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West High Yield Resources (TSXV:WHY) is focused on developing its wholly-owned Record Ridge magnesium property located near Rossland in southern British Columbia. Magnesium is considered a strategic metal and plays a critical role in a wide range of industries including agriculture, construction (magnesium wallboard and magnesium cement), battery materials, aerospace technology, automotive, power tools, pharmaceuticals, computers and sporting equipment. The gray metal with a green future, magnesium is making its way into a variety of products aimed at making the world an environmentally-friendlier, healthier and safer place to live.
West High Yield is working to position itself as a leading North American magnesium supplier. The company has received a permit for a 10,000 tonne bulk sampling program at Record Ridge. As per the permit requirements, West High Yield is also initiating environmental studies and mine plan development on the project. This work is planned for the summer of 2016, subject to securing funding.
Record Ridge is now in the final stages of the permitting process and the company is working to complete the environmental assessment application including environmental baseline work, as well as a feasibility study. The company expects the process to be complete by the end of 2017.
West High Yield has, as of May 2016, secured $1.5 million in a private placement and a loan agreement. The net proceeds and principal amount of the loan will be used for environmental studies, mine development planning and the bulk sampling programs.
West High Yield also expects to begin another 10,000 tonne bulk sampling program at its wholly-owned Midnight gold property in the summer of 2017. The potential sale of the gold bulk sample concentrate would help provide cashflow for the work needed to develop the Record Ridge project.
At Midnight, drilling results have shown some significant intervals of mineralization with gold values as high as 73 g/t over 1.5 meters, 4.1 meters at 40.11 g/t, and 8.1 meters at 12.20 g/t. The tailings from the many historic mines in the region include several million tonnes of mined material.
- Assays of the Record Ridge drill cores indicate high grades at an average of 24.61 percent magnesium with a potential for higher grades along the eastern edge of the resource.
- Defined magnesium resource still open in all directions and at depth.
- Major infrastructure already in place.
- Magnesium is a strategic metal; only a small fraction of North American magnesium demand can be met from sources in North America.
- Magnesium has several unique, environmentally-friendly uses including EV batteries, renewable energy storage, lightweight alloys and construction materials.
- Midnight gold property holds cashflow potential for funding Record Ridge magnesium project.
Record Ridge Magnesium Project
The discovery at Record Ridge extends over 7.5 square kilometers and is located 10 kilometers to the southwest of Rossland and 10 kilometers from Trail, B.C. The project benefits from well-established infrastructure including roads and highways, nearby CP Rail, electrical power, water and natural gas. Supporting industries and skilled labor are also in close proximity.
“We’re strategically located two miles north of the US border with infrastructure in place,” said Frank Marasco, West High Yield President and CEO. “If you were in the middle of nowhere, that would be $1 billion to $1.5 billion in costs to set that up. And most importantly, we have the purest and cleanest magnesium. It’s hosted in silica, so the magnesium oxide can be extracted without producing CO2 emissions.”
A preliminary economic assessment (PEA) report on Record Ridge was completed in June 2013. The property has a Measured and Indicated mineral resources of approximately 43 million tonnes averaging 24.6 percent magnesium, using a 21.9 percent cut-off for approximately 10.6 million tonnes contained magnesium.
The 2013 PEA presumes a conventional open pit mine with a hydrometallurgical processing plant and a fused magnesia production plant with pre-tax Net Present Value (5 percent discount rate) of US$1.339 billion and Internal Rate of Return of 21 percent.
West High Yield is now in the process of completing an updated PEA which is anticipated for release in the summer of 2016.
Current magnesium supply and demand fundamentals
Magnesium is the lightest and strongest metal on Earth, based on weight-to-density ratio. It’s 33 percent lighter than aluminum, and 75 percent lighter than steel. In fact, magnesium is the third most commonly used engineering metal after steel and aluminum.
Currently, China controls 86 percent of the magnesium worldwide and Russia controls another 10 percent. Once in operation, West High Yield will be the only company producing magnesium in North America other than US Magnesium, whose annual production totals 75,000 tons of magnesium ingots. “All of their product is presold and they can’t keep up with the demand,” added Marasco. “Once in production, we will probably be one of the biggest magnesium producers in the west.”
On the demand side, the market share for magnesium in alloys for automobile sheet has increased and that same trend is expected to continue over in the aviation and aerospace industries. These industries are looking to reduce weight in order to reduce fuel consumption in response to the growing number of government mandates to reduce carbon emissions.
Environmental factors driving new demand for magnesium
“The world is in the midst of an environmental revolution right now,” stated Marasco. “Everybody’s turning green. And there’s nothing greener than magnesium. We think it will benefit the world more than any other mineral or element on Earth.”
Once into production, West High Yield will have several potential avenues for cash flow across a wide range of industries. Magnesium has many uses outside of the traditional alloy sector, including magnesium batteries as a lithium alternative, solar energy storage systems, agriculture and even construction materials.
