Molycor Identifies Opportunities to Streamline Magnesium Operating Costs
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 11/15/11 -- Edward Lee, President of Molycor Gold Corp. (TSX VENTURE: MOR)(PINK SHEETS: MLYFF)(FRANKFURT: M1V) ('Molycor' or the 'Company') is pleased to report the Company has received a paper from Alpha Omega Engineering Inc. of Spokane, Washington, USA, titled 'A Discussion Paper for Potential Areas of Improvement within Molycor Gold Corporation's Tami-Mosi Magnesium Project and Possible Effects upon Projected Profitability' (the 'Paper') dated October 17, 2011. The Paper suggests additional potential savings in cost reductions to the current NI 43-101 $1.28 cost per pound of magnesium produced.
This Paper is predicated on Section 26, 'Opportunities' of the newly completed NI 43-101 Preliminary Economic Assessment Report (PEA) carried out by Wardrop (A Tetra Tech Company) September 15, 2011. The Paper is an expansion of these opportunities that quantify the possible impact on the profitability should any of the operation changes be proved viable. The Paper identifies three main areas which offer the best potential to incrementally decrease the operating cost. These areas are operational changes that either increase productivity or decrease cost, energy cost savings through energy recovery and the elimination of waste disposal costs. Additionally, the waste streams are potentially value added products which could be marketed and possibly increase the overall profitability as revenue for co-products.
Cost Savings
Three areas offer opportunity to reduce costs. They are listed in the following table.
Table 1 - Unit Production Cost Reduction Opportunities
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1. Operation Improvements Subtotal
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2. Energy Reduction Subtotal
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3. Waste into Co Products Subtotal
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A potential combination of alternative lower cost raw materials combined with maximization of productivity constitutes the potential operation improvement opportunities.
Since a new plant is to be constructed, it could be possible to make energy recovery a primary design criterion. This could enable application of conventional and new technology mechanisms to recover energy normally lost from the process.
Every waste stream generated in the process has a disposal mechanism incorporated in the production cost as identified in the NI 43-101 report. This was done to ensure the process would be economic if magnesium was the only product. In actuality, all of the waste streams are commodities used as raw material in other operations and offer the potential to offset costs and/or generate additional revenue streams.
Potential Revenues
The potential areas of increased revenues reflect the direct sales of waste streams as co-products only and do not include the potential savings from any possible efficiency.
Table 2 - Additional Revenue Stream Opportunities Based on Seeking Possible
Sales of the Listed Waste Streams Which Result From the Projected
Magnesium Production in the NI 43-101 Preliminary Economic
Assessment
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ANNUAL PRODUCTION WASTE STREAMS
(Tonnes/Annum)
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Fume Silica 5,400
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Dical 161,892
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Sulfur 864
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Coal Tar (if not consumed) 88,364
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Continuous Operation (in development) TBD
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Calciner CO2/H2O stream to Gasifier TBD
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It must be stressed that these are opportunities only and are not based on engineering studies which would have to be conducted by Molycor prior to any degree of certainty being ascribed to these opportunities which are being discussed herein and that these opportunities would need a costs benefit analysis to be carried out by the Company before implementation as well as the identification of any additional capital requirements.
Future Market Demands
With the US federal government establishing new CAFE (Corporate Average Fuel Economy) standards, the automotive manufacturers are initiating studies on ways to remove weight from their vehicles (cars and light trucks). By 2025 the target will be 54.5 mpg. To achieve this, a current vehicle's weight must be reduced by 10 to 15%. Since the typical vehicle weighs 3,625 pounds, 360 to 540 pounds must be removed.
To achieve this level of weight reduction and still maintain safety and comfort, lighter materials have to be substituted for heavier. Mild steel, zinc and cast iron will be replaced with aluminum, magnesium, composites and/or carbon fiber. Magnesium offers substantial benefits in that it has twice the strength to weight of steel and 4.5 times lower mass than steel. It also absorbs vibrations adding to the noise suppression in the vehicle.
Conceivably, with over 12 million vehicles produced annually in North America, to achieve just the minimum 300 pound weight reduction needed per vehicle by using magnesium as a substitution for steel, over 400,000 metric tons of magnesium would be required.
About Tami-Mosi Magnesium Project
The Tami-Mosi magnesium project poses the ability to exploit the inferred magnesium resource for 30 years producing 30,000 tonnes per year within the United States, where protective tariffs are in place on imported magnesium metal. The economics are based on a NI 43-101 resource estimate analysis completed by Wardrop Engineering (a Tetra Tech Company) showing an inferred resource of 412 million tonnes with an average grade of 12.3% for a contained metal content of 111 billion pounds of magnesium using a 12% cut-off grade.
About Molycor Gold Corp:
Molycor is a diversified precious, specialty and base metal exploration and development company focusing on magnesium, molybdenum and gold exploration and development in North America.
This release has been reviewed by John W. Fisher, P.Eng., a qualified person pursuant to National Instrument 43-101.
On Behalf of Management
Edward Lee, President
For all Molycor Gold Corp. investor relations needs, investors are asked to visit the Molycor Gold Corp. website at www.molycor.com.
This news release may contain certain 'Forward-Looking Statements' within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in the Company's documents filed from time to time with the TSX-Venture Exchange, the British Columbia Securities Commission and the US Securities and Exchange Commission.
The TSX-Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
Contacts:
Molycor Gold Corp.
Edward Lee
President
604-531-9639
604-531-9634 (FAX)
info@molycor.com
www.molycor.com