Wildcat Silver Corporation (TSX: WS) ("Wildcat") announces positive results from its pre-feasibility study for its Hermosa project located in Santa Cruz County, Arizona. The pre-feasibility study includes the contribution from the projects' two primary metals, silver and electrolytic manganese metal (EMM), and three by-product metals, gold, zinc and copper. The Company also announces an updated resource estimate and an initial mineral reserve for Hermosa.
The pre-feasibility study reflects the results of significant metallurgical and engineering test-work completed, which principally focused on using magnetic separation for the recovery of manganese and by-product metals. The Company has now successfully produced a 35% manganese concentrate that will be used as the feed-stock to an EMM plant. The stand-alone nature of the EMM facility provides the Company greater flexibility as that part of the project could be financed separately or phased in and funded through cash flow from production.
"The results of this pre-feasibility study demonstrate the size and economically robust nature of the Hermosa project," said Richard Warke, Wildcat's Chairman and Chief Executive Officer. "Our detailed and extensive metallurgical test-work has paid off as we now have the ability to produce EMM domestically, which makes Hermosa the only North American producer allowing us to service the local steel and aluminium industry. With manganese being defined as a strategic metal in the USA and with worldwide demand surging, entering into the domestic manganese market as one of the lowest cost EMM producers worldwide provides Wildcat a tremendous opportunity. When considered in conjunction with its substantial silver production, Hermosa has become a very unique and valuable mining project."
Economic Analysis
The base case economics in the pre-feasibility study assume metal prices of $23.50 per ounce silver, $1,250 per ounce gold, $0.92 per pound zinc and $3.25 per pound copper. The assumed forecast average realized price of EMM flake of $1.19 per pound is based on the current market price expected to be obtained based on current conditions in the target markets as projected from independent research by a third party consultant. For comparison, the average realized price assuming a three-year trailing price for the target markets would be $1.40 per pound.
Mining and Processing
The Hermosa project is based on a conventional open pit operation expected to produce run of mine (ROM) ore over 10.5 years with an additional 7.5 years of processing to come from the reclaiming of stockpiles, for a total mine life of 18 years. Average annual production is estimated to be 12.2 million ounces of silver for the first five years and 5.7 million ounces per year for the LOM, for a total of 103 million recoverable silver ounces.
About Manganese
Manganese is the world's fourth most heavily consumed metal with a global output of approximately 18 million tons annually, of which more than 90% is used in the manufacture of steel. Consumption of manganese ore has more than doubled since 2000 with China consuming just over half of all output. There are currently no North American producers of manganese ore, a strategically important metal. Most manganese used in steel making is consumed in the form of alloys such as silicomanganese and ferromanganese. Consumption of EMM, a pure manganese product produced electrolytically, is also used in steel production as well as in aluminum alloys. EMM consumption has grown approximately six fold since 2000 to approximately 1.6 million tons annually and now represents approximately 8% of the global manganese alloy market.
EMM in North America is primarily used as an alloy in the aluminum and steel industries. Increasingly high-grade steels require the purity of EMM relative to other lower grade ferromanganese alloys. In addition to the growth of EMM being used in steelmaking, EMM adoption is growing due to the use of 200 series stainless, where manganese as EMM substitutes nickel to produce a lower cost stainless steel, which is used primarily in consumer products. Another growing and relatively new source of demand for manganese is the use of EMM in lithium batteries for hybrid vehicles.
About Wildcat
Wildcat is a Canadian mineral exploration company focused on the development of its 80% owned Hermosa silver-manganese project located in Santa Cruz County, Arizona. When in production, Hermosa is expected to be one of the largest primary silver producers as well as the only electrolytic manganese metal producer in the USA at industry low cash costs. The recently announced pre-feasibility study (December 10, 2013) estimates, annual production of 5.7 million ounces of silver and 110 million pounds of electrolytic manganese metal (EMM) at average cash costs of $4.45 per silver ounce and $0.73 per EMM pound over an 18 year mine life.
