Element 25 Ltd (ASX:E25) is on track for the Butcherbird Project in Western Australia to become a globally significant, low-cost, high-purity manganese project, with commissioning scheduled for quarter one of 2021.
Butcherbird has a large resource of more than 260 million tonnes of manganese ore in measured, indicated and inferred JORC-compliant resource categories, including a maiden proved and probable reserve of 50.6 million tonnes at 10.3% magnesium for 5.22 million tonnes of contained manganese.
The company is confident the project has robust economics to support early cashflow from concentrate exports, which will fund expansion to utilise the very large resource and maximise project returns.
Robust economics
A pre-feasibility study highlights the project's economics, including:
- Low capital cost A$14.5 million;
- NPV8: Nominal A$441 million (A$283 million Real);
- IRR: Nominal 255% (223% Real);
- Strong cashflows;
- Simple payback of six months;
- Long 42-year mine life; and
- Mine plan utilises only 20% of the total resource.
In addition, simple outcropping geology allows for free-dig low cost mining with a low strip ratio of 0.3:1 based on PFS pit optimisations.
The project is surrounded by excellent local infrastructure which will help keep costs low, with easy access to Port Hedland bulk handling facilities.
The project has a world-class resource and great infrastructure endowment.
Low-cost beneficiation
The simple mechanical beneficiation for the project yields a 30-35% medium grade manganese concentrate with very low levels of deleterious elements.
This concentrate is suitable for smelting for manganese alloys or future hydrometallurgical feed for producing Electrolytic Manganese Metal (EMM).
E25 believes the unique characteristics may make this product suitable for premium markets.
Manganese markets
Manganese is the fourth most used metal on earth in terms of tonnage, behind iron, aluminium and copper, and has many uses including steel, portable batteries and aluminium cans.
It is a versatile element and a common component in several alloys including zinc and magnesium alloys.
The main non-metallurgical application of manganese in the batteries industry where there is no substitute for in many cases.
E25 is confident that the demand for manganese is growing and supply has constraints, and with the Butcherbird is closer to market than most existing projects, it’s well placed to cater for increasing demand.
Offtake terms have been agreed to and definitive documents are being drafted with OM Holdings Limited (ASX:OMH) wholly-owned subsidiary OM Materials (S) Pte Ltd to purchase 100% of the manganese ore produced - up to 365,000 tonnes per annum - from the first stage of the Butcherbird Project development.
Manganese concentrate pricing.
On time and on budget
Detailed engineering and commissioning planning is well advanced, the mining lease has been granted and all access agreements have been finalised.
Additionally, project financing has been secured, permitting applications are well advance and key equipment is starting to ship to site.
Element 25 is well on the way to transition from explorer to a miner, with all critical paths for Butcherbirds development on time and budget and commissioning scheduled for quarter one 2021.