Welcome to the third installment of our five-part series on American Manganese Inc. (TSX.V: AMY; Pink Sheets: AMYZF; Frankfurt: 2AM). This article covers the company’s ability to solve seemingly industry-entrenched problems and how the company is looking to the future to solve new problems as they come, such as scarcity. In case you've missed the previous parts, find Part One here and Part Two here. Enjoy!
American Manganese Inc. 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: Hello Larry. One thing that impresses me about the company is just how long you’ve focused on this one thing, specifically this processing technology. How long has the company been on this track?
Larry Reaugh: I’d say it goes back 10 years for us. The technology we’re referring to is something that the US Geological Survey was unable to solve with tens of millions of dollars at their disposal over 80 years. That is, of course, the problem of processing manganese from low-grade deposits. Well, we did it in three years. We benefited from all their prior work because we knew what didn’t work. They kept repeating the same thing over and over, expecting a different result. That is the definition of insanity.
Peter Bell: Or government bureaucracy!
Larry Reaugh: Right, Peter. I think the USGS never should have dropped the project, but I’m glad they left the opportunity for us.
Peter Bell: Amazing that a group out of the lower mainland would be able to solve that problem.
Larry Reaugh: Well, the scientists that we worked with are world-class. We told them that we wanted to make low-grade manganese deposits economic, just like the USGS had tried to do for 80 years, and they took the bit in their mouth and ran with it. They knew where the problems were, and they came up with the solution.
To find out that it works for recycling cobalt from EV-LIB batteries was a great surprise.
Peter Bell: It's great to see that a group of scientists, Kemetco, is still involved with the company.
Larry Reaugh: They're as proud of this achievement as we are. They want to continue to be involved. Remember they are an arm’s length contractor.
Peter Bell: And how about Artillery Peak? That is still on the books – you guys haven't optioned that off.
Larry Reaugh: No. We've dropped most of the claims with high-payments that we were making to people who owned the patented ground, but we have kept the BLM ground because it is much cheaper and containing some of the best drill hole values.
Although some of these patented claims that we gave back cover parts of the low-grade deposit, which we actually drilled-off in the resource estimates, they are going to have to work with us at some point or another because we're the only ones who can get it out at a profit. Keep in mind that we still own the intellectual property that was designed to make Artillery Peak work and is the only IP that can make it work at this time.
Peter Bell: I find it inspiring that you were able to salvage that technology out of that mining project and find all this new life for the company.
Larry Reaugh: Who would have known?
I get some very strange propositions from very large companies regarding specific things, some of which we can do and others we can't. Regardless, we're now getting international attention. Everyday something new comes across our desks and it’s just a matter of time.
Everybody wonders why we haven't done a deal with a major company yet. Keep in mind that it's only been a year and a half since we first talked about having success in our proof of concept! I know these large companies and they take forever to do things.
Peter Bell: Yes.
Larry Reaugh: Now we're reaching a point in the supply for these critical metals where this whole timeline that the car companies tried to put out there with second use and longevity of the batteries and everything else is going to come to an end. They are going to have to start looking at other ways to get material. Especially if they start hanging large amounts of these materials in batteries on the wall! That will tie up a lot of cathode materials especially cobalt, which could otherwise be used to build EV-LIBS. Car companies may have to decide whether it would rather be in the wall-battery business or the EV car business.
Peter Bell: And that reminds me of something, Larry. I’ve never really seen a world that had proper shortages of important things. It's hard to imagine that there just wouldn't be enough of something important at any price…
Larry Reaugh: It’s not just you, Peter. Many guys in their 40s have never seen shortages like this either. If you have been working in the procurement side of an EV car manufacturer, then you're used to picking up the phone and getting quotes. It was always there, and everything was available off the shelf. You could just go down to the supermarket if you wanted a steak. That's coming to an end with the metals now.
You're really disadvantaged if you don’t understand that shortages can occur, Peter. It takes a long time to understand that shortages can occur when you’ve never seen them before. They have to look at alternatives here to make sure that they have cobalt or lithium for batteries a year from now.
Peter Bell: And not 10 years from now – you’re talking about a year from now.
Larry Reaugh: There could be problems a month from now! In December 2017, the Japanese traders were not able to get any fills on cobalt because the whole quota for 2017 was sold out.
Peter Bell: Oh no. I’ve heard a lot about the zinc inventory levels plunging to new lows, but I hadn't heard it for cobalt. Are their inventories for cobalt?
Larry Reaugh: If there are inventories, then they're being bought up by hedge funds or Cobalt 27. They have over 2,000 tons of material in their bank now. That's it – there’s no inventory in the warehouse. You don't see the big price increases we’ve seen in cobalt recently unless there are issues around scarcity of the metal.
Peter Bell: Wow. How about the speed for you guys to come to market?
Larry Reaugh: It's probably a year and a half to two years. If somebody stepped up to plate now and started putting real money into the deal, then we could probably have some commercial production in a year and a half. We could make $30-40 million off an initial 3 TPD commercial scrap plant.
Peter Bell: Sounds like a lot of recycling material! Does the logistics of the recycling scare you at all? I know some people drag their feet about trying to source it from different waste piles and all that.
Larry Reaugh: Yes, that's a big argument out there against our approach. Right now, all that source material is gathered up by the recycle yards. They receive $3-4 a pound for burning it in a smelter.
I get queries from municipalities in the US that operate recycle yards – Europe and elsewhere – asking if I can take their batteries. They want to know what I'll pay for their batteries and there are a lot of batteries out there.
There's a reason why we want EV car batteries, specifically. The EV batteries are cylindrical and are all uniform in size. In a top scenario for cobalt batteries, there can be up to 12,000 of those cobalt batteries in one EV battery.
We want to automate the dismantling of those cells and run it through a process. I recently found out that there is a big company out there who already has the technology to do precisely that. I don't think they'd share it with us, but I think it’s a good sign. Even before we started proceeding down that line, it was clear to me that if they can put a battery together automatically then they can certainly take it apart automatically.
Peter Bell: That would seem to require political leadership from the top. Maybe someone like Trump can come in and say that we're doing this in a massive way.
Larry Reaugh: That’s right, Peter. Let’s get it done!
To learn more about American Manganese, visit https://americanmanganeseinc.com/
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.