Molycor Identifies Opportunities to Streamline Magnesium Operating Costs
November 15, 2011 - Vancouver, British Columbia
Edward Lee, President of Molycor Gold Corp. (TSX.V-MOR; Frankfurt-M1V; Pink Sheets-MLYFF)(“Molycor” or the “Company”) is pleased to report the Company has received a paper from Alpha Omega Engineering Inc. of Spokane Washington, USA, titled “A Discussion Paper for Potential Areas of Improvement within Molycor Gold Corporation’s Tami-Mosi Magnesium Project and Possible Effects upon Projected Profitability” (the “Paper”) dated October 17, 2011. The Paper suggests additional potential savings in cost reductions to the current NI 43-101 $1.28 cost per pound of magnesium produced.
This Paper is predicated on Section 26, “Opportunities” of the newly completed NI 43-101 Preliminary Economic Assessment Report (PEA) carried out by Wardrop (A Tetra Tech Company) September 15, 2011. The Paper is an expansion of these opportunities that quantify the possible impact on the profitability should any of the operation changes be proved viable. The Paper identifies three main areas which offer the best potential to incrementally decrease the operating cost. These areas are operational changes that either increase productivity or decrease cost, energy cost savings through energy recovery and the elimination of waste disposal costs. Additionally, the waste streams are potentially value added products which could be marketed and possibly increase the overall profitability as revenue for co-products.
Cost Savings
Three areas offer opportunity to reduce costs. They are listed in the following table.
Table 1 - Unit Production Cost Reduction Opportunities
1. Operation Improvements Subtotal
2. Energy Reduction Subtotal
3.. Waste into Co Products Subtotal
A potential combination of alternative lower cost raw materials combined with maximization of productivity constitutes the potential operation improvement opportunities.
Since a new plant is to be constructed, it could be possible to make energy recovery a primary design criterion. This could enable application of conventional and new technology mechanisms to recover energy normally lost from the process.
Every waste stream generated in the process has a disposal mechanism incorporated in the production cost as identified in the NI 43-101 report. This was done to ensure the process would be economic if magnesium was the only product. In actuality, all of the waste streams are commodities used as raw material in other operations and offer the potential to offset costs and/or generate additional revenue streams.
Potential Revenues
The potential areas of increased revenues reflect the direct sales of waste streams as co-products only and do not include the potential savings from any possible efficiency.
Table 2 - Additional Revenue Stream Opportunities Based on Seeking Possible Sales
of the Listed Waste Streams Which Result From the Projected Magnesium
Production in the NI 43-101 Preliminary Economic Assessment
ANNUAL PRODUCTION WASTE STREAMS
(Tonnes/Annum)
Fume Silica 5,400
Dical 161,892
Sulfur 864
Coal Tar (if not consumed) 88,364
Continuous Operation (in developement) TBD
Calciner CO2/H2O stream to Gasifier TBD
It must be stressed that these are opportunities only and are not based on engineering studies which would have to be conducted by Molycor prior to any degree of certainty being ascribed to these opportunities which are being discussed herein and that these opportunities would need a costs benefit analysis to be carried out by the Company before implementation as well as the identification of any additional capital requirements.
Future Market Demands
With the US federal government establishing new CAFÉ (Corporate Average Fuel Economy) standards, the automotive manufacturers are initiating studies on ways to remove weight from their vehicles (cars and light trucks). By 2025 the target will be 54.5 mpg. To achieve this, a current vehicle’s weight must be reduced by 10 to 15%. Since the typical vehicle weighs 3,625 pounds, 360 to 540 pounds must be removed.
To achieve this level of weight reduction and still maintain safety and comfort, lighter materials have to be substituted for heavier. Mild steel, zinc and cast iron will be replaced with aluminum, magnesium, composites and/or carbon fiber. Magnesium offers substantial benefits in that it has twice the strength to weight of steel and 4.5 times lower mass than steel. It also absorbs vibrations adding to the noise suppression in the vehicle.
Conceivably, with over 12 million vehicles produced annually in North America, to achieve just the minimum 300 pound weight reduction needed per vehicle by using magnesium as a substitution for steel, over 400,000 metric tons of magnesium would be required.
About Tami – Mosi Magnesium Project
The Tami –Mosi magnesium project poses the ability to exploit the inferred magnesium resource for 30 years producing 30,000 tonnes per year within the United States, where protective tariffs are in place on imported magnesium metal. The economics are based on a NI 43-101 resource estimate analysis completed by Wardrop Engineering (a Tetra Tech Company) showing an inferred resource of 412 million tonnes with an average grade of 12.3% for a contained metal content of 111 billion pounds of magnesium using a 12% cut-off grade.
About Molycor Gold Corp:
Molycor is a diversified precious, specialty and base metal exploration and development company focusing on magnesium, molybdenum and gold exploration and development in North America.
This release has been reviewed by John W. Fisher, P. Eng., a qualified person pursuant to National Instrument 43-101.
On Behalf of Management
Edward Lee
President
For all Molycor Gold Corp. investor relations needs, investors are asked to visit the Molycor Gold Corp. website at www.molycor.com.
Information Contact
Edward Lee
President
Head Office: 2A 15782 Marine Drive, White Rock, B.C. V4B 1E6
Telephone: 604-531-9639 Facsimile: 604-531-9634
Email: info@molycor.com
www.molycor.com
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