Euro Manganese Inc (ASX:EMN) (CVE:EMN) (OTCMKTS:EROMF) (FRA:E06) is progressing towards its goal of developing the Chvaletice Manganese Project in the Czech Republic and a final environmental impact assessment (EIA), which is targeted for completion by the end of the year, could enable final permitting for the project in 2022.
The project is expected to reprocess tailings to produce ultra-high-purity electrolytic manganese metal (HPEMM) with specifications exceeding 99.9% manganese and ultra-high-purity manganese sulphate monohydrate (HPMSM) - which are critical components of lithium ion (Li-ion) batteries.
Chvaletice is also expected to result in the environmental remediation of a polluted former mine site, bringing it into full compliance with modern Czech and European Union environmental standards and regulations.
Meeting European demand
Few sources of manganese are suitable for the sustainable and economic production of high-purity manganese products and the demand for high-purity manganese products is growing rapidly.
This is largely fueled by the Li-ion and electric vehicle (EV) markets, particularly in Europe where 100% of high-purity manganese products are imported.
The company has worked closely with key global customers on product development and supply chain qualification and, based on the results of its pilot plant tests, is confident that it can produce the ultra-high purity manganese products to meet demand.
Processing plant land secured
The company has secured the land required for its processing plant site (already zoned for industrial use) and has initiated the rezoning process for the tailings land.
Both adjoining municipalities have voted unanimously to proceed with the required land-use plan change after an intensive community consultation.
The company has been undertaking community consultation for several years and has seen overwhelmingly positive feedback and valuable input from local residents.
Additionally, the company has experienced ongoing collaboration and support for the project at various levels of the Czech Government.
The government issued a key preliminary mining permit in 2018 and issued and then extended two exploration licences to 2023.
It has also approved the company’s application for some investment incentives in the form of investment tax credits on eligible project expenditures, and in March 2020 issued a ruling under European Union’s Natura 2000 which determined that the project is not expected to adversely impact endangered and protected species habitat.
Environmental impact assessment
The environmental impact assessment (EIA) regulatory review process is underway with the results of the review process by several government ministries and agencies, as well as local municipalities, communicated to the company in January 2021.
Based on the results, the company can now move forward to the next stages of the permitting process.
Public and regulatory feedback from the screening procedure will be incorporated into the Final EIA, which is targeted for completion by the end of 2021 and could enable final permitting for the project in 2022.
Funding the feasibility study
The net proceeds of C$10.6 million raised from a recent offering enabled the company to continue the work on the feasibility study, place the order for the demonstration plant and advance the EIA and permitting process.
However, the company anticipates it will be required to raise additional funding as the current capital resources will not be sufficient to fully complete the feasibility study and the installation, commissioning and operation of the demonstration plant.
The expected funding of the external costs of the feasibility study and the operation of demonstration plant for one year is estimated at C$11.2 million, with internal costs to complete these stages of the project estimated at C$6 million, bringing the total costs to C$17.2 million.
Subject to additional financing, the completion of the demonstration plant and commissioning, as well as the completion of the feasibility study, is now expected by the end of 2021.
As it moves through the feasibility and project development stages, the company intends to evaluate potential value-enhancing opportunities for the project, with the aim of reducing costs and technical risks.
The company is also evaluating the possibility of producing high-purity manganese carbonate.
In collaboration with one or more potential consumers of high purity manganese products.
The company will evaluate the feasibility of building one or more satellite manganese metal dissolution plants at customer nickel-manganese-cobalt (NMC) precursor plants which could provide certain customers with manganese sulphate solution instead of granulated manganese sulphate monohydrate - eliminating the energy-intensive crystallization step.
Securing a strategic partner
Following the receipt of expressions of interest from various parties to partner in the development of the project in 2020, the company initiated a process to secure a strategic partner to assist with the further development of the project.
The company is also continuing discussions on technical collaboration with several parties (including battery, chemical and automobile manufacturers) with the intent to enter additional memorandums of understanding (MOU) for the eventual offtake of high purity manganese products from the project.
Project financing outlook
Once permitted and offtake agreements have been entered into and a bankable feasibility study demonstrating has been completed, the company expects to turn its attention to project financing.
The company believes that the capacity for project financing is likely to compare advantageously to the majority of mining projects - given its safe jurisdiction, the quality of potential offtake agreements, environmental benefits, and its strategic position within the European battery supply chain.
The project’s debt capacity would be influenced by:
- The bankability of offtake agreements and any available price downside protection;
- The government, Export Development Agency and European Union credit guarantees of debt;
- Sponsorship by customers through advances, prepayments on offtake agreements and/or equity or debt contribution; and
- The cost overrun protection provided by an engineering procurement construction (EPC) counterparty.