Bluejay Mining : Moving into a Pivotal Year

Bluejay Mining plc (AIM: JAY)

January 2022

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Independent Investment Research

Bluejay Mining plc (AIM: JAY)

Independent Investment Research

Bluejay Mining plc (AIM: JAY)

VALUATION SUMMARY

We have valued Bluejay using a sum-of-the-parts methodology.

The majority of the company's value is attributable to the Dundas Ilmenite Project. The company's Pre-Feasibility Study (PFS) for Dundas generated a project NPV5% of US$83m based on production over an 9 year life of mine and an expanded case of US$130m over 11 years assuming the company mines a portion of the Mineral Resource.

Given the extent of Dundas' Reserves, Resources and anticipated Exploration Target, we have modelled a 30-year mine life for the operation, which is likely, but at a discount rate of 7%. Our view is that the Dundas project has a value of US$219m.

The remaining projects in Greenland and Finland are at early stages of development and are inherently difficult to value accurately. For the Disko-Nuussuaq, Enonkoski and Black Shales projects the company has signed earn-in or sales agreements that we have used as the basis of value for these assets. We have estimated approximate values for the remaining projects in Greenland and Finland.

Bluejay Sum-of-the-Parts Valuation - US$301m

Based on the sum-of-the-parts valuation, we believe that the company's fair value is US$301m (£223m), but there is certainly upside to this as projects progress and are de-risked.

SWOT ANALYSIS

Strengths

• Bluejay has projects in both Greenland and Finland, both of which are low-risk and mining- friendly jurisdictions. Mining Journal Intelligence ("MJI") publishes a World Risk Report for mining jurisdictions. Finland scores at the top of this list in terms of MJI's Investment Risk Index and Greenland is in the top half of mining jurisdictions, ahead of traditional mining heavyweights like Brazil and South Africa.
• Bluejay has secured all permits required for the Dundas Ilmenite Project. The mine is now fully permitted for production and the company is working towards commercial production in 2024. Project funding discussions are moving forward and the company has received a letter of intent from the US Export-Import Bank ("EXIM"). In addition, Bluejay has secured offtake for a significant portion (up to ~75%) of the ilmenite that will be produced.
• The mining and processing operations at Dundas are low-risk. These are simple and based on approached that are well proven elsewhere. No drilling or blasting will be required for the mining operations. Material will be mined using continuous surface miners and then concentrated using a wet gravity separation process that will use normal sea water. No crushing or chemicals are used in the process, reducing the environmental impact of the operation.
• The company has a first-mover advantage in Greenland and has some of the most prospective exploration licence areas. Since 2019, Anglo American has claimed almost 10,000 km2 of exploration ground surrounding the Disko project area.