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Small cap hopes to have one of the lowest cost mineral sands operations globally
Thursday 13 Apr 2017 Author: Daniel Coatsworth

Buy into the positive share price momentum at Bluejay Mining (JAY:AIM) as we believe it could be on the cusp of something very big in Greenland. It is confident of becoming one of the world’s lowest cost mineral sands producers.

Minerals sands contain minerals including ilmenite, rutile and zircon. These are generally used in paints, plastics and other applications that require bright colours.

BLUEJAY MINING - Comparison Line Chart (Rebased to first)

Bluejay put out a resource statement on 10 April claiming it has the world highest grade mineral sand ilmenite project; and that’s only based on analysis of 17% of the project area.

It has an average ilmenite grade of 8.8% across the 23.6m tonne resource; within that is a 7.9m tonne high grade zone at 14.2% average ilmenite grade.

Leaning on partners

Managing director Rod McIllree says Bluejay won’t need to build large infrastructure to get the project into production. He believes the company could ship a concentrate to North America to either be sold as seen or further refined.

It is working with Royal IHC, one of the world’s top dredging firms, to look at different scenarios for running the project. ‘We will contract out mining and processing to IHC. That will be an operational expense; not a huge upfront expense like you would find with many new mines,’ says McIllree.

The MD tells Shares he is confident of being able to announce the participation of a large Canadian shipping company in the project in the coming months.

‘We should eventually have two large groups implement the project off their balance sheet, not ours,’ he explains.

In terms of the immediate future, he says the miner has enough cash to fund the company for the next 12 months so there are no near-term financial pressures.

Next steps

Bluejay hopes to complete a feasibility study over the next three to six months and apply for an exploitation permit.

It plans to produce a bulk sample over the summer as a proof of concept and to give prospective customers material to test. Bluejay hopes to start commercial production next year once it has secured offtake agreements.

McIllree says there is a seven month window each year to run a mining operation in Greenland, due to the weather. Shipping can only be done five months a year.

‘We don’t have any environmental concerns,’ he adds. ‘The ore body contains no radioactive elements and there won’t be any tailings dams holding waste material.

‘Our biggest concern was migrating walruses coming during the winter. Local hunters now tell us they haven’t been seen for 20 years because they ate them all.’ (DC)

Bluejay Mining (JAY:AIM) 13.75

Stop loss: 7.5

Market value:  £100m

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