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Giyani Gold (TSXV:WDG) has repositioned itself to become a “one-stop raw materials shop” for the emerging battery manufacturing sector. The junior is focused on discovering and developing the potential for mining manganese, cobalt and lithium in sub-Saharan Africa, where the majority of the world’s manganese is produced – particularly high-grade manganese required for the production of lithium-manganese-oxide and lithium-nickel-manganese-cobalt-oxide batteries. “We’re really focused on battery technology,” according to CEO Duane Parnham, during a call to INN.
The Ontario, Canada-based company recently acquired a significant land package in Botswana and is on the verge of closing deals for two additional property acquisitions containing two past-producing manganese mines in Zambia – all of which it plans to explore and develop further.
As the world’s fifth most abundant metal, manganese has a number of uses. It plays an important alloying role in steelmaking due to the metal’s ability to combine with sulphur. When manganese is added to molten steel, it increases the alloy’s strength and makes it more resistant to impact.
New battery technology
In Parnham’s year-end update to shareholders in 2016, he wrote, “Manganese is a critical element in energy storage which will be the direction for Giyani’s projects going forward.”
But a more exciting use of manganese is its application to battery technology. Manganese dioxide is utilized in regular dry cell batteries, and the metal is also the majority ingredient of lithium-manganese-oxide batteries (61 percent manganese), which have been around since the 1980s. These batteries are notable for their high thermal stability and are safer than some types of lithium-ion batteries. For this reason they are often used in medical equipment and devices.
Then there are lithium-nickel-manganese-cobalt-oxide (NMC) batteries (19 percent manganese, 20 percent cobalt). NMC batteries are commonly used in power tools and in powertrains for vehicles, but the more intriguing use for them is in grid power. Tesla (NASDAQ:TSLA), the luxury electric vehicle maker whose batteries are being supplied by Panasonic at its Gigafactory in Nevada, is using NMC batteries to store clean power, such as solar, in homes or businesses. The purpose of the batteries is to offer up quick energy, when it’s needed, without resorting to a peaker plant, which are typically run with fossil fuels. “There’s quite a lot of manganese in there,” Tesla CEO Elon Musk said in a Fortune article describing Tesla’s grid batteries. Analysts expect the rechargeable battery market to more than double within the next decade, from US$49 billion in 2014 to $112 billion in 2025.
Healthy manganese market
While the market for manganese turned lower in 2015 due to lagging economic growth in China, the metal’s largest consumer by far, the manganese market is beginning to pick up again. Global demand for manganese has jumped from around 11 million metric tonnes (MMT) in 2009 to 18 MMT in 2016, and it is expected to grow to just under 20 MMT this year. Most of the world’s manganese, 6 million metric tonnes (MT), comes from South Africa, with China and Australia ranking second and third at 3 MMT apiece. With demand outstripping supply, the price of manganese has naturally climbed, particularly over the last year. The use of high-quality flake manganese in the battery industry has caused the price of pure, 99.7 percent flake manganese to surge to around US$2,800 a tonne, nearly double what it was fetching in 2015. The demand for electrolytic flake manganese used in batteries is currently outpacing supply by 25,000 MT.
North of South Africa and bordered by Namibia, Zambia and Zimbabwe, Botswana has a rich mineral history most famously dotted with diamonds. With most of the country’s diamonds being gem quality, it is one of the world’s leading diamond producers by value. Botswana also hosts deposits of gold, copper, nickel and coal. The country is considered to be highly prospective for manganese, due to a geological formation known as the Transvaal Supergroup, a swath of mineralization that cuts under northern South Africa and into Botswana, underneath the Kalahari Desert. A mining-friendly country, some of Botswana’s advantages for mining investors and developers include a 3 percent government royalty on base metals, favorable income tax rates, and no import tax on mining equipment.
- Large (13,283 square-kilometer) land package in Botswana highly prospective for manganese
- Part of the Transvaal Supergroup, which produces 80 percent of the world’s manganese
- Two past-producing, high-grade (>50 percent) manganese mines in Zambia
- Low capital expenditure to bring mines back into production
- Off-take potential with battery/automotive manufacturers, energy companies
- Excellent infrastructure: good rail, port and road access from the Kalahari manganese field in Botswana
- Strong CEO record of increasing resource company valuations
- Recent financing of $1.232 million, through non-brokered private placement
- Potential for project pipeline focusing on increasing demand for battery metals
Key Project: Kanye Basin, Botswana
Giyani Gold is focusing its efforts on a large land package thought to contain manganese in Botswana, as well as two past-producing manganese mines in Zambia.
