Bluejay Mining (LSE:JAY) saw its share price surge by over 50% last week after announcing a new partnership. The young exploration company has entered into a joint venture with KoBold Metals to develop its highly anticipated Disko-Nussuaq project in Greenland.

Given the mining stock surged on the announcement, I think it’s fair to say investors are pretty excited. And they aren’t the only ones. CEO Bo Møller Stensgaard just bought 135,000 shares, and non-executive director Johannus Hansen snatched up 220,000.  

But now that the Bluejay Mining share price has surged, can it continue to climb higher? Let’s take a closer look at the deal and see whether I should be considering this business for my portfolio.

Flagship projects

The Disko-Nussuaq project is one of the newer additions to Bluejay Mining’s project portfolio. The site is expected to contain a vast quantity of battery metals (nickel, copper, cobalt, and platinum) whose demand is rising thanks to the transition to electric vehicles. To help fund this project, the company has sold an equity stake to KoBold Metals who will now cover the costs of getting drilling started.

KoBold is a mineral exploration company that uses artificial intelligence and machine learning to guide mining businesses to make more effective decisions before digging into the ground. The tech mining firm is backed by several principal investors, including the Breakthrough Energy Ventures fund, which is owned by the likes of Bill Gates, Michael Bloomberg, Jeff Bezos, and Ray Dalio. With that in mind, I can see why this partnership has investors excited sending the Bluejay Mining share price up.

The potential risks for the Bluejay share price

Bluejay is certainly not a one-trick pony. After all, it has various other projects scattered across Greenland and Finland. But it’s worth noting that none of these projects has begun extracting anything from the ground. In other words, this is a pre-revenue business. And needless to say, that adds a lot of risk to the Bluejay Mining share price.

Based on the published timeline for Disko-Nussuaq, it could be as long as 2024 before any drilling starts to happen. And even when it does, 51% of the extracted proceeds will go to KoBold Metals as per the joint-venture agreement. 

The bottom line

Bluejay Mining looks like its taken yet another step towards its production stage. And if everything goes smoothly, its share price could see some significant growth over the long term.

However, even with a diverse project portfolio, there remains a long road ahead before production can begin. And during that time, many things could go wrong, from failed geological studies to low-grade metal discoveries. 

With so many unknowns, I think it’s too soon to invest in this business. But when more information becomes available and further progress is made, I may have to take another look. For now, Bluejay Mining is staying on my watchlist.