American Manganese Inc. (CVE:AMY
) (PINK:AMYZF) share price collapsed after the company published a dim feasibility study, showing high capital requirements and comparatively low payback calculations.
AMY stock price lost 50% on Thursday as traders rushed to sell the stock. The trading volume was huge, totaling over 3 million shares and spike far above the average turnover of 201 thousand.
On Thursday AMY announced results of preliminary feasibility study done for the Artillery Peek Manganese Project in Arizona. The complete report will be filed within 45 days, but the preview doesn't look too encouraging.
Initial capital cost for the project is estimated to be $477 million most of which would be spent over the first two years on engineering, construction and procurement. Sustaining capital over the life of the mine will require another $60 million. Allowances for end of mine life expenditure on waste re-handling, site reclamation and plant salvage total $47 million.
The estimated internal rate of return, varied by different approaches, ranges from 12.9% to 25.03%, which is a rather low number. Net present value of the project at 5% interest rate ranges from $311 to $940 million, which yet again, seem rather low.
It would take 3.9 to 5.9 years to get the money's worth on the project.