The region of interest is in a geological zone called the Transvaal Supergroup, where an estimated 80 percent of the world’s manganese originates from. Forming in the Earth’s crust 2,500 million years ago, the Transvaal Supergroup runs under northern South Africa and southern Botswana, where it is largely hidden and unexplored underneath the Kalahari Desert. Giyani plans to employ exploration tools like airborne geophysics, Landsat and borehole imagery to guide further discoveries in the Kanye Basin of Botswana.
Giyani will be searching for high-grade manganese nodules that can produce flake manganese required by battery producers, which is different from the lower-grade material used to produce ferro-alloys.
“It’s a smaller market, but one that demands a specific chemistry and grade and volume,” said Giyani Gold CEO and Chairman Duane Parnham. “So our idea is to start from scratch, and look for new deposits that can be tailored into this new production scenario that would feed the battery industry.”
In addition to targets in Botswana, Giyani is also casting its eye on Zambia, where it will assess the potential for bringing two historical manganese mines back into production. Last November Giyani signed a letter of intent with Menzi Battery Metals to acquire a 70 percent interest in the Kampumba and Chiwefwe open-pit mines. Between 1954 and 1968, the two operations mined a combined 360,000 tonnes of material at grades over 50 percent manganese.
Under the agreement, Giyani agreed to pay $200,000 in cash and spend $1 million over five years. The company has engaged Toronto-based Boswell Capital Corporation to be the project manager that will complete a due diligence review of the mines and assess the potential for near-term production.
Duane Parnham – President, CEO and Chairman of the Board
Duane Parnham has a successful track-record of developing exploration companies from start-up to fully permitted projects with considerable resources and reserves. This experience includes working internationally with governments and landowners to identify high-impact and underdeveloped projects, and providing the capital and managerial resources. He has spent his career developing and founding several resource-focused companies, including but not limited to Temex Resources, Forsys Metals, and Canoe Mining Ventures. Parnham was also the founder and Chairman of UNX Energy, a junior oil and gas company that was sold in 2011 to HRT Participações em Petróleo S.A. for CAD $730 million. He currently serves as the Chairman of Nevada Zinc and Broadway Gold Mining as well as holding directorships with Canoe Mining Ventures and Evolution Optiks, a private technology startup.
Eugene Lee – Independent Director
Eugene Lee is a mining finance professional with experience in capital markets, financial reporting, risk management, internal controls and corporate governance. He is currently Chief Financial Officer of Premier Royalty, which he helped take public via a RTO transaction with Bridgeport Ventures. His previous roles include Vice President, Finance and Assistant Corporate Secretary for Northgate Minerals Corporation until its acquisition by AuRico Gold and Senior Accountant at Centerra Gold. Lee is a Chartered Accountant with the Institute of Chartered Accountants of Ontario and he articled with PricewaterhouseCoopers in the audit and assurance group before transferring to PwC’s consulting practice focusing on corporate bankruptcies and restructurings. He is a graduate of Trinity College at the University of Toronto and holds a Bachelor of Commerce in Economics and Finance.
Scott Breard – Director
Scott Breard is a business and marketing professional as well as an author and speaker. He attended the University of Guelph prior to opening his first retail store, Hot Shots Games in 1999 at the age of 25. Breard is currently President and Co-Founder of Inside Investing Inc. a Canadian marketing agency specializing in video and online media. He has previously held positions as Director of Marketing with Olhausen Billiards, USA and Vice President of Marketing with Jack Nathan Health’s Clinics at Walmart, Canada.
John Petersen – Independent Director
John Petersen has been engaged in the practice of law for 37 years and is a global thought leader on energy storage and sustainability issues. His diverse experience in corporate finance, natural resource development and advanced battery technologies give him a unique perspective on the technical, economic and supply chain challenges of energy storage, vehicle electrification and alternative energy. From February 2003 through January 2007, he served as a director of Axion Power International, including a two-year stint as board chairman. He is a 1976 graduate of the College of Business Administration at Arizona State University and a 1979 graduate of the Notre Dame Law School. He was admitted to the State Bar of Texas in May 1980 and was licensed to practice as a Certified Public Accountant from March 1981 through December 1990.