Giyani Metals Corp (TSX-V:EMM, OTC:CATPF) is working to address the growing need for high-purity manganese for electric vehicle (EV) batteries with its flagship K.Hill project in Botswana.
The company is currently constructing a demonstration plant in Johannesburg, South Africa, which will play a key role in establishing the credibility of its product and in turn, securing off-take agreements with customers.
As it advances the K.Hill project, Giyani Metals has drawn down the first $5.7 million of a $16 million convertible loan facility it has secured with South Africa's Industrial Development Corporation.
CEO Danny Keating joined Proactive to discuss the financing and how it will be used by the company to support its strategy of becoming a first-mover manganese supplier outside of China, which currently dominates global production of this critical mineral.
Proactive: The company has announced a significant milestone, funding in place for your flagship K.Hill project. Before we get into that, can you remind our viewers about Guyani Metals?
Danny Keating: Guyani Metals is a leading developer of manganese products that go into EV batteries. We’ve seen that the EV battery space is growing at a tremendous rate. It has its ups and downs but overall, the trajectory of growth is very strong. Obviously, they need to be putting highly sophisticated batteries into those cars and one of the key components is manganese, often referred to as the forgotten metal.
It’s very specialized manganese, not manganese from the steel industry. This is a very high-purity product. Another factor that suits the manganese industry is that up until now, almost 95% of this product has been made in China and, in a world trying to move to diversify supply chains, we are desperate to create non-China or Western world production because there’s none of it. So, we’re very excited to be in an environment where we don’t have just one trigger of growth in terms of our revenue.
So you’re getting this [high purity manganese] from the K.Hill project. Tell us more about the K.Hill project and how the funds you raised are going to take the project forward?
We’ve just announced the drawdown from our IDC facility. The IDC is a development agency in South Africa. They want to see this project developed within Botswana, they’ve recognized the need for critical metal development within Southern Africa.
We’ve raised overall $26 million, which is almost bigger than our current market cap and we’ve done it in a way where we minimize dilution to our shareholders We raised $5 million of that $26 million on the equity side and the rest has been though the debt facility. We’ve protected our shareholders through this period, which is very important because we believe our share price is very, very low.
The demonstration plant sets us apart from our peer group. It’s in construction in Johannesburg currently. Through that, we will immediately produce product for customers and start the accreditation process. We want to demonstrate we can produce it on a continuous basis and at a scale that shows when we build a big plant, it will be meaningful. This is the way to get the product to customers and start that interaction so we can get off-take agreements as quickly as possible.
Do you already have potential off-takers lining up?
We do. The market is quite a buzz at the moment. It’s picked up in the last 12 months or so, I think on the back of legislation in the US, the Inflation Reduction Act. Within the next five years, to qualify for certain tax concessions, the components within EV batteries all have to be from non-foreign entities of concern, countries like China. The EU has similar legislation so as we move forward, more EV components need to come from non-Chinese sources.
With manganese, as I mentioned, there isn’t any. So, we’re well-placed to be that first mover everyone wants to be. There isn’t one currently and we believe because of our demonstration plant, we can be at the front of the pack and get a chance to work with the major OEMs and battery developers driving that technology. We’re in contact with all of them, we have the specifications they want.
You’ve already commenced infill drilling at K.Hill as you progress towards a definitive feasibility study, which you’re targeting for 2025. Based on that, you will make the investment decision, right?
Correct. We’re putting all the ingredients together. With the ongoing drilling, we want to make sure we de-risk everything we possibly can. We appreciate that the manganese into EV batteries space is a new area for investors and lenders to look at, so we want to de-risk everything. Security of supply is important, so we want to make sure we get a measured resource.
We’re making sure that through the demonstration plant, we work up any issues we have metallurgy side so when we come to build the main plant, we’ve worked out all the budgets – totally de-risked. At the same time, we’re doing all of our permits and licensing, so that we can have that coming together. And we’re engaging with lenders, the banks, investors, shareholders and the IDC.
What sort of news flow should investors be looking out for in the short to medium-term?
At the demonstration plant, we’ve started pushing forward in terms of construction there. We will be very diligent about making sure our shareholders and incoming investors see how we’re making progress there. We’ll also be able to give some information as we’re shipping material to customers to show the responses we’re getting which will be important as we move along to payments and licensing. We’re hoping to secure a mining license and the other requirements to develop the project in Botswana, so a lot is going on in terms of the business in the next 15 to 18 months.
Quotes have been edited for clarity and style