Manganese X Energy Corp (TSX-V:MN, OTCQB:MNXXF)’s positive net present value (NPV), strategic location, large resource, and progress on a pilot plant have been highlighted by analysts at Stonegate Capital Partners in their initial coverage of the company.
In a note to clients, the analysts wrote that Manganese X’s published preliminary economic assessment (PEA) indicates a positive NPV and returns, showing an after-tax NPV 10% of US$486 million and an internal rate of return of 25%.
They pointed out that the company’s Battery Hill project, with 55 claims totaling 1,228 hectares, is in one of the best mining jurisdictions in Canada, New Brunswick.
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“The area is close to major shipping lanes to the United States and Europe and is well suited to cater to the top consumers of manganese in both regions,” they wrote.
Stonegate’s analysts also noted the large size of the resource at Battery Hill, with the project’s mineral resources estimated at 35.14 million tons of measured and indicated resources, grading 6.39% manganese, plus another 27.72 million tons of inferred resources, grading at 6.46% manganese.
Further, the analysts wrote that Manganese X had recently filed for a provisional patent pending on a “groundbreaking” metallurgical process for the battery grade high purity manganese MnSO4 (HPMSM) which the company intends to use at its pilot plant.
“One of the primary goals of this pilot plant is to show that the company's manganese feedstock from Battery Hill can produce HPMSM on a larger commercial scale,” they wrote.
“If the pilot run is successfully completed, Manganese X will become one of the very few companies in the world that can produce MnSO4 directly from their ore, a significant cost-saving and carbon-friendly measure, without having first to turn the product into a metal called Electrolytic Manganese Metal.”
Regarding Manganese X’s valuation, the analysts noted that while most manganese producers of a similar stage of development are trading at a median of 0.05x EV/NPV in their most recent assessments, Manganese X is currently trading at 0.02x.
“Given that a larger percentage of Manganese X’s resources are classified as indicated versus inferred, we believe a range of 0.05x to 0.07x with a midpoint of 0.06x is reasonable, valuing Manganese X at a slight premium to the comps,” they wrote.
“This leads to a current valuation range of C$0.48 to C$0.66 with a midpoint or C$0.57 per share.”
Manganese X’s Toronto-listed shares are currently trading at C$0.18.
Contact the author at emily.jarvie@proactiveinvestors.com
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