Aug 28, 2024

Euro Manganese (ASX:EMN) - developing the only source of high-purity manganese in the EU August 27, 2024 at 08:30 pm EDT Share Focused on supplying high-purity manganese for electric vehicles, Euro Manganese Limited (ASX:EMN) is advancing a project in the Czech Republic that repurposes historical mine tailings. The company's recent offtake agreement with Wildcat Discovery Technologies is a significant milestone, with more agreements and funding efforts planned for the near future. Focused on supplying high-purity manganese for electric vehicles, Euro Manganese Limited (ASX:EMN) is advancing a project in the Czech Republic that repurposes historical mine tailings. The company's recent offtake agreement with Wildcat Discovery Technologies is a significant milestone, with more agreements and funding efforts planned for the near future. Peter Milios: I'm Peter Milios from the Finance News Network, and today I'm talking with Euro Manganese (ASX:EMN). Euro Manganese, trading under the ASX code "EMN" with a market capitalisation of approximately $14m, is a battery materials company, focused on becoming a leading, competitive and environmentally superior producer of high-purity manganese for the electric vehicle industry and other high-technology applications. Joining me today is Euro Manganese President and CEO Dr Matthew James. Matthew, welcome to the network. Dr Matthew James: Thank you, Peter. Nice to be here. Peter Milios: Nice to meet you. Matthew, as it is your first time on the network, could you give us a brief overview of your business? Dr Matthew James: Yes. Euro Manganese is a battery materials company. We have a project in the Czech Republic, which is the only source of high-purity manganese being developed in the EU, and we're also looking for that project to serve the US market as well. It's quite a unique project because it's actually recycling historical mine tailings, so it's a remediation of a currently polluting site in the Czech Republic, whilst producing materials for the energy transition. Peter Milios: So, Matthew, let's dive into your recent announcement regarding the offtake agreement with Wildcat Discovery Technologies, which was announced this week. How impactful was this development? Dr Matthew James: It's great. It's our second offtake announcement. The first one was with a European company backed by Renault, Verkor, and now we have one for the US market. Wildcat is developing a battery plant in the US. It has been in the battery industry for over 10 years, and this is a new kind of development specifically focused on nickel-free and cobalt-free, low-cost, safe batteries for the US market. Now, being nickel- and cobalt-free means that they use a lot of manganese, and that's what drives the cost of the battery down, which is really important now as the EVs are moving into the mass adoption part of the market, where price is the number one concern for the automotive OEMs. Peter Milios: And can you walk us through the details of the term sheet of the agreement? Dr Matthew James: So, it's a seven-year offtake agreement. We haven't published volumes because they're commercially sensitive, but I can say it's for a significant portion of our planned production in the Czech Republic. Its pricing mechanism has been agreed in principle, which will use a benchmark western price, and then will be adjusted off a market index. The only market index available for high-purity manganese is the China ex works high-purity manganese sulphate index. It's not great as a price point because it's a mixture of quality and it's ex works China, so it doesn't include any of the taxes or import duties or anything like that or transport, but it's very good from a directional perspective of how the market is moving. And it doesn't matter which analysts you look at -- high-purity manganese is forecast to go into a supply deficit, sort of '25, '26, even with the slowdown that we're seeing in the EV market. High-purity manganese is one of the most restricted of the battery metals -- not from an ore perspective, there's plenty of manganese ore. The real bottleneck is in the high-purity processing capacity, and that's exactly what we're building in the Czech Republic, but we also have our own ore supply right next door. Peter Milios: Talk me through that ore supply right next door. Do you think you could elaborate on that? Dr Matthew James: Yes. So, we have 27 million tonnes of historical mine tailings. It used to be a pyrite mine, iron sulphate to make sulphuric acid in the Czechoslovakia Communist era. That deposit is not lined, so it's actually leaching sulphates into the groundwater, about a tonne a day into the groundwater and the river that's right next door to us. That tailings just happens to contain about 7.5 per cent manganese in a manganese carbonate crystal. And all we have to do to mine that orebody is effectively excavate with no crushing, no blasting, no grinding even, and we put that straight into our process, the first step of which is a magnetic separation to produce a higher-grade concentrate. And it's that concentrate which we then take through the rest of the process to produce the higher-purity manganese. That's a mine life on our current production, which is about 50,000 tonnes of manganese metal equivalent, that's a 25-year mine life for us. And, being a high-purity process, we're also looking at black mass by-products from recycled batteries. The recycling of batteries produces a black mass. The black mass processes take out the nickel and the cobalt and the lithium. But the manganese is not of high-enough value for them to specifically