Jangada Mines has increased its shareholding in London-listed Blencowe Resources by 15,250,000 shares, it announced on Wednesday, through a subscription of £0.61m.
The AIM-traded firm said the subscription was made as part of a broader £0.75m placing by Blencowe at a price of 4p per share, with an attaching half-warrant per share carrying an exercise price of 8p and a three-year life.
Following closing, the company said it would have a holding of 18,750,000 shares in Blencowe, representing 9.5% of its enlarged outstanding issued capital.
“The purchase price of 4p per ordinary share values Blencowe at £7.1m, or approximately $8m, prior to its capital raise,” said Jangada executive chairman Brian McMaster.
“This valuation is some 60 times lower than the net present value of $482m ascribed to Blencowe’s Orom-Cross graphite project by the independent third-party preliminary feasibility study released earlier this year.
“I believe the purchase has the potential to be a highly accretive investment for Jangada and its shareholders.”
McMaster said the demand for graphite was expected to see a “dramatic uptick” over the coming years, with “significant” supply deficits forecast from 2025 onwards, as the roll-out of electric vehicles accelerated and a number of the planned 300 battery megafactories came online.
“To date, graphite is yet to witness the price movements of other battery metals such as lithium and nickel, despite being the largest component within the anode of lithium-ion batteries.
“Accordingly, we see further upside potential to the already very attractive margins at Orom-Cross.
“Given the not unsubstantial cash resources currently held by Jangada following the disposal of the Pedra Branca asset to ValOre, we believe now is the ideal time to increase Jangada’s exposure to Blencowe, and graphite, as part of our broader focus on battery metals, which includes our vanadium assets in Brazil.”
At 1255 BST, shares in Jangada Mines were flat at 3.6p.
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