Rocher Deboule Seems To Have Timed Its Entry Onto The Manganese Scene With Great Finesse
By Charles Wyatt
minesite.com
Back in 2007 Larry Reaugh, a long time fan of molybdenum, decided to widen the portfolio of Canadian-listed Rocher Deboule, whilst simultaneously keeping within its self-imposed remit of seeking mineral properties containing commodities used in the steel industry. The first move he made, in June of that year, was the acquisition of some manganese properties in Mohave County, Arizona. Here there are several deposits that were worked sporadically between 1928 and 1952, and several stockpiles too. This acquisition was followed in July by the acquisition of three manganese-bearing mineral occurrences located in the south of British Columbia. Of these, Black Prince offers the encouragement from historical evidence of three metre wide samples assaying from 22.2% to 40.8% manganese and 30% to 57% silica, while Junction Creek has exposed areas of chert which are intensely fractured and impregnated with black manganese oxides. A rock chip sample from this occurrence assayed 33.4% manganese. And a similar sample from Olson across a width of 3.1 metres assayed 15.8% manganese.
These projects are still owned by Rocher Deboule which has since moved manganese to the top of its target list. And it’s easy to see why. There is no substitute for manganese in the manufacture of steel, which uses between 10 pounds and 20 pounds per tonne. Fans of Minesite will remember that the Australian company Consolidated Minerals was founded on the Woodie Woodie manganese mine in Australia and that Spitfire Resources is now moviong forward with South Woodie Woodie. In the boom times, the Chinese couldn’t produce enough for their burgeoning steel industry and in 2007 the price rose to nearly US$3.00 per pound compared to the current US$1.10 per pound. The important thing is that even at that high level the price of manganese is not critical in steelmaking. But Rocher Deboule has an extra edge in that it is aiming to satisfy the needs of the US steel industry which has to import all its requirements with the extra costs in terms of duty and shipping that that entails. There is no other primary source of manganese in North America.
The company’s Artillery Mountain manganese project has grown considerably since that first purchase of properties and now hosts the largest manganese resource in the USA, originally estimated at 175 million tonnes at between 3.5% and 4% manganese. It took Larry a year to assemble all the manganese properties in the area into a single entity, but the job was completed last October, and the overall ground that Rocher Deboule now holds measures 12 square miles. In April of 2009 an official NI 43-101 estimate was produced which gave a total resource of 107.74 million tonnes at an average grade of around 4.58% manganese, and this included an indicated resource of 10.86 million tonnes at 4.46% to give over one million pounds manganese. Based on this, a preliminary economic assessment was then got underway, with the aim of confirming that Rocher Deboule could become the lowest cost producer of electrolytic manganese in the world.
In its favour is the fact that the manganese ore at Artillery Mountain, though lowish in grade, is easily and rapidly leached in a sulphurous solution. How the actual costing will compare with China, which produces a large proportion of the world’s manganese, is not easy to deduce, as there are numerous small mines in China from which data are scarce, but it is thought that the average price of production is US87 cents per pound. The important point is that China uses most of its own manganese, so competition is in any event limited. Crucially, investors seem to have grasped the fact that manganese is a strategic metal, as the share price of Rocher Deboule went up in an almost straight line from C10 cents to C18 cents as soon as the results of assessment were announced last month. And that will doubtless give a warm feeling to those who took part in the over-subscribed June placing, when over C$1 million was raised from the sale of shares plus warrants at C10 cents per unit.
The shares are now pushing towards new highs for this year – though clearly they are still below the C30 cents level of a year ago – as this preliminary economic assessment cries out to one and all that Artillery Mountain looks a very good thing. The McGregor Pit and contiguous Lake claims, which are estimated to contain near surface indicated resources of 10.966 million tonnes at 4.46% manganese, and inferred resources of 10.382 million tonnes at 4.7%, can both be mined by conventional open pit methods at a rate of 3,500 tonnes per day. Such an operation, producing electrolytic – high purity – manganese at an annual rate of 108 million pounds could last for 17 years. Capital costs are estimated at US$90 million and the average operating costs at US44 cents per pound, which certainly takes it into the bottom quartile. The sulphurous acid leach would be followed by the removal of dithionate and trade metal impurities before the pure metal is produced by electrolysis.
It is worth comparing the present US$1.10 per pound world price of manganese with the landed price in the US after tariffs and shipping of US$1.37 per pound, and also with the breakeven selling price for manganese at Artillery Mountain, including capital recovery under the base case assumptions, of US$0.63 per pound. The figures can only get better if the price of manganese advances to US$2.00 per pound within the next year as Larry Reaugh predicts. First things first though, he has to spend US$4.44 million on a feasibility study before he even thinks about project funding. The betting has to be that he will find a way around it, even if he has to bring in a partner. It would be interesting if backing came from a US steel producer, but they are not in the best of health at the moment. The point that should not be missed, however, is that by the time project funding is required the US economy should recovering. |
