Jangada Mines PLC (AIM:JAN) Q&A Following Publication of Technical Report

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.

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. Question: 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 £17m. 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 £17m, 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.


For further information please visit www.jangadamines.com or contact:

Jangada Mines plc

Brian McMaster (Chairman)

Tel: +44 (0) 20 7317 6629

Linking Shareholders and Executives :Share Talk

If anyone reads this article found it useful, helpful? Then please subscribe www.share-talk.com or follow SHARE TALK on our Twitter page for future updates. Terms of Website Use All information is provided on an as-is basis. Where we allow Bloggers to publish articles on our platform please note these are not our opinions or views and we have no affiliation with the companies mentioned
Share Talk
Malcare WordPress Security