Edward Lee Director, Larry Reaugh President and CEO, Director and Ken Reser Research and Development

Need for manganese makes for bull market.

When it comes to investing in metals, most people think of gold and silver… but manganese? Think again! Manganese is the fourth most heavily consumed metal – after iron, aluminum and copper – but the vital importance of manganese ferroalloys, to a number of industries, is creating an impressive bull market for savvy investors.

With a long history of making money off the beaten track in metals, Larry Reaugh, president and CEO of Rocher Deboule, has hit on a manganese-rich property in Arizona which will become ever more significant as this lesser-known metal gains popularity in the automotive industry (especially regarding hybrid cars); glass production; the farming industry and even the medical industry. Not to mention the fact that manganese is a critical ingredient in the production of steel.

Artillery Peak: Manganese in the Mohave

Known for his far-sighted vision and strong-willed determination, as when he founded Adanac Molybdenum Corporation in 1995 to bring into production the first major Molybdenum open pit mine in the North West British Columbia, Mr. Reaugh recognized the importance of manganese by doing research into the needs of steel manufacturers. Through his meetings with corporate bigwigs, Reaugh learned that manganese was “number-one on their hit list,” because it is essential in the production of steel. He recalled, “So what I did was I had a couple of prospectors start to look for manganese projects for me in Arizona. And lo and behold, they came up with the largest low-grade deposit of manganese in the United States.”

Location Map – Artillery Mountains Property near Wikieup, Arizona USA

Known as Artillery Peak, Roche Deboule's flagship properties in Mohave County, Arizona are government-approved past producers. “According to the U.S. Bureau of Mines, [Artillery Peak] had about seven or eight [mining] operations on it.  It last operated back in the fifties, when [the US government] was strategically stockpiling manganese.  The price was 4.5 cents a pound, and yet they made money concentrating it to 15 or 16%Mn and trucking it to the depot,” said Reaugh, who made the acquisition in June of 2007.

In his recent NI43-101 resource report (May 1, 2008), Norm Tribe states that "an indicated and inferred resource by NT&A indicates an initial reserve as follows:”

This resource is based on 17 diamond drill holes totaling 9,930 ft (3,027 meters) in two locations.

When it comes to making steel, there’s no substitute for manganese, and this may be the reason that the specialty metal’s prices have shot up over 300% in 2007; from US$1,225 per ton to US$4,150 per ton. Reaugh pointed out that new technology should make retrieving pure metal much easier than it used to be.

This is the main working face in the McGregor open pit. This face runs 3.79% Mn top to bottom.  The manganese beds are 80 feet (24.4m) thick.

“We should be able to open pit with a very low strip ratio,” said Reaugh.  Preliminary research of past metallurgical testing on the mining properties indicates that a vat leach process readily produces an electrolytic product of high quality. Reaugh noted that a walk around Artillery Creek reveals showings of manganese that are often quite significant.  “Some are so thick – up to 60 to 100 feet thick – you can actually see [the metal].  So, it’s a very exciting project.” Currently manganese metal trades at $2.00/lb, which is up considerably from $0.30/lb in 2003.

As such, the following table of values lists the first set of assay results from mineralized sections intersected in the drilling with manganese values in excess of 1% Mn (20lb/ton). The project has drilled 17 holes in all and the table lists the results from the first eleven holes as well as samples of the pit face.

* Reported previously except for strontium values.

Metallurgical testing is currently underway.

Reaugh said that drilling will go on for approximately three years, and the process is following their intended timeline.  “We’re getting a 43-101 resource study done on the limited drilling and widespread drilling that we did last winter and this spring.” He noted that of the 17 holes, 12 of them cut manganese.  A scoping study will provide approximate operation costs, but at the moment, Reaugh expects that Artillery Mountain will become a producer in 2012. 

“My conception is a million tons a year, which is roughly between 2,500 and 3,000 tons a day,” said Reaugh, noting that vat leaching on the property will produce 80 million pounds of manganese a year.  “And it will certainly be at much less cost to put it into production than competing toe-to-toe with the major companies out there for big projects – long lead equipment, engineering and contractors – a smaller operation may be the thing of the future here, until the equipment manufacturers get caught up to date.”

Eager market for Manganese

Steel companies around the globe are watching Rocher Deboule’s activities in not just Arizona, but also in three of Rocher Deboule’s other properties in British Columbia: Black Prince, Junction Creek and Olson Properties where manganese has been discovered.

 China, the US, Korea, Japan… “They all want to see the same thing,” said Reaugh. “They want to see what the metallurgy will be like; and what it will cost to get it out, and I think once those things are established, that will bring their interest around.”

In a two-pronged approach, Rocher Deboule plans to go into production while building the biggest resources possible, because it is Reaugh’s theory that “big resources attract big steel companies and the big mining companies with the big money.”

Reaugh is confident that it won’t be long until Rocher Deboule comes up with tens of billions of pounds of manganese and resources in a very short period of time. And when you take into consideration the fact that manganese is a strategic metal in every country that produces steel and/or iron, customers will be lined up all over the world.

Reaugh  foresees a couple of other upcoming issues which will tighten up the world’s supply of manganese, including problems in South Africa, currently the largest free-world manganese producer; and a 20% export tax on manganese just implemented by the largest producers of manganese in the world: the Chinese. 

“These steel companies are out of business without [manganese],” said Reaugh, noting that out of total manganese consumption, the steel industry uses 90 percent. 

A trailblazer
During his 40+ years in the mining industry, Reaugh has repeatedly proven his mettle as a pioneer, first recognizing the importance of molybdenum and now he’s doing the same with manganese. However, he said he realizes that being the first isn’t what it’s cracked up to be.

Regarding a recent disagreement with Adanac’s independent board of directors, which resulted in Reaugh’s dismissal from the company he founded, Reaugh said that he’s not going to let the same thing happen with Rocher Deboule. “That project was my own project that I put into the company, and we were the first ones out there.  Back in late 2003 and most of 2004, nobody else was doing anything about molybdenum. Now we’re at the gate with the permits, $80 million has come through,” which his management team worked on before they were dismissed.

Reaugh has served as President and CEO of Rocher Deboule Minerals Corp. since 1998; as CEO and Chairman of Molycor Gold Corp. and as President, Director & CEO of Goldrea Resources Corp since 1981.He is credited with several producing mines and has raised more than $200 million for the exploration and development of mining properties.

He’s determined to do things differently with Rocher Deboule. Reaugh said, “I’m going to keep the Rocher Deboule board small and lean.” He wants board members with his same vision.  He observed, “I was first on the molybdenum scene, now I’m the first on the manganese scene.” He feels that being first requires more effort than following along after others, but it can also offer more rewards.  “Being first just goes to show that our management and our company can see a little further down the line than most companies out there.”

Information Contact

Larry W. Reaugh

President & Chief Executive Officer

Head Office:

2A 15782 Marine Drive

White Rock, B.C. V4B 1E6

Telephone: 604-531-9639 Facsimile: 604-531-9634 Email: info@rdminerals.ca