jangada’s exploration licenses for evaluation purposes, was granted by the Brazilian National Mining Agency in June.
The company went on to announce that metallurgical test results on ferrovanadium-bearing titanomagnetite samples conducted at Brazilian mineral and metallurgy institute, Fundação Gorceix had yielded ‘excellent results’. Bench and pilot scale test works using magnetic separation had produced a ferrovanadium-rich concentrate containing a minimum of 62pc Fe, the benchmark for saleable FeV-rich magnetite concentrate. The results, which make ‘Jangada’s potential concentrate product highly attractive’ will be incorporated into the company’s ongoing FS. The favourable results had also given the company ‘the necessary information to further advance … negotiations with potential traders and possible local buyers.’ Jangada expects the FS, being prepared by independent engineering advisory company GE21 Consultoria Mineral to be completed in Q1 2022. Earlier this week, in an update on the study’s progress, Jangada said that it would identify ‘an opportunity for Jangada to potentially benefit from extracting additional value from the titanium dioxide present at the Project’. The FS is expected to highlight ‘no technical or geological impediments to proceeding’.
The company’s most recent interim results, published in September, confirmed that subject to a satisfactory FS it ‘intends to proceed to mine development, with first production mid-2022’. The sell down of its investment in ValOre had allowed it to record a Total Comprehensive Profit of $0.605m against a 2020 loss of $0.925m.
The emerging vanadium market
Jangada is seeking to break into a market serving an economic mega trend: the development of storage batteries able to compensate for the intermittency of renewable power sources.
Vanadium has long been used to strengthen steel, making its price somewhat dependent on China and other fast growing Asian economies. But more recently it has acquired a new identity as a key ‘green mineral’ due to its suitability for use as an electrolyte in redox flow batteries, which offer the revolutionary promise of electricity grids wholly powered by means of non-carbon energy sources, allowing surplus power generated by solar and wind to be stored and released when required. These huge batteries open the prospect of electricity grids wholly powered by renewables, by-passing the requirement to rely on gas-fired power plants to provide back-up when solar and wind are not available. Vanadium’s exceptionally long life makes flow batteries better suited for heavy-duty use in grids than better known lithium-ion batteries, familiar from their use in mobile phones and electric vehicles, which can only store energy for a few hours at most: vanadium electrolyte can reliably charge and discharge for decades without degrading.
Flow batteries can also provide the backbone for standalone energy systems in regions or countries with basic energy infrastructures, such as the batteries hooked up to solar panels powering African communities and factories without access to a grid. It all makes for a huge potential market. Jangada is hoping to join a relatively select set of vanadium suppliers, including Bushveld Minerals, Glencore and Largo Resources, all of which are ramping up production in a sector that currently depends for two-thirds of its supply on Chinese steel slag.
Pitombeiras’s titanium, which has grades Jangada believes bear comparison with those recorded by established VTM miner Largo Resources (TSE:LGO) at its flagship Maracás Menchen site, also has potential. Titanium alloy’s use in the aviation, industrial and medical sectors is forecast to drive a market worth more than $5m by 2024. As noted above, Jangada flagged the Project’s titanium potential in its December update on the progress of the FS.
Jangada’s stock entered 2021 on a strong upward curve, soaring from less than 5p to a high of 11.25p in February after the publication of its positive PEA that month. The price slipped back to around 8p in subsequent weeks, and hovered around that value though the spring and summer until dipping in the autumn back down to just below 6p.
A busy 2022, however, would seem to be on the horizon. The completed Pitombeiras DFS is due in Q1, paving the way for production. Prospective investors should also look out for news of deals with potential customers. If Jangada can meet the targets it has set itself its share price may be about to resume its upward path.