05 June 2020 19:46:45

Latest Comments 
What's Here 
Stop Loss 
Bulletin Board 
Help / FAQ 
Contact Us 
Search articles:

Big Beasts at Bluejay - (JAY)
12/6/2017 (119264)

Big Beasts at Bluejay

Not a walrus in sight apparently when Bluejay Mining (JAY) completed the survey to make sure it would not inconvenience the wildlife when picking up ilmenite on the beaches of north western Greenland but big beasts galore as the company completed a bumper share placing and fund-raising last week.

The formal notifications should start to appear after Thursdays settlement, but watch out for top class names as 3% plus shareholders as the institutions who scrambled for the stock go through the process. UK unit trust giant M & G is likely to appear with 10% or so of the company, while US Capital Group (assets under management approaching $1.5trn) will be there, along with Legal & General, Hadron, Man Group and others.

Bluejay could have shifted over 50m of shares as long-standing Aussie shareholder Western Areas placed out all 138m of its holding, while Bluejay raised 3.5m gross of new money and people in the company tossed in a further 5m shares all at 12p. (Note as ever, chief executive Rod McIllree did not part with a single share.)

Make no mistake. There was no lack of demand, and it seems that, looking over a shoulder at a possible major interested player, the company moved smartly to disperse the Western stake among key investors who would take a long-term view. Western had been looking to realise cash for a while, worrying about a loss-making mine in Australia, and will be able to report for the year to June 30 with a decent profit, instead of a large loss, thanks to the money it has made by taking profits on the Bluejay stake.

It all works rather well. Bluejay has expanded a quality base of shareholders who understand the business and raised what, by Bluejay standards, is a substantial extra slug of working capital at very modest overall dilution. The new money will speed the pace of exploiting the remarkable, record grade deposit of ilmenite in Greenland, with cash to add personnel and equipment, and negotiate from a position of relative financial strength as Bluejay delivers a bulk sample and ties up deals with potential partners to shift product.

While the share price settles after running from around 13p to touch 16.5p as the placing negotiations were finalised, the market should recognise the quality of the new shareholder support. There could be buying from some of the new investors, impressed at what they have seen.

The whole Pituffik development process will be moving ahead in the next few months as the weather window opens up and full-time working on site can get under way. The company has a clear path set out, and while the full extent of the potential Pituffik bonanza is not yet fully appreciated in the market, Bluejay will rapidly be adding value.

This is not empty dreaming. There appear to be no great environmental barriers, and the Greenland government must be happy to have such a substantial and relatively benign project under way. Remember, this is low tech stuff, no need to build a mine or to use large quantities of unwelcome chemicals just a plan to drill to establish the depth and location of the resource, and machines to dig it up, filter it, and load it onto ships.

While the conventional JORC resource statement covers only a small area of the licence so far, there is clearly a massive resource. That is confirmed beyond question by the recent study undertaken by the Geological Survey of Denmark and Greenland which estimates that 10 billion tonnes of ilmenite (note actual ilmenite, not material containing ilmenite) exist in the original rock with up to 7bn tonnes of eroded ilmenite in the region. It is estimated that perhaps 1bn tonnes of this ilmenite is within the Bluejay licence.

Bluejay is pushing ahead with an eye on initial commercial production in 2018. House broker S P Angel, citing a share price target of 22p a few weeks ago, was talking about the ability to mine 100,000 tonnes of ilmenite in a matter of weeks when it gets going. On a conservative basis, the potential profit margin is maybe $60 a tonne. It could be significantly higher, but even the low figure would mean profits of $6m. It is probable that production could be raised, with the resulting cash flow perhaps spurring a change in financing which could raise margins. There are also signs that the ilmenite price could be rising.

The new institutional investors could well have done sums which suggest production of 250,000 tonnes and then 500,000 tonnes two or three years further down the line. Such figures might mean profits of $15m and then $30m a year, with the capacity for yet more expansion over the horizon.

These, of course, are highly speculative projections. They assume that the Greenland government and environmentalists will continue to smile on Pituffik, and that the ilmenite price remains at least steady. The chances of one of the majors taking Bluejay out before we get to really big figures are strong. Go back to my report Jay Talking of April 14, where chief executive Rod McIllree is speculating that Pituffik has maybe 500,000 to 700,000m tonnes of ilmenite. That, he speculates, could be worth $1 to $3 a tonne in the ground equivalent then to maybe 55p a share or 75p a share. It is pretty certain that there is 1bn tonnes on the Bluejay licence after the GEUS survey.

Maybe the shares will not get that far, though it looks pretty clear that Bluejay could create the capacity to produce, say, 1m tonnes a year almost indefinitely (notional $60m profit).

The shares eased to 14.75p as I write, but are up from the 6p to 7p region since first recommended here. At 15p, the market capitalisation would be 115m. If you are ready to gamble on any share, this really is the one. It could still have a long way to go.

I have a holding in Bluejay.


  More on (JAY)
Previous Stories
Mike on (JAY)
21/5/2020 Watch the muscle building at Bluejay.
7/5/2020 Bluejay looking better.
15/4/2020 How does it look for Bluejay?
27/1/2020 Jay ready for action.
16/1/2020 A massive report backs Bluejay.
2/1/2020 Here we go again.
13/12/2019 An important video from Bluejay.
21/11/2019 The real message from Bluejay.
18/11/2019 Answering the bulletin board.
14/11/2019 The confident tone at Bluejay.
24/10/2019 Looking at Bluejay from Berlin.
21/10/2019 Bluejay loaded with goodies.
14/10/2019 Bluejay building.
10/10/2019 Fun for all Bluejay fans
18/9/2019 Bluejay making progress.
12/9/2019 Bluejay brighter.
19/7/2019 This is a corrected version, suggesting Bluejay will run out of cash
4/7/2019 Jay getting ready for Disko.
27/6/2019 The Bluejay agm and more.
4/6/2019 Bluejay still hopping along.


Terms & Conditions | Risk Warning | Privacy Policy

The Michael Walters website is authorised and regulated by the Financial Conduct Authority, registration number 225469.
Michaelwalters.com is at Laddingford Croft, Nr. Yalding, Kent, ME18 6BJ