The news is a regulatory slap in the face: the BCSC won't accept the CPM group's numbers and AMY's gotta use the "non-economic" base case scenario. So we're getting a replay of the bad news from May on initial release of the PFS.
The doomsday sayers will gloat "I told you so" while the optimists among shareholders will continue to look to the EMD/CMD/LMD side of the story and also aforementioned possible EMM cost reductions for how AMY's Artillery Peak will be quite "economic"/profitable.
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Base Case Amended to 3 Year Trailing Average After Review By BC Securities Commission
August 27, 2012 - Vancouver, British Columbia
Mr. Larry W. Reaugh, President and Chief Executive Officer of American Manganese Inc. (TSX.V: AMY; Pink Sheets: AMYZF; Frankfurt: 2AM) (“American Manganese” or the “Company”) reports that the Company will be amending its report entitled “Technical Report and Prefeasibility Study, Artillery Peak Project, Mohave County, Arizona” dated June 28, 2012 (the “Report”) to change, among other things, the Base Case for the evaluation of the economic feasibility of its Artillery Peak Project.
Due to a lack of publicly available information on the electrolytic manganese metal market, the Report was prepared using a price forecast developed by The CPM Group, an industry leader in metal price forecasting. However, due to concerns raised by the British Columbia Securities Commission, the Company has agreed to change the Base Case to the more conservative 3 Year Trailing Average from the CPM Expected Case.
A summary from the amended of the pre-tax financial model results is presented below:
Case IRR
(%) NPV @ 0%
($US million) NPV @ 5%
($US million) NPV @ 8%
($US million) NPV @ 10%
($US million) Pay
Back
(Years)
Base Case: 3 Year Trailing Average Price 7.28 458.4 91.2 (22.9) (74.4) 10.3
Alternate 1: CPM Expected Price Forecast 19.95 1360.0 641.5 402.9 289.4 4.6
Alternate 2: CPM Up-side Price Forecast 25.03 1895.3 940.0 623.2 472.3 3.9
Alternate 3: CPM Down-side Price Forecast 12.90 785.4 311.0 153.6 79.0 5.9
As a result of the amended Base Case having a negative NPV at an 8% discount rate, the project is deemed to be not economic. Accordingly, the Report will be amended to show there are no mineral reserves for the Project that meet the CIM definition and consequently the mineral reserves for the Project are retracted. The public is cautioned not to rely on the Company’s previously filed Report wherein mineral reserves are disclosed.
About Manganese
China controls electrolytic manganese production supplying and producing 98% of the world's needs (3 billion pounds per year).
There is no substitute for manganese in steel (total manganese market greater than 33 billion pounds per year, fourth largest traded metal).
Manganese is a critical metal at risk for supply disruptions in the United States as there is no U.S. production. EMM's greatest uses are the upgrading of specialty steel (74%), and the manufacture of aluminum alloys (12%), electronics (2%), and other applications (12%).
Electrolytic manganese dioxide (EMD) for the battery industry is expected to be the fastest-growing segment of the manganese market. Ford Motors predicts production of hybrid electric vehicles will account for 25% of its entire vehicle line-up by 2020, and Hyundai has committed a lifetime guarantee to their hybrid electric vehicles that use lithium ion batteries with manganese spinel.
China has a 20% export duty on EMM and the U.S. has a 14% import duty.
About American Manganese Inc.
American Manganese Inc. is a diversified specialty and critical metal Company focusing on potentially becoming a producer of electrolytic manganese metal, electrolytic manganese dioxide and chemical manganese dioxide from its Arizona Manganese Project.
This release has been reviewed by Michael MacLeod, P. Eng., a qualified person pursuant to National Instrument 43-101.
On behalf of Management
AMERICAN MANGANESE INC.
Larry W. Reaugh
President and Chief Executive Officer
Information Contacts:
Larry W. Reaugh
President and Chief Executive Officer
604-531-9639
Connie Fischer
Investor Relations
604-531-9639 ext. 110
Email: connieir@amymn.com or info@amymn.com
www.americanmanganeseinc.com
Cautionary Notice: The Reader is cautioned that the full Cautionary Notice is not attached to this email. The reader is requested to access the news release on the Company’s website at www.americanmanganeseinc.com or at SEDAR at www.sedar.com to read the full Cautionary Notice. The full Cautionary Notice is not attached as the recipient’s spam filters frequently block receiving emails containing the full Cautionary Notice.
AI