develop a high-purity manganese line, so they're looking to sell that product or effectively give it away. Otherwise, they have to dispose of it, and our plant could be well suited to process that. So, whilst this is a 25-year mine life on an orebody that's not going to increase, what's there is there, the potential for this plant to actually then start on 100 per cent recycled material is very high. Peter Milios: So, Matthew, just going back to the term sheet agreement, considering that the term sheet is non-binding, are there any intentions to move toward a binding agreement in future? Dr Matthew James: Yes. The intent of both parties is to move towards a binding agreement, and that will occur probably some time next year. The point at which Wildcat need to sort of get towards their final investment decision and funding of their plant, they'll need to have that as a binding offtake agreement. Their plant is due to come into production in 2026. That's ahead of us, so we need that offtake for our FID funding. Them being a year or two ahead of us means that as they ramp up, then our feed stock will move into their supply chain. And then, over the seven years, it continues to ramp up through the life of the contract. Peter Milios: And, Matthew, could you elaborate on Wildcat's technology and their commitment to establishing a US-based facility? Dr Matthew James: Yes. So they have already engaged their engineering firm. They're nearly completing the design of the plant. They plan to build in the south-east of the US. That technology will start on LFP, but then they're quickly moving to LMFP, lithium manganese iron phosphate, and then they also have a technology called "DRX". This is quite a new technology. Many people may not have heard about it. It's disordered rock salt, and that uses even more manganese than LMFP. So, LMFP, about 60 to 80 per cent of the iron is displaced with manganese. As I said, DRX actually uses more manganese. All of those technologies, all of those different chemistries can be built on the same line, and that's a really important point. So, they're not building different lines for different technologies. There's different chemistries on the same line. And we already know that they have term sheets for LMFP from US manufacturers. Peter Milios: And, Matthew, just to finish up, what key updates and developments can we anticipate from Euro Manganese over the next six to 12 months? Dr Matthew James: We put out our quarterly report. I think there are a couple of things to pull from that. First one is we have a very strong offtake funnel. In the bottom of the funnel, there are nine parties. Now, two of those we've announced, Verkor and Wildcat, and Verkor have just secured 1.9 billion euros to build their plant in Dunkirk. Wildcat… Just bit more on Wildcat. Their backers are Koch Industries, Eastman Kodak, CBMM, the largest niobium miner in Brazil and others. So, they have a very strong backing and have a very high confidence level. They'll be able to fund their project. So that leaves seven other parties, which we're in advanced negotiations on term sheets with, which we're targeting to close in 2024. Now, they may not all come to fruition, but we are expecting that we will have a number of further offtake announcements throughout the rest of this year. Our target is to get to probably about 50 per cent of our offtake done by the end of this year. And then, moving into 2025, we have a further 14 parties which we're negotiating with. Not quite as advanced as, obviously, those bottom nine, but moving forward and looking to close up to about 80 per cent of our offtake to get to our final investment decision. That offtake is important because it underpins the debt financing for the project. And then we're also, in the next 12 months, putting applications in for two grants. The first is with Czech Invest. That's a Czech Government-backed grant and corporate tax credit. And then a new one which has become available is the EU Innovation Fund. The EU Innovation Fund is funded by the EU CO2 taxes, and they're going to make the next round available at the end of this year, December. And in that we believe what we'll be hearing is that there's a billion euros earmarked for the battery value chain, and being highly likely to be a strategic project under the Critical Raw Materials Act for which we've just submitted our application, being the only manganese resource in the EU, highly likely to get that. That strategic project status should come out around December, and that strategic project status puts us in a good stead for access to that EU Innovation Fund grant money as well as the Check Invest money. Peter Milios: Matthew, thanks so much for your time. Dr Matthew James: Okay. Thank you, Peter. Ends Euro Manganese Inc. is a Canada-based battery materials company. The Company is engaged in advancing development of the Chvaletice Project in the Czech Republic and exploring an opportunity to produce battery-grade manganese products in Becancour, Quebec. The Company is focused on the development of the Chvaletice deposit, which involves the re-processing of a readily leachable manganese deposit hosted in the tailings of a decommissioned mine in the Czech Republic (the Chvaletice Manganese Project), for the production of high-purity electrolytic manganese metal (HPEMM) and high-purity manganese sulphate monohydrate (HPMSM) and other manganese products, principally for use in lithium-ion batteries. The Company holds two exploration licenses for the Chvaletice Manganese Project, which is located approximately 90 km east of Prague in the Czech Republic. Employees