Jangada Mines PLC (AIM:JAN) developing low-capital and high-return Brazilian VTM project
Jangada Mines has recently completed a technical study for the Pitombeiras Vanadium Titanomagnetite (VTM) Project, in Ceará, Brazil.
The technical study returned a post-tax net present value with an 8% discount rate (NPV8) of US$96.5 million and a post-tax internal rate of return (IRR) of 100.3%. The mine is expected to produce an average of 86,000 tonnes (t) of Fe 62% / V2O5 and 66,000t TiO2 per annum over a nine-year mine life.
The open-pit operation is anticipated to generate average revenue per annum of US$46.21 million and around US$16.21 million in operating cash flow per annum.The operation will have a capital expenditure (capex) cost of just US$18.45 mln, including 10% contingency, and project payback time is expected to be just 13 months.
The low capex associated with the project is a huge positive for Jangada, as it should be fundable for a company of its size. In addition, the funding mechanism used should not significantly affect Jangada's balance sheet if debt is arranged, or the company's capital structure if equity is raised.
The vast majority of the work completed as part of the technical report (Fe/V2O5 concentrate production) was conducted to a feasibility study standard, and Jangada is now planning to bring the TiO2 concentrate element of the study, up to feasibility study standard from its current preliminary economic assessment level.
The feasibility study economics are based on the 5.1mln tonnes currently defined in the measured and indicated resource categories. Additional drilling could potentially upgrade the 3.16mln tonnes inferred resource, which would add substantial upside to the projects' economics.
The current total NI 43-101 compliant mineral resource estimate of 8.26 million tonnes comes from just three deposits:
- Pitombeiras North
- Pitombeiras South
- Goela
These deposits remain open and additional drilling at each of the deposits could further increase the resource base, potentially extend the mine life and improve the feasibility study economics.
In addition to the potential for near-mine exploration to increase the life of the operation, there are another five exploration targets that could further extend the mine life and uplift the project's economics with additional exploration.
Jangada's management has also suggested the potential for the company to acquire additional projects and is regularly reviewing opportunities, particularly in the technology metal space, that may complement its existing asset suite and create further value for shareholders.
The management has extensive in-country experience and has an impressive understanding of the regulatory environment in Brazil, a supportive mining jurisdiction.
The team has demonstrated its ability to deliver value to shareholders by operating in Brazil within Jangada through the C$13.1mln sale of the Pedra Branca Project, and outside Jangada through the A$430mln sale of Avanco Res.
Pitombeiras VTM Project
The 100%-owned Pitombeiras VTM Project is in Ceará, Brazil, around 300 km southwest of the port city of Fortaleza and is accessed by paved federal highways (figure 1). The project covers an area of 1,093.51 hectares.
Jangada has substantially de-risked the Pitombeiras Project by completing a feasibility study and management and external consultants believe there are no legal, technical, or geological impediments to proceeding to mine development and production.
Figure 1 - Pitombeiras Location
Source: Jangada Mining
Figure 2 - Geology
Source: Jangada Mines
Figure 3 - Drilling at Pitombeiras
Source: Jangada Mines
Figure 4 - Pitombeiras N-S Resource
Source: Jangada Mines
Figure 5 - Exploration Targets
Source: Jangada Mines
Geology
The Pitombeiras Project area contains metabasalts, metagabros, serpentinites and talc schists, with local intercalations of metathrondjemites, granite-orthogneisses, pegmatite and metaultramafic lenses (figure 2).
The vanadium mineralisation at the Pitombeiras Project is closely associated with magnetite and occurs in magmatic accumulations of magnetite and ilmenite bodies, hosted within the mafic-ultramafic rocks.
The deposit is considered to be a fairly typical example of a magmatic vanadium titanomagnetite (VTM). VTM deposits are considered the principal sources of vanadium globally. Other similar deposits include:
- Bushveld Complex (South Africa)
- Skaergard Intrusion (Greenland)
- Maracas Menchen (Brazil)
- Panzhihua layered intrusion (China)
- Kachkanar massif (Russia)
- Windimurra Complex (Australia)
Resource base
The Pitombeiras Project has a total NI 43-101 compliant mineral resource estimate of 8.26 million tonnes at an average grade of 0.45% V2O5, 9.02 % TiO2 and 45.98% of Fe2O3.
This resource remains open in all directions and is based on just three of eight exploration targets, Pitombeiras North, Pitombeiras South and Goela (figures 3 and 4).
Regional exploration potential
In addition to the resource estimate, there is a JORC exploration target* over the eight VTM target areas some of which are coincident with vanadium-in-soils anomalies (figure 5). The exploration target* range has been estimated to be between 40 and 60 million tonnes at an average grade of 0.3% to 0.6% V2O5, 40% to 55% Fe2O3 and 8 to 10% TiO2.
* The potential quantity and grade of the exploration target is conceptual in nature and is, therefore, an approximation. There has been insufficient exploration drilling to estimate a mineral resource and it is uncertain if further exploration will result in the estimation of a mineral resource.
Technical study
A technical study was completed at the Pitombeiras Project in April 2022, the majority of the study was completed to feasibility standard (ferrovanadium) while the titanium dioxide portion of the study was completed to preliminary economic assessment level.
This study defined a post-tax NPV8 of US$96.5 million and IRR of 100.3% based on an open pit operation over nine years, producing a ferrovanadium concentrate (Fe 62%' and titanium dioxide (TiO2) product. The study assumes a ferrovanadium sales price of US$165.64 per tonne and a titanium dioxide product sales price of US$220 per tonne.
Over the life of mine, the operation would produce and average of 186,000 tonnes of product per annum (figure 5).
The initial capex for the project is US$18.45 million and the average mining cost is expected to be US$1.26 per tonne mined with processing costs of US$19.39 per tonne of Fe V2O5 concentrate and US$12.48 per tonne of TiO2 processed.
The open-pit operation is anticipated to generate average revenue per annum of US$46.21 million and around US$16.21 million in operating cash flow per annum with a 13-month payback period.
2022 work programme
The board is evaluating the next steps to advance the Pitombeiras Project and build value for shareholders. During H2 2022 Jangada is expected to focus its efforts on upgrading the titanium evaluation up to a feasibility standard to match the Fe/V2O5 portion of the Pitombeiras Project. The Company is also expecting to commence off-take discussions, now that potential parties can understand the processing routes and costs.
Figure 6 - Pedra Blanca Deposits
Source: ValOre Metals (TSX-V:VO) Corp
Pedra Branca sale
In May 2019 Jangada reached an agreement with ValOre Metals (TSX-V:VO) Corp. to sell the Pedra Branca Platinum Group Minerals (PGM) Project (figure 6), located in northeastern Brazil.
The sale of Perdra Branca, brought in over C$3 million in cash and 25,000,000 shares in ValOre Metals (TSX-V:VO). To date, Jangada has received C$9.3 million from the sale of its holding in ValOre and currently holds 500,000 shares and a final tranche of 500,000 shares is due to be issued around August 2022.
The current market value of the remaining share and the shares to be issued is C$250,000.
The sale of Pedra Branca is expected to return around C$12.55 million in value to Jangada and demonstrates the company's ability to sell advanced projects, located in Brazil.