RCS - Jangada Mines PLC - Q&A Following Publication of Technical Report

Jangada MinesAnnouncement

03/05/2022 07:15

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RNS Number : 9824J  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 £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.

 

 

**ENDS**

 

For further information please visit www.jangadamines.com
(http://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 Adviser)       James Spinney

 Tavira Securities Limited             Jonathan Evans             Tel: +44 (0)20 7100 5100

 (Broker)

 St Brides Partners Ltd                Ana Ribeiro                jangada@stbridespartners.co.uk

 (Financial PR)                        Oonagh Reidy

 

 

 

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