Replies to post #2021 on Progressive Stocks

[thedivot]

AMYZF.PK - AMY.V - AMERICAN MANGANESE

Michael, I've attached an article from Resource Intelligence that may not answer all your questions but is a good article to start with.

Hot Stocks: American Manganese recharging the battery market

By lizmayer · June 23, 2011 · 10:03 am · Leave a Comment


Can you make steel without manganese? No, you can’t, which is why we share the enthusiasm of Larry Reaugh, president and CEO of American Manganese Inc (TSX.V:AMY), about the company’s Artillery Peak manganese project in Arizona.Not only is the property recognized as the largest known manganese deposit in the Southwest United States, market changes are boosting the prospects for both this strategic metal and the project. For one thing, China, who produces about 97 per cent of the world’s supply of electrolytic manganese, has imposed 20-per cent export duty in its bid to limit exports. Given China’s production costs of $1 per pound, plus the 20 per cent duty, American Manganese’s estimated capital costs of 44 cents per pound are certainly looking very competitive. South Africa is the world’s second largest producer of the strategic metal but its costs of $1.10 per pound could go even higher because of the rising cost of electricity, which is the biggest cost component in producing manganese.

A recent development that could further brighten the company’s outlook is its plan to expand its business model to include more high-value products, which are electrolytic manganese metal (EMM); electrolytic manganese dioxide (EMD); and LMD.

When announcing in April that the company has engaged Kemetco for research on lithium manganese oxide battery technology, Reaugh said, “The company is positioned to take a leading role in providing products to the emerging rechargeable battery market.” This is a potentially game-changing move for AMY especially given the market’s increasing preference and search for so-called green power.

Equity research firm Laurentian Bank Securities shares our optimism about AMY’s future. On May 6, it assigned American Manganese a price target of $2.90, up from its recent price of just 59 cents.

A look at the company’s profile on ResourceIntelligence.com convinces us further that American Manganese has a winner in its hands. The current NI-43-101 compliant resource estimate of the Artillery Peak Manganese deposit includes an indicated resource of about 92.8 million tonnes grading 3.27% Mn (6.7 billion lbs contain Mn), and an Inferred resource of about 107.2 million tonnes grading 3.76% Mn (8.9 billion lbs contained Mn). Plugging these figures and today’s manganese prices of $1.80/lb into our resource calculators, we get mind-boggling results: the gross project value is about $22 billion, while the gross project value per share is about $255, given the shares outstanding of 87,192,639. Currently, AMY trades at about 58 cents per share.

As of May 24, Tetra Tech was contracted to provide environmental and regulatory permitting consulting services to advance the Artillery Peak Manganese Project to the point of achieving a fully integrated preliminary feasibility study, which can be used as the mine plan of operations for regulatory permitting purposes.

Currently, American Manganese is undertaking a drilling program of more than 10,000 metres on the property. As of June 7, assays from the first six holes were returned, showing incredible intersects of thick manganese mineralization, including 3.21 per cent Mn over 34.2 metres.

When we spoke with Larry Reaugh as far back as March, he said the pace of activity the company is exhibiting today should put the project into production by early 2014.

Producing between 100 and 120 million pounds per year, he said, “We believe the potential for a very profitable mine at Artillery Peak is very, very high.”

[stills999]

TSX:AMY - Michael, I'll take a shot at answering your Q's.

How did they come upon all this resource that they are supposed to be able to extract?

Three points from the investor presentation are relevant:

1: China produces 98.4% of EMM and South Africa 1.6%.

2: "Artillery Peak Arizona - American Manganese controls the entire manganese district which comprises 112 patented and 254 unpatented lode mining claims. These mining claims contain several deposits and stockpiles that were worked sporadically from 1928 to 1955. The United States Bureau of Mines has described the Artillery Peak Manganese Resource as the largest low grade deposit in the south western United States. The Artillery Manganese project covers an area of approximately 12 sq. miles."

3. "Process to Produce from Low-Grade Ores - The robust energy efficient patent pending process will produce high purity electrolytic manganese (greater than 90% extraction) while minimizing water and energy use, and the potential environmental foot print. The conceptual process flow sheet is based on a unique application of commercially available process equipment."

Here is the press-release of the purchase: http://finance.yahoo.com/news/American-Manganese-Purchases-iw-2442693053.html?x=0&.v=1

My Take: With virtually all production from China, it seems that no one in the US has been paying attention to this land. Perhaps more importantly -- as above -- AMY has patents on a new process to extract from low-grade ores so perhaps it is this innovation that allowed AMY to get the land for a good price as there would be no other bidders to push the price up.

How are they getting the funds to proceed?

Equity financing was used for getting the land. I'm not sure how the remaining funds were raised initiatlly, but the investor presentation says AMY are well-capitalized as $9M cash. I don't know the share count to get the cash-per-share which would be interesting.

Here is the link to the investor presentation and other details:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=61915847