We note the RNS today from Bluejay Mining that states that they believe there is no basis for the share price fall. We find this odd given the very valid questions posed below. Indeed, the scant RNS in which management does not address the points raised below raises more questions aswell. To us, it all but confirms that a further capital raise is very likely the other side of the current field season as SP Angel themselves estimated infrastructure costs running to the tens of millions at Dundas. Where is this money coming from? Perhaps there was truth to the Mail on Sunday article back in the early summer that mooted a £50m rights issue. If so the dilution will be material for current equity holders.

Further, we highlight in our full bear thesis HERE that we derived a DCF value of 5.3p per share – 

“Realistic DCF approach even more damning:

In the alternate, if we make the assumption that Bluejay can achieve £9.32 million as an annual profit figure for the next 10 years in trying to align to the Sierra Rutile EV:EBITDA valuation per above and discount this at an industry standard 12% per annum (this assumption is highly optimistic to JAY with regards to being able to achieve £9.31 million of profits next year of course) we thus derive a current PV figure of £52.6 million equivalent to approx 7p per share – a succinct illustration of just how overvalued the shares in JAY are to us.

In the alternate, if we assume a simplistic £5 million p.a profit generation for the first 3 years and £7 million p.a. for the subsequent 3 years and finally £10 million p.a. for the remaining 4 years and apply the same standard 12% discount rate we derive a valuation of £39.4 million – equivalent to 5.3p per share. Remember, these DCF calculations make no adjustment for any further equity dilution or debt take on which almost certainly will be required, let alone the fact that the company still needs to obtain approval for the exploitation licence to actually mine the ilmenite at Pituffik. If the delays with regards to Mcillree’s Greenland Minerals & Energy uranium activities are anything to go by this could be a number of years before there is serious sales of the ilmenite to generate the profit figures we detail here (if ever).

To conclude, we believe that Bluejay is materially over-valued for the stage that the company is at. It will almost certainly require new equity and debt financing to progress the dredging activities to a state of any meaningful volume and the shares remain elevated by virtue of the relatively limited free float. “

That calc however was based upon a then share count of 767 million as opposed to the current 849 million. It also forecast cash flows to commence in 2019 which looks ever more unlikely now… 

Having spoken to a number of mining specialists and parties familiar with the operating environment in Greenland the same comments keep coming to pass – incredulity that the valuation of JAY has defied gravity for so long and remains stupendously out of sync with ALBA’s interest just next door for essentially the same product as detailed HERE and material questions as to why the EIA in particular is taking so long. We invite Mcillree once again to answer the questions below on what has been one of the biggest promotes on AIM in recent years.

1. Why is the Social Impact Assessment taking so long?
2. Why is the Environmental Impact Assesment similarly taking so long?
3. How many shares do SP Angel still hold given that they are advocating a Buy stance and mooting takeover talk which is, we believe, very much misplaced given that you still do not have the Exploitation licence?
4. You had said to numerous parties in early spring that an offtake deal was imminent – why has this not transpired given the supposed grade of the ilmenite?
5. The Exploitation licence is over a year late from when first flagged re timescales in early 2016, what confidence can investors have that it will be forthcoming this year?
6. How much of the £15m is now left on the balance sheet and what prospects of a further raise in the next 6-12 months?
7. Given that the field season is coming to a close in Greenland in the next 8 weeks would you agree any potential cash flows for the company are getting pushed ever further out?
8. How do you square the valuation of essentially the same product at ALBA with an adjacent licence area relative to your market cap?

• BlueJay Mining