Euro Manganese Inc (ASX:EMN, TSX-V:EMN, OTCQX:EUMNF) has had its key role in the European Union’s strategy of securing resource supply security and sustainability recognised and validated through the European Bank for Reconstruction and Development (EBRD) agreeing to invest C$8.5 million in the company.
These funds will support the company’s development of the Chvaletice Manganese Project in the Czech Republic, at the heart of Europe’s burgeoning electric vehicle and battery manufacturing industries.
The ERBD investment and relationship will be beneficial to the company as the Chvaletice Project moves through development, project financing and into production.
Strategic investment welcomed
EMN’s new president & CEO Dr Matthew James said: “The company welcomes this strategic investment, which aligns the company’s interest with the EBRD and opens a pathway to potentially securing project financing from the EBRD and other European financial institutions.”
As part of its due diligence process, the EBRD engaged an independent, international natural resources consultancy to undertake a technical and environmental review of the Chvaletice Manganese Project.
The EBRD’s Environmental and Social Policy is progressive and in keeping with international best practices, which EMN met.
EMN has undertaken to maintain compliance with the EBRD's environmental, social, economic inclusion and equal opportunity standards.
“Strong vote of confidence”
"The successful completion of the technical and environmental due diligence process is a testament to the quality of our team and a strong vote of confidence in our Chvaletice Manganese Project. We are proud to have met the bank’s high ESG standards,” James said.
The company’s relationship with the EBRD is expected to be highly strategic as the European Union charts a path towards greater supply security and sustainability.
Supporting the development project of Europe’s only primary producer of high-purity manganese, an essential battery raw material, aligns with these EU goals.
James added: “The EBRD investment is an affirmation that EMN’s Chvaletice Manganese Project is an important part of establishing a strong, sustainable European electric vehicle battery supply chain to support Europe’s accelerating transition to e-mobility.
“This agreement also highlights the value of the company’s relationship with EIT InnoEnergy.”
Shares have been as much as 9.1% higher to A$0.54 while the company's market cap is approximately C$175.53 million.
Private placement
The investment is to be effected by way of a private placement of 17.8 million common shares of the company to be issued to EBRD at a price of C$0.4775 per share.
Upon closing of the placement, EBRD will hold approximately 4.5% of the company’s common shares (on a non-diluted basis).
In connection with the placement, EMN and EBRD will enter into a project support agreement whereby, subject to certain conditions, the EBRD will be granted rights that allow participation in future financings to maintain its pro-rata equity interest in the company.
Increases flexibility
Placement proceeds will increase EMN flexibility in financing the Chvaletice Manganese Project, including the feasibility study, site preparation and operating costs for the Demonstration Plant, and environmental works including permitting and other activities related to the Final Environmental and Social Impact Assessment.
This agreement was facilitated through EMN’s relationship with EIT InnoEnergy, which entered into an agreement with EMN earlier in 2021 to assist in securing access to project financing and customer offtake agreements.
In line with this agreement, on completion of the placement, EMN will pay EIT InnoEnergy a cash finder’s fee equal to C$254,985, being 3% of the gross proceeds of the placement.
Committed to best practices
EBRD's director of Natural Resources Eric Rasmussen said: "EBRD is delighted to support Euro Manganese and we are very pleased with its management’s commitment to implement best practices for modern, responsible mining.
"As a new shareholder, the EBRD will help Euro Manganese develop a local source of high purity manganese, which will improve Europe’s security of battery raw material supply.”
The proposed Chvaletice Project entails reprocessing a significant manganese deposit hosted in tailings from a decommissioned mine.
EMN’s goal is to become a leading, competitive and environmentally superior primary producer of ultra-high-purity manganese products in the heart of Europe, serving the lithium-ion battery industry, as well as other high-technology applications.
About EBRD
EBRD is a multilateral bank that promotes the development of the private sector and entrepreneurial initiative in almost 40 economies across three continents.
The bank is owned by 71 countries, including the Czech Republic, as well as the EU and the European Investment Bank.
EBRD investments are aimed at making the economies in its regions competitive, inclusive, well-governed, green, resilient and integrated.
To date, the EBRD has invested more than EUR 1.2 billion in 110 projects in the Czech economy.