TIDMJAN
Jangada Mines PLC
03 May 2022
Jangada Mines plc / EPIC: JAN.L / Market: AIM / Sector:
Mining
3 May 2022
Jangada Mines plc ('Jangada' or 'the Company')
Shareholder Q&A Following Publication of Technical Report
for Pitombeiras Vanadiferous Titanomagnetite ('VTM') Project
Jangada Mines plc, a Brazilian focussed natural resource
development company, has received a number of questions following
the release of its Technical Report on 21 April 2022 for the
Pitombeiras VTM Project. In line with its commitment to increasing
shareholder engagement, the Company is pleased to provide answers
to relevant questions and clarity on the Project's potential value
and status.
Brian McMaster, Executive Chairman of Jangada stated, "We have
had a number of questions, which we have answered below. I would
like to stress the results were both exciting and robust with a
headline 100.3% post-tax Internal Rate of Return ('IRR'), and a
US$96.5 million post-tax Net Present Value ('NPV') (8% discount
rate), with a 13-month payback. There are few projects with such a
strong IRR, which show no geological, economic, or legal impediment
to proceeding to production."
1. Question: What metals are included in the study valuation?
Answer: The evaluation included the FeV2O5 concentrate and TiO2
production. Presently, the evaluation of the Fe 62% and V2O5 has
been completed aiming to be a Feasibility Study ('FS') standard,
while the inclusion of the TiO2 remains at a Preliminary Economic
Assessment ('PEA') level.
2. Question: What pricing was used in the Technical Report ?
Answer: The pricing for the economic evaluation used was as
follows. The Fe/V2O5 concentrate was US$165.64/t, U$120/t for the
Fe component and US$45.64 for the V2O5. A price of US$220/t was
used for the TiO2.
3. Question: What confidence do you have in the production rates for the project?
Answer: The study for Fe/V2O5 production is essentially up to FS
level. The annual production of 186,000t of Fe 62% / V2O5 and
66,000t of TiO2 at a production/processing rate of 600,000tpa
therefore carries a relative high level of confidence for Fe/V2O5
while it is a lower level for TiO2.
4. Question: What is included in the financial figures?
Answer: The financial figures include the production of Fe/V2O5
concentrate and TiO2 and are summarised below:
-- US$96.5 million NPV @ 8% discount rate
-- 100.3% post-tax IRR
-- US$415.2 million total gross revenue
-- US$145.9 million post-tax, undiscounted operating cash flow
-- Post-tax payback period of 13 months
-- US$18.45 million CAPEX (US$2.25 million for TiO2)
-- US$1.26 per tonne mined average operating cost
-- US$19.39 per tonne of Fe V2O5 concentrate processed average operating cost
-- US$ 12.48 per tonne of TiO2 processed average operating cost
5. Question: Which resource categories have been used in the Technical Report?
Answer: The Technical Report was based on the parameters of a FS
and thus only included the 5.10Mt in the Measured and Indicated
resource categories, while excluding the Inferred. With drilling,
there is the possibility to upgrade the Inferred resource of
3.16Mt, which would have an immediate impact on the Life Of Mine
and subsequent potential financial metrics.
6. Question: Is their scope to increase the resource?
Answer: Yes. The Total Project Mineral Resource Estimation
('MRE') below (effective/published date of July 20th, 2021), is
from only 3 of 8 known magnetic targets, being Pitombeiras North,
South, and Goela.
Resource Classification Mass (Mt) Average Grade %
V(2) O(5) TiO(2) Fe(2) O(3)
---------- ------- -----------
Measured 1.75 0.48 9.47 47.79
---------- ---------- ------- -----------
Indicated 3.35 0.45 8.82 45.16
---------- ---------- ------- -----------
Measured + Indicated 5.10 0.46 9.04 46.06
---------- ---------- ------- -----------
Inferred 3.16 0.44 9.00 45.86
---------- ---------- ------- -----------
7. Question: Can you explain the pricing used in the Mineral
Resources Statement compared to the Technical Report?
Answer: In the Technical Report in the section titled Mineral
Resource, it stated the following:
'A reasonable prospect for an eventual economic extraction of
the Mineral Resources has been established through the calculation
of a conceptual open pit shell, following the input parameters: 1)
Selling price for iron concentrate (62%/65% Fe, + V2O5 credit) of
US$105.75/t; 2) mining cost of US$2.78/t mined; 3) processing cost
of US$6.00/t processed; 4) general and administrative (G&A)
costs of US$1.14/t; 5) global mass recovery of 80%; 6) mining
dilution of 5%, and; 7) mining recovery of 95%.'
