| Trading Symbol: TSXV: BMC |
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| Shares Outstanding: 166,283,160 |
WINDSOR, NS,
Oct. 31, 2012 /CNW/ - Buchans
Minerals Corporation (TSXV: BMC) ("Buchans Minerals" or the
"Company"), together with Minco plc (AIM Market: MIO)
("Minco") are pleased to announce the signing of an agreement to
further develop the Woodstock
manganese property located in New
Brunswick, Canada.
Under the terms of the option agreement Minco
has the right to earn up to a 50% interest in the Canadian
Manganese Company Inc. ("CMC"), a wholly owned subsidiary of
Buchans Minerals that owns 100% of the Woodstock manganese property.
The Option Agreement:
Minco will initially make a firm commitment to
earn a 10% interest in CMC by spending phase one expenditures of
$1.250 million by drilling an
inferred resource on the Plymouth
deposit within 12 months.
Following phase one expenditures, Minco will
have 30 days to elect to continue with phase two expenditures of
$750,000 over a period of six months
to complete a preliminary economic assessment ("PEA") on the
Plymouth deposit to earn a further
10% interest in CMC. In the event that Minco elects not to proceed
to the second phase of expenditures, Buchans will have a 90 day option to buy back
Minco's 10% interest in CMC back for $1.250
million.
Upon completion of the PEA, Minco will have an
exclusive 3 month option to elect to earn a further 30% interest in
CMC by completing an NI 43-101 compliant pre-feasibility report on
the Plymouth deposit within two
years (the budget to be determined at that time).
Buchans Minerals will be the operator for all
work programs performed under the option agreement.
Warren MacLeod,
President & CEO of Buchans Minerals stated that "Buchans
Minerals now has agreements and funding in place to continue
advancing the development of our exciting Woodstock manganese project and our
Newfoundland base metal assets.
Buchans Minerals has established and achieved its goals
consistently over the past two years and I believe that it is now
time for the market to revalue this exciting company."
John Kearney,
Chairman of Minco stated that "Following Minco's six month
review and detailed analysis of the Woodtock manganese project, we
believe that the project has the potential to be developed into a
significant long-term, mine and processing facility capable of
producing high purity Electrolytic Manganese Metal ("EMM"). The
work to date provides a sound foundation upon which to advance the
project towards the demonstration of an inferred resource and
thereafter the completion of a preliminary economic assessment
"PEA"."
Opportunity for new Electrolytic Manganese
Metal ("EMM") Producers:
Buchans Minerals is currently evaluating the
continued development of its Plymouth manganese deposit (located within its
Woodstock property) with a view to
develop an EMM and/or electrolytic manganese dioxide (EMD)
production facility with production capacity of either 50,000 TPY
or 100,000 TPY of EMM, with target operating costs amongst the
lowest in the industry. Management anticipates the Buchans Minerals
Plymouth project to be able to match or improve on operating costs
for the lowest cost Chinese producers, thus positioning the project
to significantly undercut Chinese producers in supplying both the
Chinese and the international EMM markets. The historical resource
for the Plymouth deposit is based
on work completed in 1957 by Strategic Manganese Corporation that
reported the deposit extends from surface to depths of at least 500
feet (152 metres) and reported a non-43-101 compliant, historic,
uncategorized resource estimate of 151.2 million tons
(46.5 million tonnes) averaging 10.9% Mn (manganese) and 13.3% Fe
(iron).
China produces
over 97% of the world's Electrolytic Manganese Metal
("EMM")3, but its industry is highly fragmented with
high operating costs, increasing electrical tariffs, increasing
labour rates, depleting resources and grades, reducing capacity,
relatively higher inflation and tightening environmental
regulations. China has 188 EMM
plants with average production capacity of only 7,000 tonnes per
year ("TPY")2. Only five of the Chinese plants have
capacity over 50,000 TPY representing only 22% of current Chinese
capacity3.
