Jangada Mines (LSE:JAN) rose to 2.7p this morning after revealing the discovery of additional nickel and sulphide anomalies at its flagship Pedra Branca platinum group metals (PGM) project. Alongside chairman Brian McMaster, we look at the development’s importance in the emerging electric vehicle (EV) battery market and the progress Jangada has made in Pedra Branca’s ongoing development.
In today’s update, Jangada said it had identified high-grade economic nickel and copper sulphide mineralisation immediately beneath the existing PGM and base metal resource at Pedra Branca.
It added that the distribution of anomalous nickel intersections indicates at least five potential targets at the project. All of these are associated with geophysical magnetic anomalies and are coincident with known PGM deposits.
The firm added that the discovery could enhance Pedra Branca’s economics, which was released in a preliminary economic assessment in June. The study gave the project a $192m NPV and 13-year mine life with annual production of 64,000ozs of PGM and gold, 2.2Mlb of nickel, 1.2Mlb of copper, 44,000lb of cobalt, and 30,000t of chrome.
Speaking to ValueTheMarkets, McMaster said Jangada will now begin work to define the size of the new resource and identify opportunities for expansion. Alongside this, the business has commissioned an independent nickel and copper maiden JORC resource for publication in Q4 2018.
The resource will aim to confirm the current project metrics and, scale and highlight the potential to expand on the existing base metal resources at the project. Pedra Branca, which Jangada calls the largest and most advanced PGM project in South America, currently has a JORC resource of 1.45MMoz PGM and gold, 140MMlbs nickel, 26MMlbs copper and 6.7MMlbs cobalt.
Writing in today’s update, McMaster added: ‘As shown in the Preliminary Economic Assessment (‘PEA’) announced in June, our PGM resource already has very robust economics. High-grade nickel, which can be mined from the same shallow open pits as planned for the PGM horizon, is a potential game-changer that could further enhance these economics.’
The discovery of nickel will give Jangada vital additional exposure to the metal’s strong long-term fundamentals. Indeed, thanks to growing demand, prices have managed to hold up against the wave of global macro issues that have hit other commodities in recent months.
McMaster told us the discovery is also particularly important because nickel sulphide is now a significant component in most EV batteries, perhaps one of the most essential parts of the growing EV market.
BP has predicted that the number of EVs on the world’s roads is set to rise from 3m today to over 320m by 2040. As a result of this, demand growth for nickel is increasingly outstripping supply growth, with analysts expecting a global market deficit of 88,000ts by the end of this year. In line with this, prices of the metal are also soaring. They rose by 18pc in the first half of 2018 to around $14,823/t, and Wood Mackenzie expects long-term prices to jump to as much as $22,000/t.
Given that nickel sulphides are particularly challenging to find, McMaster said he is excited by the prospect of getting exposure to the upside offered by this highly valued mineral.
Today’s update continues a recent period of intense activity for Jangada. Last month, the firm announced a £2.1m fundraise package, including a placing at 3p a share, to give it the funds need to progress a bankable feasibility study at Pedra Branca.
Although the market did not welcome the placing, days later Jangada was boosted by the news it had been issued an environmental licence for trial mining at the project. Obtaining a permit was the final requirement for the company to apply for a trial mining licence, which it intends to do in the current quarter. However, the business does not expect to carry out trial mining before it has completed its bankable feasibility study (BFS).
McMaster told us today that Jangada has continued to make progress on this work: ‘Following the raise we have been pushing on with all of the necessary BFS work. It has only been a couple of weeks but we are making good progress, and we expect to continue to progress quickly from here.’
Author: Daniel Flynn
Disclosure: The author does not own shares in the company mentioned in this article