Mr. Larry Reaugh reports

AMERICAN MANGANESE INC. FOCUS ON LITHIUM SUPPLY FROM LITHIUM ION BATTERY RECYCLING OPPORTUNITY

American Manganese Inc. has submitted applications for government scientific research grants in both the United States and Canada to extend its patented technology for producing electrolytic products from low-grade manganese resources located in the Southwestern United States by proof-of-concept testing for recycling and for upcycling lithium-ion electric vehicle (EV) batteries.

Norman Chow, president of Kemetco Research Inc., said: "There is currently no known commercial technology for large-scale recycling of cathode materials of multiple chemistries. Spent cathode materials represent an ideal resource material to be processed with American Manganese's proprietary hydrometallurgical process." Independent third party examination of the process chemistry concurred that it should be technically viable.

Currently, the lithium demand for EV battery cathode materials is outstripping available supply. The price of the lithium carbonate feedstock in North America is currently about $6,400 (U.S.) per tonne. Recently reported Chinese spot prices have been up to triple this amount.

One factor driving demand is that first-generation EV batteries are reaching the end of their life cycle. A Recycling International article dated Jan. 12, 2016, by Kristen Linnenkoper, titled "EDV Batteries Present Big Recycling Opportunity," reports that 276,000 electric drive vehicle (EDV) batteries expired or left service by the end of 2015. It estimates that this number will increase to 358,000 by 2020 and 849,000 by 2025. These spent batteries are a growing feedstock for recycling and upcycling efforts.

The Belfer Center for Science and International Affairs reports that China has set ambitious targets for domestic electric vehicle development and deployment: The target is to have five million electric vehicles on the road by 2020. China's leaders want to leapfrog the advanced automotive industries of other countries and seize the growing new energy vehicle market. This goal is complemented by a recent government policy initiative that identifies car manufacturers as the responsible body for recycling. The legislation aims to provide guidance to the relevant enterprises to carry out EV power battery production and recycling, and will form the basis of a new recycling system for upstream and downstream firms in the sector.

Successful application of the American Manganese patented process could result in the following benefits:

• Reducing the demand for new cathode materials, notably lithium and cobalt;
• Providing a source of lower-cost recycled/upcycled cathode materials, potentially generating higher profit margins for battery manufacturers;
• Improving battery safety, as hydrometallurgical processing eliminates product crushing and grinding, potentially lowering processing costs, while generating products with less extraneous metal contamination, thereby lowering the chances of battery explosions or fires due to thermal runaway;
• Providing significant environmental benefits, including, but not limited to:
  • Substantial reduction of landfill waste;
  • Reduction of energy consumption and emissions of carbon dioxide and other pollutants;
  • Reduced consumption of critical and strategic metals.

The American Manganese process offers other potential advantages:

• A hydrometallurgical process that is easily scalable;
• The potential to recycle all lithium and base metal matrix compounds;
• A process applicable to multiple lithium-ion battery chemistries, including lithium cobalt, lithium aluminum cobalt, lithium nickel manganese cobalt and lithium manganese;
• The ability to tailor treatment processes to precipitate cathode materials with tailored structures and chemistries for improved battery performance.

Subject to securing adequate financing, the company intends to partner with Kemetco Research to demonstrate on a bench scale that the conceptual process can successfully treat spent lithium-ion battery cathode materials, producing rejuvenated materials suitable for reuse in new lithium-ion batteries. The proposed testing program would be carried out at Kemetco Research's laboratory located in Richmond, B.C.

Financing

American Manganese is currently in discussion for the potential licensing of its process to interested parties in other countries.

Concurrently, the company is also actively exploring many other potential sources of funds for this work, including: a strategic alliance with an established company in the lithium-ion battery, electric vehicle or materials recycling businesses; a joint venture with a financing group; and sale of a royalty on future use of the American Manganese patented process.

Options

The company has granted nine million incentive stock options pursuant to its stock option plan for its directors, officers, advisers and consultants. The options are exercisable at a price of five cents per share for a five-year term.

Any shares issued on the exercise of these stock options will be subject to a four-month holding period from the date of the grant. This stock option grant is subject to approval by the TSX Venture Exchange.

We seek Safe Harbor.