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Euro Manganese: Developer poised to supply the fast-growing EV battery market

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  • Developing the Chvaletice Manganese Project (CMP) in the Czech Republic
  • CMP is Europe’s largest manganese resource, and is located close to electric vehicle and battery production hubs
  • Manganese is to be extracted from old mine tailings, with no new mining or waste generation
  • Tailings reprocessing effectively remediates the site; water and soil quality improve over the life of the project
  • Project is advancing: commissioning of the larger-scale demonstration plant underway, and completed a second production run of the smaller scale pilot plant to produce samples for potential customers
  • Strong demand for samples from 12 companies, including automotive OEMs, EV battery makers and speciality alloy manufacturers
  • Formal tender process for off-take underway with bids received from multiple parties across value chain and further discussions ongoing;
  • European Bank of Reconstruction and Development is the company’s second largest shareholder having invested CAD$8.5 million to support advancement of the CMP
  • Solid ESG credentials and strong support of local community
  • JV with clean technology company Nano One to provide manganese feedstock for their patented OnePot M2CAM Process, a metal direct to cathode process that has significant environmental and cost benefits
  • Exploring a high-purity manganese opportunity in Canada to supply the North American market

Euro Manganese [TSXV:EMN] [ASX: EMN] is a battery raw materials company focused on becoming a leading, competitive and environmentally superior producer of high-purity manganese for the electric vehicle industry.  The company has raised ~US$70 million to date, and together with its wholly-owned Czech subsidiary, Mangan Chvaletice, is advancing the Chvaletice Manganese Project in the Czech Republic.

The project is a unique waste-to-value recycling and remediation opportunity involving the reprocessing of old tailings from a decommissioned mine that operated between 1951 and 1975. Euro Manganese plans to invest approximately US$750 million to build a state-of-the-art processing facility adjacent to the tailings deposit that would produce two high-purity manganese products: high-purity electrolytic manganese metal (HPEMM) and high-purity manganese sulphate monohydrate (HPMSM).  These are essential ingredients in the cathodes of most electric vehicle lithium-ion batteries and in other high-technology applications.

The Chvaletice Project’s 27 million tonne reserve is hosted in the historic mine tailings and is the only sizable manganese deposit in the European Union, which strategically positions Euro Manganese to provide fully-traceable, locally-produced high-purity manganese products for Europe’s battery supply chain. EMN’s Proven and Probable reserve base supports annual production of 15,000 tonnes of HPEMM and 100,000 tonnes of HPMSM for 25 years.

EMN has successfully built a small pilot plant in China which confirmed that the manganese in the tailings can be extracted and converted cleanly and efficiently into battery-grade manganese products. A second batch of samples from this plant has attracted strong demand from six companies from across the EV battery value chain and the speciality alloy industry.

To test its process at scale, the company is building a demonstration plant at a site in the Czech Republic.  Installation of the nine modules comprising the demonstration plant has now been completed, with commissioning proceeding on a module-by-module basis, including cold, hot and performance testing. On-spec products of HPEMM and HPMSM are expected in the first quarter of 2023. A further six companies, including European and North American automotive OEMs, battery manufacturers, and cathode manufacturers, who are currently testing pilot plant samples, are expected to request demonstration plant samples.

A formal offtake tender process is underway with bids received from multiple parties across the value chain. The company aims to announce term sheets and an offtake contract in Q1 2023.

Earlier this year, EMN released a positive feasibility study for the Chvaletice Project which outlined a post-tax NPV of US$1.3 billion at an 8% discount rate, an IRR of 22% and payback period of approximately four years.

Investors in Euro Manganese include the European Bank for Reconstruction and Development (CAD$8.5 million) and EIT InnoEnergy (€250,000 / ~CAD358,500).

Batteries are changing the world

Two years ago, Elon Musk set out a vision which included the production of three terawatt hours per annum of EV batteries by 2030. The global lithium-ion battery industry currently produces around 2.7 terawatt hours per year. Tesla also said it would be mass-producing a new generation of zero cobalt batteries for their intermediate passenger vehicles, with cathodes that would be composed of one third manganese. This is potentially a game-changer for the high-purity manganese business, on top of already explosive HPM demand projections, driven by auto manufacturers like Volkswagen, Renault, Toyota, Kia, Nissan, BMW, GM, Jaguar, Ford, Mercedes Benz, Peugeot, Fiat Chrysler, Volvo, Hyundai and others, all of which already use manganese in their battery electric vehicles.