In the agriculture industry, magnesium is used as a fertilizer nitrate. Agricultural experts are concerned that today’s fruits and vegetable are lacking in magnesium and other essential nutrients. “I recently spoke with a professor from Berkeley University where they are grinding magnesium down to a fine sand with which to re-cultivate agricultural land with vital nutrients,” added Marasco.
Magnesium wallboard and magnesium cement are gaining traction in the construction industry. Magnesium wallboard can be used in ceilings and walls in place of cement boards, drywall, OSB board or plywood. It’s manufactured using an energy-efficient process and it reduces deforestation. It’s fire-resistant, waterproof, mold and mildew proof and termite proof.
Magnesium cement lasts for thousands of years and displays compressive strengths of 9,000 psi to 45,000 psi, giving it a vital role in infrastructure construction. It’s far superior to the Inland and Portland cement that has been traditionally used to build much of our now crumbling infrastructure. The production of these conventional cements creates significant amounts of C02 emissions; however, magnesium cement requires 60 percent to 80 percent less energy to produce.
In the battery space, Japanese researchers as well as scientists at Toyota have been working to develop the technology for magnesium batteries, which may be superior to and cleaner than their lithium counterparts.
“With the purity of our product, we could sell to the pharmaceutical industry as well,” said Marasco. Magnesium is just as important as vitamin D for our health. Research shows that 80 percent of North Americans have a magnesium deficiency, which can lead to many diseases, muscle pain, stress and heart attacks.
These are just a few of the industries in which magnesium plays an important role. It’s also used in computers and electronics, sporting goods and power tool manufacturing.
West High Yield is well-positioned to move forward on these various avenues and opportunities in the magnesium space. “We will do it in a measured, practical way,” explained Marasco. “We will start off producing magnesium oxide according to our PEA. Once we have more cash flow, we will begin construction of a magnesium wallboard and magnesium cement plant.”
West High Yield has a letter of intent for a future purchase of 100,000 tonnes per year over 10 years for magnesium ingots which will be used in magnesium alloy-based manufacturing of rail hopper cars. The company also has a letter of intent for 2,000 tonnes of magnesium per month.
“Magnesium is not sold on an exchange, so you need to secure your own client,” said Marasco. “Currently, I have two or three houses that have already contacted us to represent our magnesium oxide in North America. I see no issues with receiving or getting any clients to purchase the product because there’s a very big demand for it in North America right now.”
Frank Marasco Jr.—Director, President and Chief Executive Officer
Frank Marasco is the founder of West High Yield. He is also President and Director of Big Mountain Development Corp. Ltd.
Dwayne Vinck—Director and Chief Financial Officer
Dwayne Vinck is an independent financial consultant and Chartered Accountant with over 20 years of business experience. He is a Director at Sulfur Recovery Engineering and volunteer director of Kids Help Phone.
Patricia L. Nelson—Director
Patricia Nelson was Controller for Sabre Petroleum’s, Petroterra Natural Resources and Manager of Financial Control for Suncor. She is the Vice Chair and Director of the In Situ Oil Sands Alliance, Director of Altalink, and Director of Optiom Inc. Nelson served 15 years as an elected Member of the Legislature of Alberta. She was appointed and served as Minister of Energy, Minister of Economic Development and Tourism, Minister of Government Services and finally was appointed Minister of Finance. She served 12 years as a member of the Treasury Board and the Agenda and Priorities Committee of the Government.
Maria Marasco is an independent business woman who has provided services in corporate restructuring finance, acquisitions, and strategic planning. She is also responsible for overseeing management information systems, human resource strategies, and property management systems.
Rick Walker—P. Geologist, P. Engineer
Rick Walker has over 25 years of geological and structural mapping experience in the mineral exploration industry. He has a strong background, ranging from structurally complex areas to advanced exploration property definition. In addition, he has worked on a wide variety of deposit types, including porphyries, sedimentary exhalative (SEDEX), volcanogenic massive sulphides (VMS), low tonnage vein-type, industrial minerals; gold, silver, base metals, rare to strategic metals and diamonds. Walker has delivered significant geological value throughout his career for companies, ranging from junior to major resource companies, both nationally and internationally. He has also served as a volunteer for industry related organizations, serving for 12 years as President of the East Kootenay Chamber of Mines, 5 years as a Director of the BC and Yukon Chamber of Mines (now the Association of Mineral Exploration for BC), on the committee that developed the initial Mineral Exploration Code for BC and as an Industry representative in the Commission on Resources and Environment (CORE) process resulting in the East Kootenay Land Use Plan.
Corey Peck—Junior Geologist
Cory Peck is a junior geologist who came to West High Yield Resources in the spring of 2007. He studied at the University of Calgary, where he received a B.Sc. in Geology, with a minor in earth science. He has extensive training in both the field and lab settings. His skill set encompasses all aspects of geology, geophysics and geography, with particular emphasis on geotechnical logging, mineralogy and mapping.
Ian F. T. Kennedy— Director
Ian Kennedy brings over 45 years of experience in venture capital and investment banking activities. Kennedy is a consultant who has served on the board of more than 35 public companies from mining, oil and gas, to high-tech. He has also been Chairman of Ryerson Polytechnic, Toronto.