Just when may be a good time to buy Bluejay?
“…If any of its biggest bets are successful JAY has the potential to make a significant contribution to Europe and North America’s pressing need for new commodity supply chains….”
The latest oscillations in the share price of Bluejay Mining (AIM:JAY) (OTCQB:BLLYF) are indicative of the company’s capacity to both tantalise and frustrate the markets.
This morning the Company released final results for the year ended December 2021.
JAY has compiled a cluster of intriguing assets in Greenland – the company is now the largest operational landholder on the island – and Finland, which together are prospective for ilmenite (the most important titanium ore) and a host of other metals including nickel, copper, platinum, cobalt, lead, zinc and silver. If any of its biggest bets are successful JAY has the potential to make a significant contribution to Europe and North America’s pressing need for new commodity supply chains.
Greenland’s inhospitable climate has long prevented extensive exploration of the vast mineral resources it is believed to hold. But climate change is making much more of the 2,166km2 island accessible as ice recedes for longer during the brief Arctic summer, opening up coastlines and shipping lanes. Though it has a population of no more than 56,000 people, about the same as a small English town, the world’s great powers are competing to position themselves to tap Greenland’s riches. China has a keen interest in the island as it seeks to tighten its strategic grip over the supply of the world’s most valuable commodities, but the US has an increasingly powerful presence. Donald Trump’s notorious offer to buy the island back in 2019 may or may not have been entirely serious, but the US is working with Greenland’s government to conduct a hyperspectral survey to map its geology, and has posted more American diplomats to Nuuk, the island’s capital, per head of population than any other country in the world. The Greenlandic government is keen for investment as it seeks to reduce its dependence on fishing, for which it relies for 95pc of its exports, and further increase its independence from the Danish government, from which it already enjoys substantial autonomy.
The Dundas Ilmenite Project
JAY is one of several exploration companies seeking to position itself as an early developer of the country’s resources. The company’s long-time flagship asset is its Dundas Ilmenite Project, running along the shoreline of north-west Greenland close to the US military base at Thule. Ilmenite is used to produce titanium, traditionally used as a white pigment in paints and polymers, plastics and films but has increasingly wide – and critical – applications in 3D printing, the battery and fuel cell industry (as a potential new anode and coating material), and as a lightweight but durable material in robotics, drones, and light vehicles.
Several independent assessments indicate Dundas has the potential to be the world’s highest-grade ilmenite sand project. It has a JORC compliant indicated and measured Mineral Resource of 117 million tonnes (Mt) over more than 30 kilometres of strike, and with a 6.1pc ilmenite grade would require only simple mining and minimal processing to produce a high purity concentrate. Just two decades ago the location would have been accessible to ships for no more than 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.
The Project is well down the road to production. It is fully permitted – indeed the governments of Greenland and Denmark have both given financial backing, and a Master Distribution Agreement has been signed with a major Asian conglomerate for up to 0.34 of its anticipated annual output of 0.44 million tonnes. A ‘premier European Investment Bank with global reach’ was appointed last November to lead project financing for initial production. Letters of interest have been received from three international export credit agencies and discussions are underway with ‘a focused group of banks’. This year’s field works will complete necessary engineering, geo-technical and planning, and evaluate an optimised production schedule.
The Disko-Nuussuaq Project
But though progress has continued at Dundas, JAY’s most eye-catching venture over the past year has been its Disko-Nuussuaq Nickel-Copper-Cobalt-Platinum Metals Project, covering a 2,897km2 area within the West Greenland Tertiary Igneous Province. As with Dundas, JAY has not been shy to make claims for Disko-Nuussuaq, noting that it is a well-recognised geological analogue to the Siberian Flood Basalts of the Noril’sk Region, which are host to the world’s largest nickel-copper sulphide mine, Norilsk-Talnakh.
If that can be proven through further exploration, and eventual production, Disko-Nuussuaq does indeed have spectacular potential. The most recent reserve estimates by Norilsk operator MMC Noril’sk Nickel estimate proven and probable ore reserves totalling 663.1Mt, containing 6.0Mt of nickel, 11.4Mt of copper and 117.5 million ounces (Moz) of platinum group metals. Reserves are reportedly sufficient to support 80 years of output. Measured and indicated ore resources are in the order of a 1,702.9Mt containing 11.6Mt of nickel, 22Mt of copper and 257.3Moz of platinum group metals.
Current estimates for Disko-Nuussuaq are based on geological, geochemical, and geophysical data accumulated through exploration dating back 30 years undertaken by private companies and Greenlandic and Danish geologists. JAY’s own assessments have identified more than 20 drill-ready targets, including two of particular interest, respectively 10km long and 2km wide and 4.8km long and 800 metres wide. The region is proximate to the town of Ilulissat, an active hub with an airport, deep-water port facilities and service providers.
JAY made headlines last year on signing a Joint Venture Agreement with KoBold Metals, a mining exploration firm based in California specialising in the use of AI and machine learning, whose backers include Breakthrough Energy Ventures, a climate and technology fund overseen by Bill Gates, Andreessen Horowitz, a leading Silicon Valley venture capital fund, and Equinor, the Norwegian state-owned multinational energy company.