In addition to forecast growth in the EMM
industry by CPM Group from the current 1.532 million TPY in 2011 to
2,839 million TPY in 20213, the Chinese government have
committed in their 12th five year plan to close down all
their small inefficient EMM plants and are anticipated to be
reducing their total EMM production capacity from 2.2 million TPY
down to about 1.3 million to 1.5 million TPY2. When
reviewing the above increase in future EMM demand in comparison to
the significant forecast reduction in Chinese EMM capacity, a
scenario may arise whereby Chinese EMM production may not be able
to cover the existing world EMM demand, let alone the anticipated
increasing demand in years to come.
Warren MacLeod,
President & CEO of Buchans Minerals stated that "When
viewing the Buchans Minerals Woodstock Manganese project in
relation to increasing Chinese operating costs and our relatively
lower anticipated operating costs, the prospect of advancing the
development of the Woodstock Manganese project looks very
attractive. It becomes even more attractive when you consider that
Chinese output is anticipated to be reduced such that it may only
have enough capacity to cover existing EMM demand of approximately
1.5 million TPY EMM in the shadow of an EMM market that is forecast
to potentially grow to about 2.8 million TPY EMM by 2021. Although
our primary focus at this time is on the production of EMM our
proposed Woodstock process can
also produce electrolytic manganese dioxide ("EMD"). The EMD market
is primarily driven by the increasing demand for electric batteries
and is forecast to potentially expand from about 364,000 TYP in
2011 to about 580,000 TPY by 20213."
Understanding Manganese:
When reviewing the global manganese market, it
is important to understand that there are primarily two types of
manganese ores; manganese oxide ores that generally grade 35%-44%
Mn and manganese carbonate ores that grade 10%-20% Mn. The Buchans
Minerals Plymouth deposit is primarily a manganese carbonate
deposit with an average grade of about 11%.
The important characteristic of these two
different ores is that they produce entirely different products.
Oxide ores are processed by physical concentration techniques to
produce manganese concentrates that grade about 50% Mn. These
concentrates are sold for about $4-$6/dmtu (ie. $4-$6 per each 1% Mn grade) and are sold
primarily to produce 60-77% silicomanganese and 65-80%
ferromanganese for production of flat and long steel.
Carbonate ores on the other hand are processed
using hydrometallurgical leaching and electrowinning techniques to
produce high purity > 99% electrolytic manganese metal (EMM)
which sells for about $1.30/lb-$1.60/lb.
EMM is primarily used in the production of stainless steel,
specialty steels and high purity alloys.
Although it is technically possible to produce
EMM and EMD from oxide ores, the process is more complex, has
higher capital costs than to process manganese carbonate ores and
has higher operating costs3. Manganese carbonate
deposits utilize less complex hydrometallurgy with a single stage
acid leach to produce EMM and EMD. About 88% of the world's EMM
produced in 2010 originating from manganese carbonate
deposits3.
Qualified Persons:
Paul Moore, MSc,
P.Geo., (NL), Vice-President Exploration for Buchans Minerals Corporation, is acting as a
Qualified Person in compliance with National Instrument 43-101 with
respect to the geological technical information contained in this
release and has reviewed and approved those contents for accuracy.
Quoted historical resource estimates for the
1Plymouth deposit are
based on data obtained and prepared by previous operators and
Buchans Minerals has not located original assay sheets or details
of the estimation methodology completed, nor has Buchans Minerals undertaken the work necessary
to verify or classify the mineral resource estimate. Buchans
Minerals is not treating the mineral resource estimate as a
NI 43-101 defined resource verified by a qualified person, and the
estimate should not be relied upon. Verification and
classification of the resource will require considerable further
evaluation.
