Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
BF- have to go into the office on Wednesdays & only just home. Rather manic at the moment trying to close off work items before going on holiday this Saturday. Doubt I’ll be upgrading hotel room after todays SP reaction, but looking forward to a break even more now! Let me have re-read of RNS and pull together previous comments/calculations
Well there’s not exactly a whole load of recent RNS to work through! We’re at mine build decision stage which basically means obtaining and evaluating financing options. It was advised at the half year statement at end of June that would 3mths-9mths I.e. be sometime in either Q4 2022 or Q1 2023.
Most important and potentially exciting stage of Pitombieras project to date. They’ll be NDAs in place during negotiations and BOD are unlikely to show hand whilst negotiations continue.
Should involve discussions with offtakers as every project needs someone to buy the produced product. That ideally would be a local offtaker as circa 75% of the logistics costs relate to port handling fees and shipping cost. Logistics is $10.8m of the $17.9m opex (year 1) as shown on page 33 of company presentation, clearly big incentive to try and get local offtaker if possible! Then of course negotiations on whether that offtaker would advance cash for mine build in return for discounted product when producing.
Other financiers/partners to either cover 100% of the capex of the remaining after offtaker advance. Might be preferable for 100% from such partners, or as little as possible - depends on their terms vs offtakers terms.
Then there’s chat with government over state support. Again on page 33 it’s possible to see current economics equals tax circa 33%. Tax incentive programmes for first 10years of mine are available for NE Brazil projects so hopefully BOD is negotiating with them to.
Or alternatively maybe they’ve had expressions of interest to buy the project, at which point those negotiations also going on and once all options in decision made.
Whatever the outcome I’d hope for update this quarter, anytime now really! Valuing/realising value of much more than the £10m pitombieras valued at current MC
Glencore offtake with CSN including $500m advance. It’s almost like they also have confidence in Brazil….
https://www.bnamericas.com/en/news/brazils-csn-mineracao-concludes-new-financing-deal-with-glencore
Sir Mick Davis knows a little about mining… Decent investment just made into Brazil REE project…
https://m.miningweekly.com/article/vision-blue-and-emg-put-150m-into-brazil-ree-developer-2023-01-12
Iron ore price been moving well in recent month and near 6mth highs. Obviously expect this to continue if China moves away from the zero Covid policy in Q1/Q2 as expected.Next year could be good time to be starting production. Hopefully all pieces are starting to fit together behind the scenes and we get a series of updates soon..https://www.mining.com/iron-ore-price-rises-on-china-property-support/
Sure they’ve had more than enough time to get the Tio2 stage to FS std, but we should all know economics change with local offtaker &/or tax incentives. Alternatively as you suggest being tied in with deal covering all financing. If any further benefication was going to be done then Brian did say most likely funding would be combination of offtake and industry partner.
BF - the licence in question appears to be circa 5km East of a small village called Lagoa do Mato. You’ll be able to find that on google maps if you want to see location relative to highways and Port Pecem.
I’ve not looked into too much. I don’t really prescribe value to a tenement we know very little about. As posted nearby tenements are quartzite which is a marble like stone. Would be very much a bulk style commodity in which logistics matter, but simple I expect to mine/quarry. Possibly more the simple low capex operation BOD gone for.
Uranium and phosphate also in the area. It’s not too far from the Itatala project which you can just google. I don’t think those commodities are likely to become or focus, however until we get details I wouldn’t discount anything..
Roadblocks have been cleared, Bolsonaro has said protests should be peaceful (saying we’re not violent like the left), he’s agreed to transition of power and his political Allies have conceded defeat. Outside Brazil - China, Russia, USA, EU and pretty much all other leaders accepted result within hours of result.
Brazilian Real is largely unchanged against the USD. That would not be the case if there was real concern.
They’ll be protests for a while, regardless of who won that’s to be expected with such different political views.
What I’m watching and waiting for now is the ministerial appointments. Meirelles as finance minister is largely expected and markets would see that favourable. Centre based views and pro-business.
