Cool Jay - (JAY)
Look. This is silly. At a shade over 10p, the share price of Bluejay Mining (JAY) has eased slightly since news on Wednesday of an £11.5m fund-raising at 10p. Read it carefully and it is packed with gifts and messages to shareholders, signals that Bluejay is becoming a very big deal in Greenland just as the world is waking up to realise that the mineral riches of Greenland are a very big deal indeed.
The practical stuff first. Raising £11.5m means that Bluejay is not going to run out of money. There is to be £7.5m from a firm placing at 10p among existing and new institutional investors known to the board, with £4m to follow at 10p from two government investors, Greenland Ventures and Vaekstfonden (the Danish Growth Fund). Cash was running low at Bluejay, and had looked as if it could run out in the first half of 2020. Though the company has long been relaxed about it, the new money should remove market concerns.
Bluejay says the funds will go towards continuing to advance the Greenlandic resource projects, including the Dundas ilmenite opportunity, the maiden drilling campaigns at the Disko and the Kangerluarsuk polymetal projects, and to reviewing other potential high value prospects.
At this point it is probably useful to go back to my report of November 11 ‘Coming Up Trumps’. That set out the background to these projects. And let me emphasise for any who are still worrying over the detail that the GEUS survey estimating 17bn tonnes of ilmenite in the area which contains Dundas really does mean 17bn tonnes of ilmenite which sells for in the region of $200 tonne.
Whatever – we have established that Bluejay already has three massively valuable mineral extraction projects in Greenland, and is looking for more. This week’s fund-raising confirms that chief executive Rod McIllree and his board have established Jay as the leading operator in this minerals-rich land, one which has been under-explored because of the climate conditions, but which now has increasingly accommodating weather, a stable political system, and an administration which is anxious to cultivate sensible industry for their 59,000 citizens.
The Greenland and Danish governments do not normally invest in mining companies (one representative will join the board of Dundas, not the Bluejay top company), but it is clear they recognize Jay as something special. McIllree is delighted by the support, saying it shows the mutual desire to grow the mineral resource industry, and that he hopes Bluejay will be the vanguard.
His words are backed by the chief executive of Greenland Ventures, who says they consider Bluejay to be a leader in Greenland’s emerging mining sector, were greatly impressed by the team and are looking forward to supporting their future progress. The chief executive of the Danish Growth Fund talks about the advanced Dundas project and wider portfolio of projects in the development pipeline, attracting attention from major international mining companies. The investment from Greenland and Denmark is ‘contributing to making possible a substantial mining operation in the north-western part of Greenland.’
The sums might be small in global terms, but it is clear that this is big stuff for the area. Greenland Venture is the largest equity fund in Greenland and is established by the Government, while the Danish Growth Fund Is the state’s investment fund, deeply rooted in the Danish capital and business ecosystem.
The sharp response towards Trump’s nonsense about buying Greenland indicates that they are well aware of the growing global significance of their mineral riches, and will not simply roll over and drop them into the lap of the Americans. But they are open to negotiation. Following the Trump comment there have been meetings between high level officials on both sides.
The Americans have been caught napping by China’s dominance in the rare earth sector and other areas, and have started making strong efforts to woo mineral rich countries as the trade war rolls on. In June, the US agreed to cooperate on mineral sector governance and to help fund and operate an aerial survey in south west Greenland.
It is clear that Bluejay is being recognized as an important partner by the state just as Greenland is being accorded greater significance as a source of critical raw materials in the western world. McIllree has been an important figure in the local resource industry for way more than a decade. In the early 2000s, he was a founder of Greenland Minerals, which now has a Chinese partner in major titanium/rare earth project in south west Greenland. Along with the three current Bluejay projects, that amounts to pretty much all of the major prospects in Greenland right now, so McIllree is the major player.
It is also clear that Bluejay will not stop here. Comments by the two local investors both hint at more to come, with McIllree talking about being the vanguard in growing the mineral resource industry, and defined programmes to drive the Greenland portfolio towards partnering and ultimately production and revenue generation.
Partnering? Well, we already have Rio Tinto deeply involved in analyzing the Dundas ilmenite, and Anglo American has built a ring of licences around the Disko project. Plainly Bluejay does not have the cash at this point to develop even Dundas all the way to production and would probably be looking for a partner/offtake customer to put up money. Further on, McIllree has acknowledged that Disko is too big for Bluejay alone, but is likely to push ahead and prove up as much of that asset (and Kangerluarsuk) as he can before bringing in one of the big boys.
He has proven so far that he can get a long way on a minimum of cash and equity issues, but anyone looking to get into Greenland now must surely be looking to track his progress. There looks as if there is more to come, not just from hints in this week’s announcement, but going back to the recruitment earlier this month of an exploration manager ‘to manage multiple interrelated exploration programmes in Greenland.’ As the ice moves back, maybe there will be more prospects sticking out of the ground. And maybe Bluejay will be there first.
All of this reading between the lines does not suggest a business which is struggling. It might not be so easy to raise money in the smaller company sector these days, but Bluejay’s Dundas asset might just be within a year or two of generating revenue, even if a partner does not emerge to put up cash.
What else can we infer from this week’s announcement? Well, it would be astonishing should there be any great problem in obtaining an exploitation licence at Dundas. The FT comment reproduced on our bulletin board looks over-cautious. That could be forthcoming in the first quarter of next year, certainly in time for the weather window next summer, although there would not be a proper dock in operation that early.
In these conditions, raising cash at around the recent 10p market price is a fairly confident sign, even if the share price has not responded since. Maybe it is a sign of confidence that McIllree, ever conscious of keeping the equity tight, did not try to raise more.
After the new share issue, there will be 970m Bluejay shares, so the company would be capitalised at around £100m at the current price. That looks like a steal for anyone ready to accept that any mining/exploration company is speculative.
Bluejay has a secure grip on three of the biggest prospects in Greenland, covering a variety of minerals. Greenland is strategically ever more important these days, with the locals watching carefully as the Americans seek to elbow out the Chinese, who would love to access the mineral riches. Quite suddenly it seems, the US has realized it has to stake a claim to so many mineral sources, and Greenland is there, sensible, civilized, sitting on the door step – and still significantly under-explored.
One small quoted company sits in the middle of this, the experienced prime player, while the big boys, the established generation of major miners, start buzzing around, realizing that the game in opening up and there is one player ahead of the pack, worth following, worth backing, maybe a cheap way into the opportunities of choice in the western world.
We have seen one false share start, and that illustrates that there are dangers. But give it a little time and Bluejay could fly.
I have a holding in Bluejay Mining.