Mining stocks columnist Mike Kachanovsky says Manganese X has been one of the hottest junior mining stories over the last few quarters.
The push towards widespread adoption of electric vehicles (EVs) is putting a strain on supplies of many critical commodities. For example, lithium is essential to manufacture the batteries for these vehicles. Several years ago, this increased demand led to a boom for junior lithium exploration companies. As EV production continues ramping up higher, a similar effect is underway for cobalt. Even nickel is trending sharply higher as a component in these batteries.
New technology is advancing development of more efficient batteries incorporating manganese. All battery metals are now surging in price due to the expectation of greater demand and tighter supply. Manganese is only the latest metal to join that trend. Rising demand for manganese in cathodes for lithium-ion batteries has placed more urgent emphasis on developing new mine supply for the metal.
As the EV market continues expanding, some estimates suggest year-over-year manganese consumption will grow at a compound rate of 23 per cent per annum just from increased battery manufacturing demand. Where is all of this new supply going to come from?
Manganese X active in New Brunswick
A US presidential executive order was signed in February to prioritize certain strategic elements, including manganese. This may generate further support to fast-track development of advanced deposits in the United States and Canada. There is no current mine production for manganese within North America. However, the province of New Brunswick was once considered a hub for manganese deposits and mining.
It is fortunate that the management team of Manganese X Energy Corp. (TSXV—MN; OTCMKTS—MNXXF) recognized this historical importance several years ago, while manganese was still largely off the radar for exploration. The company was able to acquire the Houlton-Woodstock manganese property for a bargain purchase price by contemporary standards. Now dubbed the Battery Hill project, this package of 55 claims comprising an area of 1228 hectares holds the potential for a manganese mine development near the town of Woodstock, N.B.
The highlight of this project is an enriched manganese deposit encountered in five major zones within the property area. Of these, the Moody Hill zone demonstrates the most attractive economic potential for an open-pit mine. This advanced exploration prospect is situated near surface, with higher-grade showings of manganese sulphate originally identified through work programs completed by a previous operator. The prospect for additional discovery zones at untested areas of the property is also appealing.
Drill hole results being analyzed
Manganese X launched a drilling program late last year to confirm and expand the deposit at the Moody Hill target area. A program of 28 drill holes with a total of more than 4,500 metres of drilling was completed in November. Favourable results were recently reported. Several high-grade zones were encountered with average grades above 11 per cent MnO, or manganese(II) oxide, across wide intervals of drill core.
Combined with previous drilling work, 53 drill holes totalling 9,600 metres have been completed. Manganese X has defined a large deposit area at Moody Hill. This data is now being incorporated into a compliant resource report for the project.
The company has also been actively evaluating the metallurgical characteristics of the deposit. Manganese is encountered in more than 50 different minerals and some of these may present metallurgical challenges to efficient recovery under conventional processing technology. However, mineralization from Battery Hill is hosted in carbonate form, which is attractive since it can be processed using conventional sulphuric acid leaching.
Sample material was submitted for evaluation through Kemetco Research, a consulting firm specializing in metallurgy and mineral processing technology. A flow sheet has been designed for a circuit tuned to mineralization from Battery Hill that indicates 85 per cent of the manganese content may be recovered. The combination of attractive grades and favourable metallurgy is a key consideration toward achieving positive economic results in a producing mine scenario. Data will be incorporated into a preliminary economic assessment (PEA) following the completion of the resource report.
Subsidiary may also yield shareholder value
Ultimately, the potential to commence mining at a domestic manganese deposit is the catalyst that could lead to a much higher market value for Manganese X Energy. However, another business unit has been created outside of the resource sector that may also create shareholder value. The wholly-owned subsidiary, Disruptive Battery Corp. (DBC), was established to advance a patented technology for air purification and delivery systems.
Common HVAC ventilation systems used in large buildings are known threats for distribution of pathogens. A process has been developed to mitigate and neutralize airborne and surface pathogens carried in these HVAC systems.
Pure Biotics Air is now under development as a joint venture to commercialize the technology. The process disperses a mist of particles through air-circulation ducts to destroy viruses and bacterial microbes on contact surfaces. The organic process is effective protection against pathogens but is harmless to people and animals.
A research program has been launched at the prestigious Virginia State University laboratory facility where results may be confirmed through high-powered electron microscopes to validate the technology. If this testing regime is successful, it will open the opportunity to work with hospitals and large commercial buildings to incorporate safer air circulation.
Graphite property being spun off
As the core mineral resource strategy is focused on advancement of the manganese project, the company has chosen to divest another attractive property that they held, with leverage to graphite. The Lac aux Bouleaux graphite property is located in Quebec, immediately adjacent to a formerly producing graphite mine. The property will be spun out to shareholders through the creation of a newly-listed junior explorer, Graphano Energy Ltd.
A shareholder meeting is scheduled in April to approve the process. Similar transactions have unlocked investment value for other companies that have completed a spin-out of non-core assets.
Manganese X is the most advanced company moving towards the establishment of a manganese mine within North America. The ideal geographical location of Battery Hill near the US border, along with access to support and infrastructure, provides an attractive setting for development in this formerly active mining district.
Favourable metallurgical characteristics also contribute towards positive economics for a potential mine development. As the company presents its NI 43-101 resource estimate and then commences a PEA for the project, the timing for these events is ideal. Battery Hill may emerge as a viable mine development prospect.
Meanwhile, the integrated approach is pursuing commercial opportunities through the DBC subsidiary. The Pure Biotics joint-venture strategy could advance as another well-timed investment as public concern over airborne pathogens is still very much a factor. Testing is expected to commence shortly. With about $3 million in working capital on hand, Manganese X is fully funded to advance its strategy.
This approach to building shareholder value has already generated results. Manganese X has been one of the hottest junior mining stories over the last few quarters. The stock has more than doubled since the start of this year. The pace of activity will support a bullish trading outlook as work continues.
Mike Kachanovsky is a freelance writer who specializes in technology and junior mining stocks.
This is an edited version of an article that was originally published for subscribers in the April 2, 2021, issue of Investor’s Digest of Canada. You can profit from the award-winning advice subscribers receive regularly in Investor’s Digest of Canada.
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