Jangada Mines – Management strike again #JAN
Having previously written that Jangada mines could be an overlooked opportunity due to mismanagement last year, management have now effectively thrown in the towel. The shares were down over 35% on the day on their proposed disposal of the Pedra Branca project.
The proposed transaction is for both a cash and shares-based payment from Canadian listed ValOre with Jangada to hold 33% of ValOre’s issued share capital. Using last week’s ValOre share price, that gives a purchase price of £4.1 million.
Management have not vended the vanadium Ptombeiras project which the company believes is of more interest to UK investors.
Management Rational – nobody’s interested
Management rationale for the transaction is that there is “limited support in the UK financial markets for financing a PGM project” and that there may be more support in Canada.
Management did concede that “this announcement may come as a surprise to some shareholders and seem to be conflicting with the Company’s promoted views of the technical and economic prospects of Pedra Branca”. I actually don’t have a problem with the company vending out the project to maximse value but I would have expected that to be after releasing the Bankable Feasibility Study. Giving up on the UK market before releasing what should have been compelling numbers is strange.
I don’t agree with Jangada’s assertion that the market is more interested in the vanadium project. Personally, I viewed it as interesting upside not baked into the share price. UK investors already have access to vanadium exposure through Bushveld Minerals with a profitable mine and world class resource.
Lesson learnt for myself and Mr McMasters, like Colin Bird, won’t ever be seeing any of my capital again.
Kenmare Resources which I recently reviewed has also called into question many of my resource investments. When I can buy a company with a market cap of about £220m, with a NAV of £800m, a 100 year life of mine and no debt which generated $95m in EBITDA last year, why would I invest in almost any pre-revenue AIM exploration companies? Funds such as Blue Whale Capital have outperformed my portfolio since the beginning of last year – if I’m not generating decent returns, the rationale for taking increased risks in direct equities doesn’t add up.