Molycor Gold Corp.

Molycor Gold Corp.

August 05, 2011 06:00 ET

Molycor Gold Corp.: Positive Preliminary Economic Assessment Study Completed for Tami-Mosi Magnesium Project

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 5, 2011) - Edward Lee, President of Molycor Gold Corp. (TSX VENTURE:MOR)(PINK SHEETS:MLYFF)(FRANKFURT:M1V) ("Molycor" or the "Company"), is pleased to report that Wardrop Engineering, a Tetra Tech Company (Wardrop), has completed a preliminary economic assessment (the "Report") for the Company's 100% owned Tami–Mosi Magnesium Project located in the Schell Creek Range of White Pine County near Ely, Nevada. The NI 43-101 compliant Report will be filed with the Regulators on SEDAR within 45 days of this news release.

The Report suggests an economically attractive opportunity exists to develop the Tami–Mosi Magnesium Project within the United States. The Report demonstrates the ability to exploit the resource in excess of 30 years. The conceptual basis of the Report is for the project's business operations to be performed within the United States, where protective tariffs are in place on imported magnesium metal. The Report is based upon a Resource Estimate Analysis generated by Mr. Klaus Triebel, CPG, (Wardrop) showing the Inferred Resource estimated by Wardrop to be 412 million tonnes with an average grade of 12.3% Mg for a contained metal content of 111 billion pounds of Magnesium using a 12% Mg cut-off grade. No dilution is incorporated in the Wardrop estimate. The increased tonnage and grade over earlier estimates results from the acquisition of 13 more contiguous claims as well as applying block modeling and surface sampling. (See announcement dated August 2, 2011)

An initial metallurgical assessment study completed by Hazen Research Inc. in 2010, found this dolomite to be high quality and an ideal source for production of magnesium metal, magnesium based refractories, and/or agricultural products. Analyses on a sample from drilling done in 2008 show the dolomite to be almost identical to the National Institute of Standards & Technology Standard Reference Material 88b (for dolomite limestone) but with lower levels of impurities. (See announcement dated September 15, 2010)

It is proposed that the dolomite would be open sided pit mined from the dolomite quarry to be located near Ely, Nevada and transported 210 kilometers (130 Miles) north to the Processing Site ("Facility") at the rate of approximately 800 tonnes per day. The Facility would be located near Wells, Nevada and situated adjacent to the interstate highway, main line railway, natural gas and existing electrical infrastructures. The 150-acre Facility would be vertically intergraded and will contain a magnesium plant, a ferrosilicon plant and a power plant. The magnesium plant is designed to produce 30,000 tonnes annually of 99.9% pure magnesium ingot. The 30 year mine life represents consumption of only 2% of the inferred 412 million tonne Tami–Mosi resource. The ferrosilicon plant would produce 75% ferrosilicon and is included in the facility design for quality control and to reduce cost of a critical raw material for the magnesium reduction process. A proposed clean coal power plant utilizing coal gasification and energy recovery would generate 74.5 megawatts of dedicated power for the Facility. Coal will be delivered to the Facility via rail from the Powder River Coal Basin, minimizing raw material transportation. The expected power cost will be significantly lower than that of commercially available natural gas or electricity.

The magnesium plant would produce magnesium metal ingots using conventional thermo reduction method via an updated and automated Bolzano Process. (Comparable magnesium recovery is currently defined at the industry standard of 81%.This area has the strongest potential for improvement). The process is identified not only as the most environmentally friendly, but also as one that has potential for increased efficiency and automation. Currently, Molycor has identified six areas of opportunity that could substantially reduce the cost per pound produced, enhance the efficiencies of all operations and lessen the overall emissions. Molycor is currently pursuing application possibilities for patent protection.

The preliminary financial modeling, on a pre-tax basis, is constructed to describe magnesium production in the United States. The latest negotiated contract tariff spot price in the U.S.A. ranged between US$2.45 and US$2.65 per pound 99.9% Mg (Metal Pages, June 1, 2011). The model uses the lower US Spot price of US$2.45 per pound for all revenue calculations.

Estimated Capital Cost is US$424 million and total Operating Costs is estimated at US$1.28 per pound magnesium recovered. This includes all on and off site operations. The project is expected to employ up to 194 employees for the life of mine before expansions. The strip ratio for the deposit is estimated to be 0.038:1.

(US$ millions)
(US$ millions)
BASE CASE 16.1 5.9 547 1,818


The Preliminary Economic Assessment is based on a number of technical costs and other assumptions. These may be changed or lowered in the future as additional information becomes available. The conversion of waste streams into products; increasing plant efficiencies; heat recovery from process streams; alternative feed and/or reagent substitutions or continuous operation options were not included in the operating cost calculations. During the development of the pre-feasibility study these items will be tested to determine probability for lowering the operating cost per pound of magnesium produced and increasing revenues.

Mineral resources that are not mineral reserves do not have demonstrated economic viability. The analysis includes inferred resources. The preliminary assessment includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.

The Report was completed by Wardrop and includes significant input from the following sources:

  1. Mr. James Sever, B.S., M.S., M.B.A. – responsible for concept of the overall facility and the technical process for magnesium production and the costs;
  1. Mr. Robert Brown – for process operations and markets;
  1. Mr. Ralph Carter, P. Eng. – for ferrosilicon production and the production costs;
  1. Dr. Fred Buckingham, Ph.D., P.E. – for coal gasification technology, operations and costs; and
  1. Dr. Neale Neelameggham, Ph.D. – for technical review, research and patent development.

Larry W. Reaugh, Chief Executive Officer and Edward Lee, President agree; "The preliminary economic assessment demonstrates the positive economics needed to develop a new efficient world class primary magnesium producing facility in the US, securing domestic supply and allowing Molycor the opportunity to move the project forward towards the final feasibility."

Further work will consist of drilling, metallurgical testing and process design, geotechnical and environmental baseline studies, magnesium marketing studies, patent applications and a preliminary feasibility study.

About Wardrop (

Wardrop is a multi–disciplined consulting and engineering firm that provides innovative solutions for the natural resource management, energy and infrastructure markets globally. Wardrop currently has 1,200 employees who work collaboratively throughout its North American and overseas operations.

Wardrop is part of Tetra Tech (, a leading provider of consulting, engineering, program management, construction and technical services. The combined companies have more than 12,000 employees worldwide and capabilities that span the entire project lifecycle.

About Magnesium:

Magnesium is a widely used industrial metal categorized by its high strength and light weight; the supply of which has undergone dramatic change. Production of the metal from source has almost ceased in Canada and the United States with only one producing company in Utah remaining. During 2010, China produced 82% of the world's primary supply. The total world production is estimated at approximately 800,000 metric tonnes (2008 United States Geological Society). This distortion of the market led to anti-dumping charges and the imposition of an import duty on foreign produced magnesium by the United States; this dependence on virtually only one North American source presents opportunity. The price of magnesium outside the US is currently US$3,350 a metric tonne or US$1.52 lb (Metal Pages, 2011-07-07). The metal has enjoyed a favorable price for decades and has reached over US$6,000 a metric tonne or US $2.72/lb in times of high demand.

Molycor's Goal:

The Company plans to advance the Tami-Mosi Magnesium Project toward prefeasibility and feasibility studies over the next eighteen months on its NI 43-101 inferred resource of 111 billion pounds Mg in Nevada.

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.

The resource estimate and associated work was prepared in compliance with requirements set out in National Instrument 43–101 by Klaus Triebel, CPG, of Wardrop, Vancouver, BC.

The technical content of this news release was read and approved by John W. Fisher, P.Eng., a qualified person recognized under NI 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

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.

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