IGO to record impairment against nickel assets in strategy shift
IGO has been undertaking a strategic review in an attempt to revaluate its resources.
Manganese demand is closely tied to the global steel market. While there are questions about what 2011 will offer, in terms of steel demand, especially as China appears to be cooling off, there are other stories out there talking about India’s rampant appetite for raw materials for steel production in the face of rising prices.
It appears South Africa has become a prime Indian target for securing supplies of manganese ore, along with iron ore and coking coal.
In the midst of all this jostling for securing rights to raw materials, some manganese companies have been doing quite well, in South Africa, Australia and elsewhere.
Take American Manganese, a TXS Venture-listed company that is focused on taking advantage of the steel industry’s need for those raw materials. Case in point: it’s acquisition of the Artillery Peak Manganese properties in Arizona, recognized as one of the largest known manganese deposits in the US southwest. Mine planning is underway.
At the start of January, American Manganese shares were trading at 30 cents. They were trading at just under 80 cents by late-February. A nice jump. Since then, there has been some expected consolidation. In fact, they’re down to 72 cents.
But then there was news this week that American Manganese had closed a previously announced private placement at 70 cents, putting $5 million into its treasury. The underwriter was Laurentian Bank Securities.
So here’s the next probable catalyst: Laurentian will likely issue a note on American Manganese, one that likely talk about the prospects for the manganese market. This could push the stock to its next level as Amercan Manganese uses the private placement to develop its assets and look for other opportunities.
While American Manganese is a smaller cog in what is a large global playing field, it shows that larger Australian and South African counterparts (think of Australia’s Jupiter Mines, which has a large manganese holding in South Africa ) should also benefit from a global steel market that might cool in the short run but will ultimately drive worldwide demand for raw materials higher.
And, if American Manganese can de-risk it’s mine-under-development at Artillery Peak, there’s always the potential for take out at a significant premium if there’s consolidation within the sector.
