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Welcome to the second installment of our five-part article series featuring American Manganese Inc. (TSX.V: AMY; Pink Sheets: AMYZF; Frankfurt: 2AM). This teaser article is a little shorter than the others, but provides contextual information about the industry, specifically concerning cobalt and battery recycling.
American Manganese Inc. (TSX.V: AMY) is a diversified specialty and critical metal company focused on capitalizing on its patented intellectual property through low cost production or recovery of electrolytic manganese products throughout the world, and recycling of spent electric vehicle lithium ion rechargeable batteries.
Peter Bell: Larry, I love this line from a recent news release that “Two years ago, AMI recognized that the electric vehicle revolution coupled with the inelastic supply of mined raw materials for lithium ion batteries, in particular cobalt.” You’ve completed the bench scale testing and applied for the patents. Next up is the pilot plant, right?
Larry Reaugh: That’s right, Peter. We don't want to be like Elon Musk and rush to build the Gigafactory without doing the pilot work on how to put the batteries together. I’m sure they thought they did enough testing, but they are having problems. To find out that you have bugs in your system when people are standing by – waiting for your product – that’s not a good place to be.
Peter Bell: There may be some silver lining for your company, at least, as those faulty batteries may create a nice feedstock for you guys.
Larry Reaugh: That is the feed stock that everybody likes to talk about, even though the consensus is that there are not enough batteries coming free. Did you know that they have shut down a smelter and used it to burn the old batteries to recover the cobalt from these faulty batteries? The fact that they are doing that tells me there are enough batteries!
If they're shutting down a nickel circuit or a copper circuit to burn batteries, then they only recovering 40-60% of the cobalt from the battery. The rest goes into slag. There's got to be money improving on that with our technology, Peter. We could go after those batteries, but right now we're only interested in the rejects. Rejects in most manufacturing processes average around 4-5% of total production and I've heard from government sources that they can be as high as 10% with these batteries.
Peter Bell: Wow.
Larry Reaugh: The estimates are for 45,000 tonnes of cobalt to go into these batteries this year in total. With even 4-5% rejection rates, you're talking about 2,000 tons of cobalt and that has some real value to it.
Peter Bell: Right. I believe Cobalt 27, the cobalt-ETF, has something like 2,800 tonnes of cobalt now, which is worth over $200 million dollars. Now, in one of the presentations, I think it said a $3 tipping fee or something like that for batteries – how does that tie in?
Larry Reaugh: That is the amount the recycling yards typically pay for someone to take these batteries and burn them in a smelter. Now, if you’re the EV car manufacturer, then a big part of your marketing is the positive environmental impact. But you share a responsibility to recycle those batteries that you produced. How can you say that you're doing great things for the environment when you're burning the batteries? That introduces toxic material into the environment, regardless of whatever scrubbers they may have in place. The lithium, nickel, manganese, aluminum, and 40-60% of the cobalt end up somewhere in the slag piles because they can't do anything with it.
Peter Bell: It's a PR nightmare headed their way.
Larry Reaugh: It’s worse than that, Peter. When you add in all the issues around security of supply and everything else around cobalt, in particular, there's a freight train coming that these guys just haven't woken up to yet.
This is not in any way investment advice nor any sort of stock recommendation. Please do your own due diligence and talk to a qualified investment advisor.
The contents of this article are for informational purposes only. Nothing in this article, in any way whatsoever, should be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy, hold or sell any security. Note the inherent risks when investing in microcap stocks. Prior to making any investment decision, we recommend that you seek outside advice from a qualified and registered investment advisor.
American Manganese Inc. is a paid marketing client of Stockpools Inc. and one or more of the owners does own shares in American Manganese Inc.