The Bluejay Mining share price (LSE: JAY) jumped today following news of a joint venture agreement with fellow exploration firm KoBold Metals. While a positive announcement in itself, it’s who is behind the deal that’s getting the market excited.
KoBold “uses machine learning to guide exploration for new deposits rich in the critical materials for electric vehicles“. Among its backers is a climate and technology fund called Breakthrough Energy Ventures. This fund is overseen by none other than Microsoft founder (and now committed philanthropist) Bill Gates.
But Gates isn’t the only name that will be familiar to Foolish readers. Investors in his fund include former Amazon CEO Jeff Bezos, Alibaba‘s Jack Ma, and legendary money manager Ray Dalio. Michael Bloomberg and Norweigian energy giant Equinor are also on board. As rosters go, I’m not sure they get much better.
So, what’s the deal?
The agreement will see Bluejay and KoBold develop the former’s Disko-Nuussuaq project in Central West Greenland. Once up and running, this “world-class battery deposit” will hopefully produce nickel, copper, and cobalt. We already know the electric vehicle revolution will place huge demand on miners to generate sufficient quantities of metals. Since this should push prices up, it’s fair to say this has the potential to be a highly lucrative investment for those involved.
For its trouble, KoBold will be entitled to 51% of Bluejay’s licence for the area under a “two-stage earn-in” agreement. The remainder stays with the AIM-listed stock who will also manage field operations over this period.
Unsurprisingly, Bluejay CEO Bo Stensgaard described today’s agreement as “transformative” for the company. So, where might the JAY share price go from here?
Where next for the JAY share price?
Today’s big uplift will naturally be welcomed by those already invested. However, it’s important to put this rise in perspective.
I last looked at Bluejay almost four years ago. Back then, the stock was available for a little over 18p a pop. Since then the JAY share price has been as high as 26p. This huge volatility tends to be the norm with junior miners, however promising they might be. Even so, it’s sobering that those who took positions back then will still be underwater.
Of course, those that picked up the stock for around 3.5p as the first UK lockdown kicked in will have done very well indeed. So, the fact that JAY’s share price has been all over the shop doesn’t mean it hasn’t generated great returns for some investors already. Whether the announcement of a new partner means it now follows in the footsteps of Greatland Gold and multi-bags from here remains to be seen.
It’s hard to look at today’s announcement and be anything but optimistic. Having some of the world’s best business minds on board certainly won’t do the JAY share price any harm either.
As with other investment themes, however, a truckload of patience will be required. Drilling using KoBold’s tech will take time and a slowdown in global growth could be a catalyst for yet more volatility. For this reason, I’d need to make sure I was properly diversified elsewhere before taking a stake.
Bluejay could prove very rewarding in a few years’ time but one should never overlook the potential perils of penny stock investing.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Alibaba Group Holding Ltd., Amazon, and Microsoft. The Motley Fool UK has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.