References:
1 Historic resource estimate from an
article written by K.O.J. Sidwell,
1957: The Woodstock, N.B.,
Iron-Manganese Deposits. Transactions of the Canadian Institute of
Mining and Metallurgy, Volume LX, 1957, p.231-236. The article
reports the resource is compiled from data acquired from a total of
17,388 feet (5,300 metres) of drilling
2 "A study of Electrolytic Manganese
Metal (EMM) Industry and China's
Dominating Effects to the Global Market" by JF Zhang Associates,
Nov 2011
3 "Manganese Market Outlook" by the
CPM Group, Feb 2012
About Minco plc
Minco plc, registered in the Republic of Ireland and listed on the AIM
Market of the London Stock Exchange (AIM: MIO) is involved in
exploration and development activities in Canada at its Buchans, zinc-copper-lead-silver, volcanogenic
massive sulphide ("VMS") properties under joint venture with
Buchans Minerals Corporation, and indirectly in exploring and
developing silver-zinc properties in Central Mexico through its 29% shareholding in
Xtierra Inc., a company listed on the TSX Venture Exchange.
Minco holds 30 million shares (approximately
29%) in Xtierra Inc. listed on the TSX Venture Exchange (TSX.V:
XAG). Minco also holds 15 million shares (approximately 10%)
in Buchans Minerals listed on the TSX Venture Exchange (TSX.V:
BMC).
Minco currently holds approximately US$16 million in cash and is also evaluating a
number of other investment opportunities in the minerals industry
in North America and Europe.
For further information of Minco refer to
Minco's website at www.minco.ie.
About Buchans Minerals
Buchans Minerals is an Atlantic Canada based resource company that
has three main assets that include its 100% owned base metal
properties near Buchans in
Central Newfoundland (Optioned to
Minco plc.), its 100% owned manganese property located near
Woodstock (Optioned to Minco) in
New Brunswick and its 50% owned
gold & copper Long Range Property in central Newfoundland.
Forward Looking Statements &
Disclaimer
Information set forth in this news release may
involve forward-looking statements under applicable securities
laws. Forward-looking statements are statements that relate to
future, not past, events. In this context, forward-looking
statements often address expected future business and financial
performance, and often contain words such as "anticipate",
"believe", "plan", "estimate", "expect", and "intend", statements
that an action or event "may", "might", "could", "should", or
"will" be taken or occur, or other similar expressions. All
statements, other than statements of historical fact, included
herein including, without limitation; statements about the
potential of the Buchans Minerals projects, are forward-looking
statements. By their nature, forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause our actual results, performance or achievements, or other
future events, to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the
following risks: the need for additional financing; operational
risks associated with mineral exploration; fluctuations in
commodity prices; title matters; environmental liability claims and
insurance; reliance on key personnel; the potential for conflicts
of interest among certain officers, directors or promoters with
certain other projects; the absence of dividends; competition;
dilution; the volatility of our common share price and volume and
the additional risks identified the management discussion and
analysis section of our interim and most recent annual financial
statement or other reports and filings with the TSXV and applicable
Canadian securities regulations. Forward-looking statements are
made based on management's beliefs, estimates and opinions on the
date that statements are made and Buchans Minerals undertakes no
obligation to update forward-looking statements if these beliefs,
estimates and opinions or other circumstances should change, except
as required by applicable securities laws. Investors are cautioned
against attributing undue certainty to forward-looking
statements.
This release contains market and industry data
and statements that have been obtained from independent third-party
sources, including the February 2012
report prepared by the CPM Group and the November 2011 study of Electrolytic Manganese
Metal Industry and China's
Dominating Effects to the Global Market by JF Zhang Associates.
While Buchans believes the data
and statements derived from these sources to be reliable,
Buchans has not independently
verified such data and statements. Buchans cannot guarantee the accuracy or
completeness of the market and industry data and statements
contained in this release and does not independently endorse such
data or statements. As a result, undue reliance should not be
placed on the market and industry data and statements in this
release.
Neither the Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the Exchange)
accepts responsibility for the adequacy or accuracy of this
release, and no securities regulatory authority has either approved
or disapproved of the contents of this release.
SOURCE BUCHANS MINERALS
CORP.
