Euro Manganese Inc (ASX:EMN, TSX-V:EMN, OTCQX:EUMNF) has defined the potential of its flagship Chvaletice Manganese Project in the Czech Republic with positive results from a feasibility study.
The company expects the project to have an after-tax net present value (NPV) of A$1.91 billion (US1.34 billion) using an 8% discount rate and a risk-adjusted base case price forecast.
The ungeared after-tax internal rate of return (IRR) for Chvaletice is expected to be 21.9%, resulting in a 4.1-year payback period with an initial capex of A$1.08 billion (US$757.3 million) – including contingencies of A$147 million (US$103.2 million).
EMN's feasibility study forecasts a 25-year life of project (LOP), underpinned by sustaining capital of A$167 million (US$117 million) and LOP revenues of A$19.87 billion (US$13.9 billion), with gross revenue averaging A$791 million (US$554 million) per year for the life of the project.
Step closer to production
“The global automobile industry has been transformed in recent years with manufacturers focused on the transition to electric vehicles,” Euro Manganese chair John Webster said.
“This focus has not only resulted in an increased demand for battery raw materials but specifically for those sourced from a sustainable and responsible supply chain.
“At the same time, manganese has emerged as a key component in the dominant formulations of lithium-ion batteries. This has created an unprecedented opportunity for us.
“The Chvaletice Project is a key pillar in ensuring the security of supply for Europe’s EV industry. Our strategic location in the Czech Republic, central to an emerging cluster of electric vehicle plants and a related ecosystem of chemical, cell and battery producers, our 25-year operating life, and our commitment to the responsible production of high-purity manganese products, has attracted the attention of lithium-ion battery, battery precursor and cathode makers from around the world.
“The completion of our feasibility study is a significant milestone for Euro Manganese and moves us a step closer to bringing the Chvaletice Manganese Project into production.”
The study also highlighted the high potential conversation rate of the Chavletice Project’s mineral resources to ore reserves of 27 million tonnes – expected to average a grade of 7.41% manganese with 98.3% in the proven category.
Based on this potential reserve, the study forecasts 1.19 million tonnes of high purity electrolytic manganese metal (HPEMM) produced over the LOP, two-thirds of which is expected to be converted to high purity manganese sulphate monohydrate (HPMSM) on-site.
Study “validates financial credibility”
“I am extremely pleased with the results of the feasibility study, which further validate the financial credibility of the Chvaletice Manganese Project, even in the current inflationary environment and using conservative risk-adjusted pricing for HPMSM and HPEMM,” Euro Manganese president and CEO Dr Matthew James said.
“The strength of the project economics, its green credentials and the forecast demand from the EV industry for our highly specialized products support a wide range of financing alternatives.
“Several factors uniquely position Euro Manganese to transform into a leading supplier to the European EV market.
“The supply security, traceability, sustainable production, and low impurity, high-quality nature of Chvaletice’s battery grade manganese products, make our HPEMM and HPMSM increasingly desirable to customers.
“I am proud of the team’s accomplishments in delivering this very positive feasibility study and confirming the viability of the project.
“We remain focused on progressing our key milestones towards making a final investment decision, including securing our financing package for the project, and have already commenced work alongside our recently appointed project finance adviser, Stifel Nicolaus Europe Limited.”