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BlueJay Mining PLC

BlueJay Mining sees lots of exploration and other upside at Dundas

Snapshot

Dundas currently has a resource estimate of 117mln tonnes at 6.1% ilmenite in-situ.

mineral sands

Quick facts: BlueJay Mining PLC

Price: £0.08

Market: AIM
Market Cap: £64.12 m
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  • BlueJay Mining PLC (LON:JAY) has the licence for the Dundas Ilmenite project in Greenland

  • A pre-feasibility study values it at US$83mln over a nine-year mine life

  • “Plenty of scope to improve the numbers through resources to reserve work”

  • At 6.65p, BlueJay is valued at £59mln

 

What it does

Ilmenite is the primary ore of titanium, a metal needed to make high-performance alloys, while most of the ilmenite mined worldwide is used to manufacture titanium dioxide which is used in pigmentation, whiting, and polishing.

In May, BlueJay published a resource estimate of 117mln tonnes at 6.1% ilmenite in-situ.

It also detailed a maiden exploration target of between 300 and 530 million tonnes in an offshore area, though the company noted that the potential size and quality of the target is “conceptual in nature”.

BlueJay also believes there are inherent advantages at Dundas - including a homogenous and consistent material, a high-grade resource, the coarse-grained and chemical nature of the ilmenite – which all potentially have economic benefits.

Dundas has a distinction of having “the highest concentration of in-situ ilmenite of any mineral sands project globally” thanks in part to its geological characteristics.

“This would have been a hard rock mine…But the slow grind of the glaciers has effectively mechanically mined the material for us.

Tide and wind and rain have then deposited what is a finished product on the beach over time.

It’s saved us the front end capex of setting up a mine there which helps a lot.”

That glacial grind has had significant consequences for the economics of production at Dundas, with McIllree saying the firm has “dodged anywhere between US$200-400mln in capex, mother nature has done our mining and concentrating for us”.

If Bluejay has the onward advance of glaciers to thank for the quality of the product at Dundas, it also has their retreat to thank for revealing the extent of the opportunity.

“Historically the project was only recognised as a small local occurrence,” says McIllree.

“But then the ice and snow melted, revealing a much larger occurrence. In 2015 we undertook a work programme that demonstrated the project could be globally significant. There are quite remarkable concentrations of the material across thirty kilometres.”

For those worried about the costs of operating in remote Greenland, McIllree offers reassurance aplenty. For one thing, there’s that initial capex dodge. But more tangibly, the project is situated near Greenland’s closest equivalent to an infrastructure hub, not far from two ports, two airports and the town of Qaanaaq, home to around 650 locals, all keen for an additional industry to start.

Even the mine camp has come pre-packaged: Bluejay has simply moved into a town that was abandoned following a change in local wildlife migratory patterns, providing a platform for accelerated implementation.

How is it doing

Dundas’ pre-feasibility study put a net present value of US$83mln on the project over a nine-year mine life.

Costs to build the mine and infrastructure were estimated at US$245mln.

BlueJay added that the PFS was based only on a JORC compliant mineral reserve of 67.1Mt and not the entire resource of 117Mt.

The cut-off grade used assumed a selling price of US$232/t, all in sustaining costs of US$113/t, a Greenland royalty of 2.5% and total titanium dioxide recovery of 79.7%

What the boss says: Rod McIllree, chief executive

"The base case PFS positive 32.8% IRR and US$83.1MM NPV are just a starting point.

 With demonstrable potential for additional resources both on and offshore along the entire 30km of licence holdings the opportunity to significantly increase the initial 9-year mine life and/or rate of production is clear.

“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"

Inflection points

  • A detailed costing study will now get underway
  • Permit approval: The PFS has been lodged with the Government of Greenland
  • Talks are underway with European funding agencies over capita to build the mine

 

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