Gold Investment News - Gold, Molybdenum, Manganese and Magnesium - Larry Reaugh Shares his Expertise with Metals News

Gold, Molybdenum, Manganese and Magnesium - Larry Reaugh Shares his Expertise with Metals News

By Dr. Allen M. Alper

Larry Reaugh CEO of the Reaugh Group: Molycor Gold Corp, American Manganese Inc. and Goldrea Resources Corp

Back in late 2008, when doom and gloom were everywhere, Larry Reaugh was upbeat about the mining industry, predicting everything would start to pick up. He was proved right, with metal prices soon on the rise, so we went to seek out his latest views on the situation.

Rise of the Three Ms

Larry Reaugh has 44 years’ experience in the mining industry and is CEO of the Reaugh Group, based in British Columbia and comprising three companies — Molycor Gold Corp, American Manganese Inc. and Goldrea Resources Corp. “We’ve got some interesting projects,” he comments, having been concentrating mainly on gold in 2008. “Lately, I’ve been talking about the three Ms — molybdenum, manganese and magnesium — as being next as we talked about gold, then copper, then the three Ms and they’re already starting to move up in price.”

His American Manganese company has developed a 43-101 manganese resource that’s close to eleven billion pounds. He says: “We have developed the 43-101 preliminary economic evaluation and it shows that it could be the lowest cost producer of electrolytic manganese in the world and, coincidentally, 97.44% of all electrolytic manganese in the world is produced in China.

Artillery Peak and surrounding Artillery Mountains, Arizona region, location of American Manganese claims.

“We happen to be in a market that, on the manganese side, has been growing at 26% a year, compared to the rest of the market at 8%. So, I think we’re well positioned in North America, where there is no production of manganese. It’s very critical to the steel industry. You can’t make steel without manganese. The electrolytic is used mostly in enhancing alloys of steel and the electronics and aluminum industries use it. It’s a big market, 2.6 billion pounds a year.”

On the magnesium side, his group encountered high grade magnesium in dolomite in Nevada when it was actually looking for gold. Larry states they have a NI43-101 inferred resource of 236 million tons containing around 52, billion pounds with the true economic worth being proved when the metallurgy is done.

Molybdenum, the third of the three Ms, has also been on an upward trend, confirms Larry: “When I talked about it, it was $8 or $9 a pound and it ran up rapidly to $18, only to retreat to a little over $10 and now it’s moving back up to $14.5. His company’s futures are tied in to all three metals and he predicts them all moving up as steel use increases.

President & Director for MOLYCOR, Mr. Ed Lee at the CrowRea Molybdenum Project. He is also a Director of Goldrea Resources Corp and Executive Vice President of corporate development for Adanac Molybdenum Corp. a Director of American Manganese Inc.

Exciting Times for Juniors

All in all, Larry sees exciting times ahead for the juniors: “We’re starting to get more liquid and it should be much easier to finance. The big money is moving down from the producers. It’s moving through companies with large deposits into the interim companies and actually is starting to get into the juniors. So, my forecast is that it’s a year for juniors.”

Looking more closely at his companies’ activities, Larry starts with American Manganese, which has just changed its name from Rocher Deboule Minerals Corp. He says: “Our manganese deposit in Arizona is the largest low grade deposit of manganese in the south western United States. We have a 43-101 deposit of eleven billion pounds and we believe we can increase that with some drill holes this year to at least double. It’s a very significant deposit with robust returns. We think this will be easy for a junior to move into production.”

Molycorp has good gold deposits but its focus in 2010 is going to be magnesium, which Larry says “dwarfs everything”. He goes on: “You’re talking 52 billion pounds at $1.25 a pound. Do the math on that and you’ll see this has a lot of value in the ground. It’s going to require not that many drill holes to double the size of the resource and to move it into a much better category, perhaps into measured or indicated, or at least most of it into indicated.

“There’s a need for magnesium, of course. Magnesium is another one that’s controlled by China. They have about 80% of the world’s production of magnesium and the writing’s on the wall. China’s going to be slamming the doors on all those exports pretty soon. They’re buying commodities offshore. I expect that we’ll see more of that happening and more usage going directly into China as they keep increasing the export duties.”

For more information:
Telephone: (604) 531-9639 
Fax: (604) 531-9634 
Head Office: 
2A 15782 Marine Drive 
White Rock, B.C. 
V4B 1E6 CANADA
http://www.rdminerals.ca 
http://www.molycor.com 
http://www.goldrea.com

Chinese Joint Venture

The third company, Goldrea, is heavily involved in a major gold project in China at Rushan City, where there’s an estimated deposit of 175,000 ounces. “It’s down dip from an existing mine,” says Larry. “That mine is running out of ore and we’re developing more ore that’s wide open. On the down dip section, we have one shaft going underground. Our plans are to put in two more, one a production shaft, and get it up to about 1,200 or 1,500 tons a day production. We expect this to be a joint venture with a Chinese company. We’re talking to five of them at this moment.”

Once agreement is reached with a Chinese company, he expects gold output going up to around 40,000 ounces a year, with each company getting half of the income. Given that production costs in China are much less than most other places in the world, it should be a very profitable venture. This is especially true given Larry’s belief that gold will move through $1,500-2,000 an ounce and maintain these levels for years to come.

The moves to find a Chinese partner are well advanced and, according to Larry, could reach an outcome at any time: “The company that’s most advanced in the negotiations is also negotiating to buy the existing mill at Rushan City. They need us, we need them, so there will be a deal in the future.”

Once agreement is reached and production moves up, money will start to flow in from the project. And this, confirms Larry, will have a positive effect on the group’s finances: “Someday we may be able to pay a dividend. We may be able to stop raising money on the markets and develop some of our projects in North America or expand the business into other countries out of cash flow.”


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