(Alliance News) - Bluejay Mining PLC has now proven the economic viability of the Dundas ilmenite project in Greenland, the miner said on Thursday, and there is upside potential.
Bluejay has now completed and filed the pre-feasibility study for Dundas, which it says is the world's highest-grade mineral sands ilmenite project. Ilmenite is an ore of titanium.
Dundas, which has an initial nine-year lifetime, has a base-case post-tax internal rate of return of 33% and post-finance net present value of USD83.1 million. On an upside case the rate of return would be 34%, and a net present value of USD130.7 million.
Over the lifetime, net profit could be USD153.1 million, growing to USD247.2 million if Bluejay managers to extend the lifetime by two years.
This study, Bluejay stressed, is based on a ore reserve of 67.1 million tonnes at 3.45% titanium dioxide, equivalent to 7.3% ilmenite, taken from only the Moriusaq area.
The current estimate for Dundas is an ore reserve of 117 million tonnes at 2.91% titanium dioxide, if Bluejay adds recent drilling results from Iterlak East and West.
Bluejay is looking at an estimated capital expenditure of USD245 million, and it has started talks with project finance partners. This has been inflated by 20% to meet "viable and safe" operation, especially as Dundas will be the first conventional mineral sands mine in conditions like those in Greenland.
Chief Executive Roderick McIllree said: "The pre-feasibility study demonstrates Dundas' commerciality and all stakeholders, shareholders and the government and people of Greenland will benefit from this development.
"Dundas has now been proven as a viable and economically mineable deposit, and we continue to explore project financing packages with European funding agencies who recognise the secure nature of the jurisdiction, which has positive implications for the cost of capital.
"However, to truly understand Dundas' worth, one must also look at the value it could add to higher-grade finished products because of the potential for blending with lower-quality feedstocks," he added.
Shares were up 1.1% on Thursday shortly before midday at a price of 6.98 pence each.
Bluejay (JAY)