With the needs for manganese rising, Larry Reaugh, President and CEO of American Manganese, is pleased with the position of his company and the potential for the future – potential that may move American Manganese into the battery and steel industry.
Reaugh said, “Basically, we have announced that Kemetco is going to develop an EMD and a CMD – an electro-manganese dioxide and a chemical manganese dioxide – to make batteries.” With a superior process, American Manganese and Kemetco management feel that their process will streamline rechargeable battery production. Reaugh said, “Kemetco feels their process will eliminate their battery testing phase because of contaminants in the powder.” Slight fragments of iron ore can cause batteries to overheat, which is why there is a testing phase. With Kemetco's new process, American Manganese will have the opportunity to move manganese products to battery manufacturers more quickly and out into the market.
This development is one that Reaugh believes will benefit his company in the long term. He said, “We expect that it will position us to take advantage of an emerging market in electric batteries. We know that EMD will be in short supply by the time we go into production.” Production is ultimately the goal and though American Manganese has run into challenges, they are still on track to transition shortly. Reaugh said, “We still have a production timeline for mid 2014. We were delayed by conceptual work on the pilot plan. It is an R & D program.” American Manganese ran into challenges in making the pilot plan transition to real production. Reaugh said, “The fact was that it was easy to put it down on paper, but to put it out in practical form is another thing.” Reaugh further said, “The results of the pilot plant testing far exceeded expectations and resulted in a successful completion of this test phase of the project.”
American Manganese has faced multiple challenges as they move forward in addition to the challenges with production. Reaugh said, “We have been delayed on the prefeasibility study. It shouldn't delay us on the feasibility study and we are on schedule with our environmental permitting.” Reaugh and his staff expect the environmental studies and permitting to move along smoothly. He said, “We expect that to be completed early next year – reviewed and approved by early next year.” In addition to having to wait for permitting to be completed, American Manganese, like every other company in the commodity market, is also contending with the markets and financing. Reaugh said, “We'd like to do more financing to assure that we can meet our goals.” Overall, though, Reaugh believes that the market hasn't realized the value of what American Manganese is doing. He said, “I think the market has us valued a little better than most, but if you look at the net profit value, we are nowhere near it.”
How will American Manganese get the market's attention? Reaugh said, “The prefeasibility study will confirm that we are potentially the lowest cost producer in the field. That shows investors very robust returns.” The returns will come from the demand in the markets. Said Reaugh, “We will have an easy entry with the battery material. If the battery industry takes off the way that we expect it to, we will have a critical metal and we are the only producer in the United States or Canada.”
The potential for American Manganese and the manganese market in general has led Reaugh and his team to think about the future carefully. He said, “The off-take for the product will take off after the prefeasibility. We could enter into one with any of the six different companies that we are talking to. That won't benefit the company, though.” Reaugh and his team are looking for a different kind of commitment from an outside company. He said, “We are looking for a strategic partner to buy into the project at 20%.” Reaugh believes that another company may be interested in joining them due to the future demand for manganese. He said, “The prefeasibility study done by the CPM group is showing that China may be an importer of electro-manganese metals (EMM) in the future. If they become net importers, the rest of the world will need to fill that hole. Even with other manganese producers, we are a long way from filling that hole.” Demand from China could also spark the manganese market toward new levels. Said Reaugh, “Going forward, if China curtails production, prices will be going up. The demand is there every year. People will be scrambling to fill those shortages. We will be in the right place at the right time.”
All of these reasons are factors that Reaugh believes will draw investors to American Manganese. He said, “This is an opportunity for investors to look at a company that is in critical metals. We will be the first producer in the US. We have our optics on the steel industry and the battery industry.”
The bottom line for American Manganese is that they are moving forward with their plant project as well as their patented production process. Reaugh said, “The pilot plant was successfully completed. Our conceptual paper that we gave at the CME conference has been published in February, 2012. We gave a paper in the conference in Seattle as well. The results of the power plant were positive. We learned that our hydro-metallurgical process put us in the category of clean and green. We have learned that the process developed in the 1940's will now have a robust back end with hydro-metallurgy.” What this means for investors is that production costs are low. Reaugh said, “It's going to put us in that lowest cost producer area.”
The next step for American Manganese is to get their study completed. Reaugh said, “We are aiming for the end of March on our prefeasibility study. It could stretch out to the end of April.” With an anticipated uptick in demand, American Manganese is in a position to provide EMD and CMD components to the battery and steel industries at a low production cost.
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