Understanding the Future of American Manganese and the Latest Pre-Feasibility Report

Added May 28th, 2012 – Vancouver, British Columbia


Larry W. ReaughBy Larry W. Reaugh – President & CEO of American Manganese Inc.

It has been a busy month for us here at American Manganese, with the completion of our Pre-Feasibility report for the Artillery Peak project and the public release of parts of that report on May 17th. The release of this report is one more step towards the future of our company and the production of manganese in North America. (A copy of the public PFS material can be found here)

As with any release of this nature, there are always questions that arise from our shareholders and the general public. It is our resolve to answer those questions to the best of our ability. As part of our efforts, we held a press conference on Friday, May 18th which can be heard in its entirety here.

There are several questions that seem to resonate the most with those interested in the PFS release, so we felt it best to address them in as simple a manner as possible.

• Why has the cost of developing the Artillery Peak project risen?
Yes, the cost of the Artillery Peak project is more than originally anticipated. AT $477 million to develop, it is a capital expenditure that we cannot avoid going forward. However, the rise in expenditures has been seen across the board industry wide, with a rise in the cost for supplies and construction. A large contributor to escalating costs is the doubling of the plant size as a result of the reduced grade of the manganese in the final mine plan developed by Tetratech Wardop Engineering. In addition, while our initial capital expenditures are higher than expected, our overall operating expenditures remain some of the lowest in the manganese market with a low-cost production process.

• Will Artillery Peak be in production in 2014?
While we are firmly committed to advancing towards a 2014 start date, we cannot predict the future of the manganese market. As with any mining operation, our development and production is reliant on the market value of the material we are mining. If the value of electrolytic manganese metal does not support a feasible business model, a 2014 start date may not be achievable. However, the CPM report predicts a growing demand for electrolytic manganese metal and that prices will continue to remain strong and steadily grow over time; if we didn’t, we wouldn’t be in this business.

• Is our hydrometallurgical process scalable?
Our patent pending process is an achievement we are proud to be using in the Artillery Peak project. In a market that is generally reliant on high-energy consumption models, our hydrometallurgical process allows for a cleaner, more energy efficient model. The model has been rigorously tested by Kemetco Research, and in the PFS report, Tetratech Wardrop ultimately found that the process can be scaled to a working model for the Artillery Peak project.

• How do we plan on raising the capital funds needed to develop the Artillery Peak project?
Manganese is a commodity that is in short supply, as such; we believe that a strategic partner can come on board to help finance the final stages of this project. The company has a history of raising the capital needed during various rounds of financing, and we are confident there is enough interest in our material that financing will be achievable.

• Why have the tonnes per day increased to 7,000?
To keep up with our planned annual production of electrolytic manganese metal, about 50,000 tonnes per annum, we had to raise the tonnes per day. This increase is reflective of the ore grade and the capabilities of the hydrometallurgical processing.

The electrolytic manganese market is a growing industry that we are confident will require a North American producer. American Manganese has the opportunity to become a strategic supplier for the North American market. This is why the company has been invited to speak at the Strategic Metals Conference on June 6th in Washington D.C. I will be speaking on behalf of the company regarding the state of the manganese market, the growing demands for manganese and the need for domestic production in North America. If you are able, I invite you to attend the conference to answer any questions you may have. In the meantime, I and the staff of American Manganese are available to answer shareholder questions.

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The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. 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 Toronto Stock Exchange, the British Columbia Securities Commission and the US Securities and Exchange Commission.