You have to watch out for the snakes. Sometimes it seems like the streets of Vancouver are filled with them. Oops, I meant the deserts of Arizona. How could I have made that mistake?
Actually I had a wonderful trip recently to the Arizona desert to see more manganese than I ever imagined. And a Mojave Green rattlesnake; one of the most deadly in North America. My very good, seasoned advice to you is to stay away from the snakes in the mining business.
Larry Reaugh founder of Adanac (AUA) has an almost uncanny ability to see the future for metals. He picked up the Ruby Creek moly property for pennies. He paid 1 million shares and $96,000 for 90 claims, including a 2% NSR from the prospectors. Of course moly was in the dumps and no one except him saw any future for molybdenum. He's done exactly the same thing for Rocher Deboule except this time it's the largest known manganese deposit in North America.
It's one of those good news, bad news stories. The jewel of the crown is the Artillery Peak manganese project with a historic resource reported by the US Bureau of Mines of 100 million tons with an average grade of 10%. Since manganese is going for about $4,150 a ton, that makes a ton of 10% manganese worth about $415 in contained metal or just over $2 a pound. The bad news, of course, is that every time Larry comes up with a new company, I have to hit the books again.
I'll be as blunt as I can be. Before I visited Artillery Peak a few weeks ago, you could have conked me over the head with a bar of manganese and I wouldn't know the difference between that and a baseball bat. I still wouldn't but now at least I have some idea of what manganese is used for; now that I've done my homework.
The deposit consists of 90 unpatented claims located in the southeast corner of Mohave County, Arizona, some 30 miles due east of the Parker dam on the Colorado River. Larry picked them up in the summer of 2007. He had talked to experts in the steel business and they agreed manganese would be the metal in the shortest supply.
Manganese is a critical metal used in production of pig iron and steel. It competes with nickel as a hardening agent. The price of manganese was as low as $.65 a pound 16 months ago and topped $2 a pound recently. With nickel at $13 a pound, manganese could go up 400% and still be competitive. 90% of the world's manganese is used in the iron and steel industry. 30% of the world's production comes from South Africa and with the power issues there; production of manganese is down almost 30%.
As an aside, the United States imports almost all of the manganese used in our steel industry, so a domestic source of the vital metal would be very valuable.
I was there for a day, a month ago with Jim Marin, prospector and project manager. Manganese deposits tend to form in stratagraphically controlled sedimentary basins. Artillery Peak was the source of manganese mined as early as 1917 through 1930. Production resumed in 1940 and continued through 1945. The Federal government used to maintain stockpiles of critical materials and bought manganese from the area up until the end of 1955 when government stockpiles filled.
Since then manganese came from higher-grade deposits located in China and South Africa. With the increased demand associated with vast production of iron and steel, the area is once again economic.
Jim Marin showed me a lot of manganese. It's high grade and there is a lot of it. Where there were existing mines, those areas could be opened up easily. My suggestion to Jim and to Larry Reaugh would be to get an offtake agreement as soon as possible and get this puppy into production. As a result of the power issues in South Africa, the industry is undergoing a critical shortage right now. Power is going to be an increasing issue all over the world and Larry needs to strike while the manganese is hot.
You could work out the math and determine there is something like $41.5 billion dollars worth of manganese in the Artillery Peak region but the number would be meaningless. First of all, Rocher Deboule doesn't control the whole area, though they continue to pick up additional land. But by the time you got ready to produce tens of millions of tons of manganese, the market would have changed dramatically. In short the manganese market is hot, RD needs to get an offtake agreement and get into production quickly.
We were early investors in Rocher Deboule and have participated in two different private placements. They are advertisers and we own a fair number of shares. I like Larry Reaugh and Jim Marin and believe they can get this into production quickly. It isn't difficult to leach manganese; it's a very mobile metal. This could be fast tracked into production and the company could make a lot of money, quickly.
We are biased. Naturally since we share neither your profit nor your losses, you should take responsibility for your own due diligence. The stock is not far off the yearly low but the company has made a lot of progress quickly. It's cheap and going a lot higher soon.
Rocher Deboule Minerals
Apr 15, 2008