Below post from the Senior editor of Bloomberg business with a tweet from the senior economist from the IFF worth a read. I refrained from posting it until it looked like there would be transfer of power..
https://twitter.com/johnauthers/status/1586903284861833217?s=21&t=LjPpvH9FgL07xcxWqvbBig
BF - iron is used on some batteries, however it’s such tiny amount compared to overall use I’d never call it one!!!
Jangada has to work within very limited financial means at the moment. Just like other companies a free cash flow generative asset provides further options. Drilling out further resource, adding additional plant, other projects and other investments all possible. Let’s see pitombieras at least funded first though before we go along those routes!!
BF - not sure on who’d be offtaker for the Tio2 product. Company RNSs does reference it now starting to be used in batteries as well as for the traditional paints/plastics industries. As such could be same outfit bres talking to. Just have to wait and see. Article below something I saw last year
https://tdma.info/could-titanium-dioxide-be-the-solution-to-the-battery-problem/
Or close to own funding on Pitombieras. Bres in talks with Chinese outfit as per their recent RNS, maybe we’ve also been in talks with them and this forms part of a wider strategy?
Either way still leaves Jangada with over £2m cash, value of our investments and whatever is happening with Pitombieras and the value that’ll be to to us
I didn’t write the article below myself, honest guv! Released about an hour after you posted though
https://www.mining.com/web/brazil-mining-group-sees-steady-investment-regardless-of-election-result/
Not overly worried. Senate and other chambers moved even more to the right. He’ll target clamping down mining in rain forest and indigenous lands.
Ceara the state Pitombieras is in has a left Governor. He’s pro mining as creates jobs, even supporting uranium mining. Lula will also want the jobs. Some talk of additional royalties on some high margin mines, however will still need to encourage new projects.
Taxes on high margin existing mines, keep incentives for new mines and focus battles with the senate and congress on rain forest/indigenous lands is my expectation.
Jangada haven’t factored in any tax incentives in current economics. Previously posted on Tombador getting theirs (circa 70% reduction to federal tax). South Atlantic gold (project also in ceara) also have MOU for circa $35m of government assistance. If anything expecting our numbers to get better…
Article on congress/senate results below
https://news.mongabay.com/2022/10/conservatives-tighten-grip-on-brazil-congress-hampering-environmental-agenda/
1) Local offtaker providing logistics savings (logistics being $11m of the $17m annual opex)
2) Government support, probs in form of tax incentives
3) Industry partner (referred to in June 21 interview as most likely funding of including Tio2)
4) Asset sale
Above are items I think could be working. Points 1&2 seriously improve economics, would make the mine profitable at much much lower commodity prices. Points 3&4 move towards monetizing asset.
Even with current economics are MC is less than 1 years free cash flow or 10% of the NPV.
Yep, £1.3m off the MC from £18k of sells.
Whatever views on Jangada is it clearly would have been better selling into the rise, when support and higher prices! Few idiots traders
Biggest volume day in long time was Monday with a vwap of 4.41p. PIs chasing it 20% lower 3 days later on no volume. If not tragic it’d be funny…
Mesb - something else of interest in the same sector as fodere. Hadn’t even considered the glaringly obvious - less use of energy on tech such as fodere = good ESG credentials.
After fair few updates they’ve been quiet last couple months. Wonder what next for them?
https://www.businesswire.com/news/home/20221011006018/en/Rio-Tinto-partners-with-Government-of-Canada-to-decarbonise-RTFT-and-boost-critical-minerals-processing
I don’t buy there’s been a leak, not had any before nor and most are aware the BOD aren’t very talkative! We are approaching 6mths since any form of operational update though so plenty news should be due.
Unless anything gets reported late I make it 882k buys today vs 593k sells.
VWAP (average price of transactions) 4.41p.
Last 2 sells below bid at 4.25P (4.3p bid at time) and then bid hit at 4.2p annoying, especially bearing in mind vwap and buys vs sell volume. All should know my thoughts on bid hitting/selling below by now!