Economic Evaluation & Conclusion
Tetra Tech prepared an economic evaluation of the Project based on a pre-tax
financial model that assumes 60% of EMM production will be sold domestically in the
US, and 40% will be sold overseas.
The base case uses the expected EMM price forecast determined by CPM Group
(CPM Group’s Electrolytic Manganese Market Outlook, 2012), as follows:
• average domestic (North America Warehouse) – $2.03/lb
• average overseas (Warehouse Rotterdam) – $1.78/lb.
For the 21-year LOM at an average annual production of 50,000 t of EMM the
following pre-tax financial results were calculated:
• 19.95% internal rate of return (IRR)
• 4.6 year payback on $477 million initial capital
• $403 million net present value (NPV) at an 8% discount rate.
Tetra Tech conducted sensitivity analyses to establish the sensitivity of the Project
merit measures (NPV, IRR and payback periods) to the main inputs.
Details of the Project economic evaluation are provided in Section 22.
CONCLUSIONS AND RECOMMENDATIONS
Based on the results of the work presented in this Report, Tetra Tech recommends
that AMI proceed with the next phase of work to identify potential cost savings and
additional revenue generating opportunities and more completely assess the viability
of the Project.
The overall processing concept has been proven by metallurgical bench and pilot
plant tests. The diagnostic projections of the PFS can be used to focus further
efforts in optimizing, designing and demonstrating an initial refined embodiment of
the actual operations. The main risks and challenges to the Project are shared by
many established producers worldwide and pertain to rising energy, environmental
protection, labour and reagent costs.
