Thursday 29th September 2016

Resource Clips

American Manganese President Larry Reaugh on Arizona 2.68% manganese over 32m

“The project is considered by the Arizona Geological Survey to be the largest deposit of manganese in the United States. The US Bureau of Mines spent a lot of time and effort on research, developing that resource to make it a profitable mine. Utilizing their development work and bringing in some new technology in the field today, with Kemetco we have come up with a preliminary economic evaluation that shows that we have a cost of about $0.45 a pound. The current cost in China is $1.30 a pound.

“The drill program that we’re doing is to increase the indicated resource from 6.9 billion pounds, and to add to the inferred resource which [currently is] 8.7 billion pounds. What we’ve been seeing out there is thicker intersections with higher grade intercepts in the middle of them in some of the holes. Certainly a lot of it’s a pleasant surprise to us that this thing extends much further than we thought. So we expect that when we do our 43-101 resource study—say, by the end of August—we will have increased the indicated and hopefully we’ll increase the inferred.

We have news out of China that in the next three to five years they’ll probably lose a third to a half of their production because of depleted resources. So the demand is going to be greater than the supply.—Larry Reaugh

“Historically, this was considered to be a large resource that’s larger now, under the work that we’ve done. We’re moving it ahead with our environmental studies out of Tucson, with Tetra Tech, and Wardrop are doing the prefeasibility work, and the pilot plant testing is being done by Kemetco. The program is completed, and it’ll probably be another four to five weeks before we have all the results. So we’ll have a continuous stream of information coming out on the company. It looks like we’ll hit the fall with our pilot plant testing completed, the resource study completed, and the environmental study will be incorporated into the prefeasibility, which should be completed by October.

“We’re very pleased with these results. The grades are low, but the process—using sulfurous acid—[includes] hours of time in the vat leach tanks, and it comes out at high rates of recovery in the 90% to 95% range. That’s the key. The treatment was developed by the US Bureau of Mines; they operated a mine in the 1940s using it, so this is not new technology. The stuff that we have developed on the other end to make the electrolytic manganese metal improves the efficiencies in water and in power. So it’s energy effecient and water efficient. And, interestingly, while we make EMM on the cathode, on the other side of the equation we could make EMD [electrolytic manganese dioxide] on the anode, and that is used in the battery industry. So we currently have Kemetco looking at making a lithiated manganese powder from our EMD, which would be a very value-added product for us. So it’s exciting times.

“Working with everything we have going now, and if environmental permitting goes through the way we expect, we expect to be in production in 2014.

“Arizona is a mining-friendly state—it’s the largest mining state in the US. There’s a high unemployment rate where we are in Mohave County and we’ve been well received by the constituents there. We foresee this as being a value-added situation for Mohave County.

“I hate to sound like a promoter, but it’s the best project I’ve ever worked on. I’ve never had a project that showed such robust returns—it’ll pay back at a $1.10 electrolytic manganese metal price in just over a year. The price is currently $1.80 in the US because of a 14% import duty. We have news out of China that in the next three to five years they’ll probably lose a third to a half of their production because of depleted resources. So the demand is going to be greater than the supply. We’ve got the best of all worlds here.

“China controls 99% of the electrolytic metal production and if they lose one-third to one-half of their production today—which is around three billion pounds—then that’s going to put pressure on us to look at increasing the size, because basically we have enough there right now for about 150 years. So increasing the size of the project would not deplete the resource that quickly.”

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