Tesla and other EV manufacturers want to make batteries that can reduce the cost of manufacturing and operating cars. High purity manganese is the lowest cost battery raw material and offers the opportunity to reduce the cost and price of EVs, but to do this they will need access to large quantities of high purity manganese.

US Inflation Reduction Act opens up opportunities in North America

Landmark changes in US environmental regulation introduced in the summer of 2022 will make tax credits dependent on make it mandatoryocal EV producers to source and/or produce most of their battery materials either locally or in US-friendly countries. This could boost North American demand for high-purity manganese to approximately 200,000 tonnes per year 2031, yet there is no current processing capacity and production of battery-grade manganese in North America.

Following discussions with North American cathode and battery manufacturers, and automotive OEMs seeking to secure local, responsibly produced high-purity manganese in North America, Euro Manganese initiated a scoping study to evaluate building a dissolution plant in Québec, Canada. Euro Manganese has an exclusive due diligence agreement on a strategic site at the Bécancour industrial park where two cathode active material (CAM) manufacturing plants are currently under development.  The dissolution plant would utilise HPEMM to produce HPMSM powder and/or HPMSS (a sulphate solution that could be piped to local plants within Bécancour).

In addition to being in an emerging battery metals hub, the site offers a year-round deep-water port, extensive road and rail infrastructure, access to low-cost hydro-electric power, strong governmental support, sophisticated local service, equipment and reagent suppliers, and a qualified workforce.

Excellent geographical situation and environmental rehabilitation

In Europe, it is hard to see how the company’s extraction and processing facilities could be better geographically situated. Its Chvaletice project is hardwired into excellent infrastructure, including power, rail, highways, water and gas, and is within range of literally dozens of auto manufacturing facilities and battery factories in Germany, Austria, Hungary and Poland and further afield in Finland, Sweden, France and Belgium. This is really the heartland of European EV and battery manufacturing, with highly anticipated demand for HPM going forward. Key to that demand are sustainability and traceability.

From an ESG point of view, Euro Manganese reports that feedback from local communities has been overwhelmingly positive, as the tailings area is going to be progressively reclaimed and remediated, with no new waste generation. After extraction of the manganese, the tailings will be washed and neutralised, placed on an impermeable membrane, topped with soil and revegetated for long term productive land use. The soil and water in and near the Chvaletice tailings area is currently polluted and the reprocessing of the tailings is expected to materially improve the environmental condition of the site.  The Life Cycle Assessments that EMN conducted in mid-2022 showed the project’s CO2 footprint is one-third of the Chinese incumbent industry and has net positive benefits to water and soil quality from the remediation of the site.

Carbon-free renewable energy for the site is planned to be supplied by Norway’s state-owned company Statkraft, supporting the company’s low carbon objective for the project.

Sustainable supply chains for batteries

Euro Manganese is very cognisant of the emphasis placed on sustainable and traceable supply chains by EV manufacturers. This year the company became the first high-purity manganese member of the Global Battery Alliance, a partnership of leading organisations from across the battery value chain, governments, academics and NGOs who have mobilised to ensure that battery production not only supports green energy, but also safeguards human rights and promotes environmental sustainability. As such, Euro Manganese intends to participate in discussions around battery materials transparency and traceability, particularly as the GBA advances development of the Battery Passport, a digital representation of an EV battery providing customers with assurance of responsible manufacturing processes.

Earlier in 2022 Euro Manganese said it was working with Canadian clean technology company Nano One to develop economically viable and environmentally sustainable applications of high-purity electrolytic manganese metal as one of several inputs for the production of cathode active materials used in lithium-ion batteries. Pilot plant samples from EMN’s Chvaletice project have been successfully validated as feedstock for Nano One’s patented One-Pot and M2CAM cathode production technologies which eliminates the added cost, complexity, and environmental footprint of using metal sulphates in cathode production.

Euro Manganese is well positioned to benefit from the rapid growth in demand from European, and at a later stage North American buyers of high-purity manganese output. Commercial production is anticipated in 2027, by which time we expect the EV manufacturing industry in Europe will have travelled a long way towards creating heavy demand for its output.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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