The joint venture company Nikkeli Greenland A/S was incorporated in February under an agreement according to which KoBold will earn into 51pc of the Disko-Nuussuaq licence through a two stage commitment. Stage I commits the US miner to invest $3.4m in a geological and geophysical evaluation of Disko-Nuussuaq to refine drill-targets. A further $11.6m would be committed under Stage II to chosen drilling targets. Bluejay will maintain its 49pc shareholding by funding its pro-rata commitment.
An ambitious 2022 work programme set out in March detailed plans to test already defined geophysical and geochemical anomalies and collect new geophysical and geochemical data sets that will be used to further validate and identify drilling targets. The programme would comprise 3,000 line kilometres of high-resolution drone magnetic survey, 3,000 metres of conventional diamond drilling along the Disko coastline, 5,000 line kilometres of airborne gravity and magnetic data, and 1,500 line kilometres of electromagnetic data. 4,000 soil geochemical samples would be taken over 200 line kilometres. The programme is due to commence in early June with mobilisation and build-up of the exploration camp from mid-May.
As anticipation rose JAY’s shares soared, moving from just under 7p to 10.4p. But that gain was lost in April after a somewhat enigmatic ‘revision’ to the original programme was published. In a brief statement JAY said that following ‘further evaluation of the work programme’ the partners had decided to revise the 2022 programme ‘to double the collection and analysis of modern data for the entire suite of potential targets’. Diamond drilling would now begin in 2023. The change was designed to allow for ‘a much more extensive geophysical, geological and geochemical programme this field season to define the best drill targets.’ The programme would ‘still commence in early June, with mobilisation and build-up of the exploration camp from mid-May.’ Suffice to say the market will be paying close attention to future updates for any indications of further delay.
The Enonkoski Nickel-Copper-Cobalt Project
In the meantime JAY has been pursuing another significant joint venture programme, this time with Rio Tinto, at the Enonkoski Nickel-Copper-Cobalt Project in Finland. An exploration programme completed earlier this year, encompassing diamond drilling, bedrock sampling and downhole electromagnetic surveys, highlighted mafic intrusive bedrock samples, occasionally sulphidic, from multiple sampling lines. An update last month said planned field activities scheduled for Q2 2022 will follow-up diamond drilling targets that have so far been identified, and continue electromagnetic surveying, geological mapping and sampling.
JAY has a few other projects, notably the Kangerluarsuk and Thunderstone prospects in Greenland. Historical work at the 692km2 Kangerluarsuk location has recovered grades of 41pc zinc, 9.3pc lead and 596g/t silver and identified four large-scale drill ready targets. The 2,025km2 Thunderstone project has the potential to host large-scale base metal and gold deposits. Initial exploration results have highlighted gold-silver anomalies as well as the presence of other high tenor base-metals including copper, zinc, cobalt and molybdenum.
Outlook
JAY returned to the market earlier this year to raise £5.8m to fund the feasibility study necessary to allow funding to be negotiated for the Dundas project. As with previous fundraises the placing was supported by Greenlandic and Danish government-backed institutions. The company’s most recent interim results, for the six months ended 30 June 2021, stated a cash balance of £5.2m (£6m full year 2020). That excluded £1m return of cash due to be received from HMRC.
The strategic promise of JAY’s projects was underlined in March when the European Raw Material Alliance (ERMA), which seeks to secure raw materials and raw material supply chains for EU members, gave its official backing for Dundas, which it believes have the potential to offer a reliable supply of ilmenite for European economies. Historically, production of titanium ore and concentrate on the European continent has been sourced from long established hard-rock deposits in Norway and mineral sands projects in Ukraine.
ERMA’s backing is indicative of growing recognition of the importance of developing native supply chains for the critical commodities on which Europe relies. International projects are taking longer to get built and face more scrutiny than ever before. Bernstein analyst Bob Brackett told Investors’ Chronicle that historically ‘a good rule of thumb has been around 10 years from a mine’s feasibility assessment to production, but nowadays this number is closer to 15 years … This is due to more local ESG opposition to new mines making it harder to obtain permits and approvals.’ BHP and Rio Tinto are struggling to get their new joint-venture project, the Resolution Copper mine in Arizona, up and running in the face of local opposition, and Rio’s lithium mine in Serbia, Jadar, is also running into uncertain territory.
With multiple prospects moving towards production or deep exploration JAY may be close to beginning to realise its potential. Or maybe not. This is an interesting story to follow: it’s harder to know when might be a good time to invest. Perhaps this is a stock best viewed as one of AIM’s slow burners. JAY’s licences are undeniably impressive, promising – one day – a persistent surge in value. The company’s share price was as high as 15p last August, and back in 2018 was 25p. With the price now sub 7p some may think now is a good time to buy. Perhaps. We can say with certainty that JAY is an interesting stock to watch. Investors will have to make up their own minds as to when might be a good time to buy.
