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. 

Big backers

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. 

Cautiously optimistic

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.

The post Here’s why the JAY share price is rocketing 25% today! appeared first on The Motley Fool UK.

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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.

For those that have the time and inclination, however, the rewards from stock picking can be substantially better, as the following example shows.

Index-beater

Celebrating its tenth anniversary in the FTSE 100 this morning was miner Fresnillo (LSE: FRES) — the world’s largest silver producer. The first Mexican business to list in London, it was spun-out from Peñoles Group in 2008 but has a history going all the way back to the early 20th century. 

Having invested more than $6bn over the last 10 years, developed four new mines and grown its silver equivalent resources by 158%, the £10bn cap has vastly outperformed the index of which it is a constituent.

Using the figures provided in today’s news release, Fresnillo’s share price has climbed from 555p to 1,338p over that time — a gain of 141%. That’s over 118% more than that achieved by the FTSE 100 index. What’s more, this excludes dividends which, despite the volatility inherent in commodity markets, the company has never failed to pay to its owners (to the tune of $2.5bn over the last decade).

It is, of course, impossible to say whether the next 10 years will be so kind. In the very short term, however, things appear to be ticking along nicely. April’s Q1 report for the three months to the end of March showed a 14% rise in silver production compared to the previous year. Gold production (Fresnillo is Mexico’s largest producer) rose by 4.1%. Management’s outlook on 2018 was unchanged with 67-70moz of silver and 870-900 koz of gold targeted.

At 26 times forecast earnings, Fresnillo stock is fairly expensive but not ludicrously so. While I probably wouldn’t lap up the shares at the current time, the decent returns on sales and capital employed it’s been able to achieve over the years suggest there are worse options for quality-focused investors.

Massive potential 

It may not be anywhere near the size of Fresnillo, but things are increasingly positive for AIM-listed Bluejay Mining (LSE: JAY). The company is focused on resources in Greenland and Finland, including the world’s highest-grade ilmenite project (Dundas) and the promising Disko nickel, copper, cobalt and platinum project.

Back in April, the £200m cap reported a 400% increase to the maiden resource at the former — equating to 96 million tonnes at 6.9% ilmenite with “significant further upside” remaining. Production is scheduled to begin in 2019 with costs expected to be in the lowest quartile globally.

Currently in talks with a number of potential off-take partners, Bluejay will take a bulk sample later this year “to supply final product parcels to customers“. Thanks to the project’s location, the company believes it can sell to buyers in both Europe and North America far more easily than competitors based in Africa. 

Taking all this into account (and so long as you’re prepared to invest in a market minnow that will probably require more funding further down the line), I’m confident that Bluejay will — like Fresnillo has since 2008 — outperform the FTSE 100 going forward.

The post This FTSE 100 giant has thrashed the index over the last decade appeared first on The Motley Fool UK.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Fresnillo. 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.

However, this view may not hold true in all circumstances. In some cases there may be further growth to come. Having risen 1,476% in the last five years, is this small-cap stock worth buying right now?

Positive update

Reporting on Friday was Bluejay Mining (LSE: JAY). The company is focused on advancing the Dundas Ilmenite Project in Greenland into production in 2018. It released news of the commencement of a feasibility study, with a number of advisers appointed in order for it to be completed. The final feasibility report is expected for completion during the first quarter of 2018, and it will form the final part of the exploitation licence application that is expected to be approved in the first half of next year.

Bluejay Mining has risen significantly in the last five years. Investor sentiment is increasingly positive regarding the company’s outlook. If its progress continues and it is able to start production over the medium term then further share price gains could be on the cards.

Clearly, the company remains a relatively high-risk opportunity. While its strategy and project potential appear to be sound, it is a small stock which could be highly volatile and could be the subject of profit taking should its outlook deteriorate. However, for less risk-averse investors who are seeking a small mining company with high growth potential, it could be worth a closer look.

High growth potential

Offering significant investment potential right now is gold and silver miner Hochschild (LSE: HOC). The company’s share price has disappointed in the last three months, with it falling 10%. However, it has high earnings growth potential which could catalyse investor sentiment.

For example, the company is expected to post a rise in its bottom line of 81% in the next financial year. This puts it on a price-to-earnings growth (PEG) ratio of just 0.2, which suggests that it could be worth considerably more than its current valuation. Furthermore, there is the prospect for an upgrade to its guidance since the price of gold could move higher. With uncertainty surrounding North Korea set to continue, and inflation likely to rise if US spending increases, demand for gold could increase over the medium term.

Hochschild could also become a more in-demand income stock. It currently yields just 1.3%, but with dividends due to be covered over three times by profit next year the level of shareholder payouts could increase rapidly. Therefore, with some defensive characteristics as well as high growth potential at a low price, the risk/reward outlook for the company remains favourable.

The post Time to get greedy with this 1,476% share price riser? appeared first on The Motley Fool UK.

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Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.