These figures were conceptual and were used for the Resource
calculation by the geological consultant as of July 2021, being the
date of its publication. They do not represent the pricing
parameters for cash flow used in the Technical Report, which were
updated by GE21, the Company's consultant and had an effective date
of 31st January 2022 (see Question 2). According to technical
information disclosure rules and GE21, these had to published when
publishing the report and have unfortunately proven confusing. GE21
is a leading Brazilian based mining consultant with a highly
experienced team and an extensive national and international
affiliate network including the British Geological Survey.
8. Question: From the Dec 21st RNS, it was stated that all
aspects of the FS had been completed apart from the TIO2
components. What progress has been made in the last four
months?
Answer: For the last four months, our independent consultant
GE21 has been evaluating the potential of the titanium component of
the Project, the relevant processing routes, and its impact to the
economics of Pitombeiras. This process takes time and has now been
included to a PEA level and included in the headline figures. The
next stage is to bring the titanium evaluation up to an FS standard
to match the Fe/V2O5 portion of the Project.
9. Question: What is your level of confidence in Pitombeiras?
Answer: The numbers speak for themselves. The Project
potentially presents an excellent value and, with both V2O5 and
TiO2, we have exposure to commodities related to the new energy
economy, which have a positive pricing environment. With our
technical advisors seeing no geological, economic, or legal
impediment to proceeding to production, we believe we have a
project that is highly attractive. All chapters of the Technical
Report including pit design and operation, processing route,
production matrix and sales route are defined to FS level
(exception being chapter relating to TiO2, which is at PEA level).
Importantly, we are in a progressive and stable mining jurisdiction
which, in the current global environment and increasing supply
pressures, underpins the wider story.
10. Question: What are the reasons for choosing wet separation
processing, as opposed to the original PEA's dry separation, which
has reduced the IRR from the initial PEA?
Answer: The Davis tube tests indicated that the mass recovery
and product content would be high, meaning a dry ore processing
rout via magnetic separation was chosen. A FS goes into more detail
to ensure a de-risked development path can be defined. Following
additional tests, the route that proved to be viable for
beneficiation was the wet processing for iron liberation and
concentration through flotation. The wet process reduced the mass
recovery rates and increased the equipment, energy, and
transportation costs, which increased the OPEX and CAPEX. Despite
this, and a reduction in the headline figures, the project remains
robust with an IRR of 103%.
11. Question: Why does the DSO operation refer to 62% Fe
content, as opposed to previous references of 65% Fe?
Answer: The previous DSO was based on the Davis tube methodology
and dry iron ore concentration. With more detailed studies, as
explained in the answer to the question number 10 above, it was
verified that the ore beneficiation would have to be wet processing
for iron liberation and concentration through flotation and the
guaranteed content of iron would be 62%.
12. Question: What is the current off-taker situation?
Answer: The Board has a wide range of contacts within the
mineral industry. The channels have been open to many of these as
the Project has been de-risked through the previous evaluation
studies. Now that most of the Project is to FS, off-take discussion
can be commenced to a level that potential parties can understand
the processing routes and costs, making the Project open for
terms.
13. Question: Are you acquiring new projects?
Answer: The Company has highly experienced Brazilian centric
legal, financial, and operational management team able to source
and execute on projects. They have a proven track record of being
able to find high value low-cost opportunities, such as the
acquisition of the Pedra Branca Platinum Group Metals Project,
which was vended to TSX listed, ValOre Metals, for an initial
consideration of c. 25,000,000 shares and C$3,000,000. We identify
and evaluate multiple projects to see if they fit our investment
criteria and have the potential to add shareholder value.
14. Is the Company considering a fund raising?
Answer: No. The Company has a strong treasury with the last
reported cash position of $5 million as at 30 June 2021. There are
few companies on AIM with a comparative economic project with and
NPV8 of US$96.5m, cash and a market capitalisation of under GBP17m.
The Board also controls 42.7% of the equity and would not want to
dilute its position.
15. Question: Were you disappointed by the market's reaction to
the Technical Report findings?
Answer: In a nutshell, yes. The report de-risked the Project
significantly and published highly compelling numbers. With a
market cap of under GBP17m, a strong treasury, a defined mining
asset with an NPV of US$96.5m and IRR of 100.3%, a scalable
resource, a proven team operating in a stable jurisdiction and the
potential for additional value accretive acquisitions, I am
disappointed.
**ENDS**
For further information please visit www.jangadamines.com or
contact:
Jangada Mines plc Brian McMaster (Chairman) Tel: +44 (0) 20 7317
6629
Strand Hanson Limited Ritchie Balmer Tel: +44 (0)20 7409 3494
(Nominated & Financial James Spinney
Adviser)
Tavira Securities Limited Jonathan Evans Tel: +44 (0)20 7100 5100
(Broker)
St Brides Partners Ana Ribeiro jangada@stbridespartners.co.uk
Ltd Oonagh Reidy
(Financial PR)
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END
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