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Artillery Peak project capital costs jump

Keywords: Tags  American Manganese, electrolytic manganese, Artillery Peak, Mike MacLeod, Thorsten Schier


NEW YORK — American Manganese Inc.’s capital cost estimate for its planned Artillery Peak project in Arizona has soared to $477 million, more than five times the initial projection of $90 million.

Production costs also rocketed, now estimated at around $1.02 per pound of electrolytic manganese, according to the results of the project’s pre-feasibility study, more than double the initial forecast of 45 cents per pound (AMM, Aug. 23).

"The escalating costs are a function of the mining market as it stands today," chief operating officer Mike MacLeod told AMM, citing other projects that have recently faced sharp cost escalation, like Thompson Creek Metals Co. Inc.’s Mount Milligan copper-gold project in British Columbia (AMM, May 16). "The cost escalation has been severe both in terms of capital and operating costs."

While Artillery Peak’s cash costs have risen, MacLeod said that they’re still lower than those in China, which accounts for about 97 percent of the world’s electrolytic manganese supply, according to American Manganese’s website.

"Cash costs last year (in China) were around $1.15 per pound and they’ve since faced escalations for power (costs) and the cost of the ore itself," MacLeod said.

China imports a large amount of manganese ore from South Africa

The United States consumes about 35,000 tonnes of electrolytic manganese per year, mainly for the manufacture of high-end steel and aluminum, and there are no domestic manufacturers of the product, MacLeod said.

Artillery Peak is estimated to make 50,000 tonnes of electrolytic manganese annually and have a mine life of 21 years, according to the study.

Electrolytic manganese is currently trading at $1.63 per pound in North America, according to Vancouver, British Columbia-based American Manganese’s website.

Research house CPM Group predicts that global electrolytic manganese prices will average $1.92 per pound over the next 10 years, reaching $2.40 per pound in 2021. At CPM’s price forecast, Artillery Peak will have an internal rate of return of nearly 20 percent and net present value of $1.36 billion, assuming no interest-rate escalation.

Artillery Peak is expected to make 50,000 tonnes of electrolytic manganese annually and have a mine life of 21 years, according to the study.


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