Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Short answer is next steps after DFS is offtakes and financing if they are to proceed with the DSO…
I’ll post over weekend, but busy at work at the moment.
For those wondering on fair value 50-70% of NPV for post tax 100% IRR projects is the norm. Check history of Marianna sold at 70% of PEA NPV (which includes inferred resources a DFS can’t include). Adriatic metals who at DFS stage (they have great slide on their presentation showing how various projects stack up) or Atlantic lithium from their recent scoping study.
BF - NVS (non-exec) also a consultant to Apollo global. They’ve interest in Tio2, as can be seen offered to takeover Tronox last year…
https://www.reuters.com/business/exclusive-buyout-firm-apollo-makes-43-billion-offer-buy-tronox-sources-2021-09-13/
BOD had 4 updates before end of this quarter, accounts for both HMI and Jan, sales update for HMI and project update for pitombieras at Jan.
HMI got their sales update yesterday, accounts still required for both today. One would hope if we’re just getting a one liner update it’d have been cleared yesterday, but let’s see.
SM - no, somewhere I’ve seen something about Fodere having an offtake agreement for their Tio2. Can’t remember whom, however with NVS as a common director he’d have an in with that party and as such they could be potential suitor for us on the Tio2 side of things. I’ll have a dig around sometime see if I can find the name
BF - Largo I think are most likely, simply as they don’t just want more vanadium but need it for their battery plans.
There are however other options and if you’re looking towards the Tio2 then Tronox are a $3b USD listed company with a pigment plant in Brazil. As Mesb has previously posted their Brazil Ilmenite mine is now depleted so they’d be looking for material elsewhere. Fodere group also have an offtake agreement for their Tio2, I’d need to have a dig around and see if I can find who that was with.
Ultimately the BOD and insiders with their large % holdings are only likely to be able to cash in either via dividends from
the project or a full takeover, both of which I suspect would be years away. They would though of course be looking to position the company for such eventualities.
Scooby as we’ve some trying to trade 20% moves. The real prize however is more likely to be akin to the 300% rise FAR saw when they got corporate transactions to progress financing… We just don’t know exactly when that’ll be..
Joeman - I’d never discount anything, with the DSO option though Jangada have an option to go alone and wouldn’t need to accept a low ball offer. I doubt at this stage we’d get anywhere near fair value for the project on full takeover, more likely in my view would be a partner and offtakers financing stage 1 construction of a wider operation. Free cash flow from that to later expand throughout of the plant, probably after further resource also proved your via drilling
Highlights of the 2022 NI 43-101 Pedra Branca Inferred Mineral Resource Estimate:
2,198 thousand ounces (“Koz”) palladium + platinum + gold (“2PGE+Au”) in 63.6 million tonnes (“Mt”) grading 1.08 g/t 2PGE+Au;
106% increase to 2019 inferred mineral resource;
$6.1M CAD spent on exploration and development since 2019 resource, equating to $5.40 per ounce 2PGE+Au added;
17,434 metres (“m”) have been drilled since the 2019 resource, with approximately 11,500 m allocated to resource expansion;
Extensive resource growth potential remains at Massapê, Santo Amaro, Trapia, and Cedro, in addition to advanced exploration targets property-wide;
Regional exploration by Trado® drilling continues to advance new prospects to RC or core drill targets.
2022 Inferred Mineral Resource Estimate
The updated Pedra Branca mineral resource estimate was completed by independent Brazilian consultancy GE21 Consultoria Mineral (“GE21”), in accordance with Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) Definition Standards incorporated, by reference, in NI 43-101 Standards of Disclosure for Mineral Projects, and has been reviewed internally by ValOre. The 2022 resource estimate is the result of over 17,000 metres of new drilling between July 2020 and December 2021 and comprises 7 distinct deposit areas which host, in aggregate, an inferred resource of 2,198 Koz 2PGE+Au in 63.6 Mt grading 1.08 g/t 2PGE+Au (see Table 1 below). Mineralization outcrops at surface in all zones, and all the inferred resources are potentially open pittable.
The Pedra Branca inferred resource estimate has doubled in its palladium, platinum, and gold endowment since the 2019 NI 43-101 technical report (CLICK HERE ValOre news release dated July 23, 2019, for a summary of the 2019 inferred mineral resource estimate). Compelling growth potential remains at multiple deposit areas, including Massapê, Santo Amaro, Trapia, and Cedro.
BF - think Largo used something like $8.8 per lb in their recent long term average forecast, whilst noting vanadium had entered a bull market with vanadium deficit in 2021 looking like it exceeded 2017 levels which saw the most recent high spikes.
This compares to the $6.3 per lb used in Jan PEA.
The increases in lithium particularly makes other forms of battery technology now much more expensive than few years ago, as such vanadium prices can now be that much more expensive and still compete against other battery technology on price format, the crux really is certainty of supply of vanadium to support the battery industry.
I’d imagine any numbers used in economics are likely to be similar to largos $8.8p, maybe slightly higher, but not significantly so. Any offtaker more likely spot price minus a small discount as per the norm
Very interesting part of largo earnings call, highlighting the price increases could only just be the start and why largo are so keen to obtain more vanadium via offtakes..
16:01 Additionally, according to [Indiscernible], the supply deficit for the first 9 months of 2021 was 6.6 tonnes of V, which was on pace to eclipse the 2017 deficit of 8,100 tonnes of V, which in part led to vanadium prices increasing to a high of $29 per pound of V2O5 in 2018. More broadly and as we've noted before, the vanadium market is expected to grow in the years to come, driven by new economy use cases, particularly the need for greener steel and deployment of flow batteries.
BF - I had a quick read yesterday.
Q4 production was affected by weather as reported at time. Put up costs for year, but still made circa $20m.
Vanadium prices much higher now than averaged last year.
Entered a Vanadium bull market
Have circa $125m cash available inc credit
My fag pack calculators was they’d probably net $100m profit this year of no adverse events
Their Ilmenite concentrate plant pieces ordered. Construction to start soon.
They seem to be in a good place and expanding operations at a time they’re making good money.
Still need to get regulatory approval for the listing of their new physical vanadium purchasing company.
O&W always looks for the negatives in his investments or those he’s considering, he’s us the sensible thing to do and anyone that doesn’t risks getting caught unaware. Wouldn’t take it as malice, although can dampen spirits.
What happens to the SP short term depends on who buying now, their reasons, what next update is and how it’s worded.
What we know for sure is we’ve a highly economic project, macro environment is improving for us with strong iron price and vanadium increases which should continue, parties in the vanadium sector focused on security of future supply and us being in advanced discussions with said parties.
I’d certainly hope they are close to concluding any deal as these talks have been ongoing for some time now, however with 3rd parties involved deadlines are to an extent outside one’s own control. If they delay, it’s poorly worded and recent buyers have plan to sell on news we’d fall back. If delayed and worded referencing under NDAs discussing route of further benefication then it might rise or fall, if deal gets announced as we hope then it flys.
Macro environment really in our favour at the moment and no doubt causing more eyes to look at Jangada, first time this has happened in a while with lack recent news or PR so suggest take the opportunity to highlight the project and potential. That was those looking now might want to make Jangada a cornerstone conviction hold as most of us do, ratter than potential trade.