Element 25 Ltd (ASX:E25) has completed a scoping study assessing the construction and operation economics of a high purity manganese sulphate monohydrate (HPMSM) plant that highlights a robust set of financial metrics over a 20-year project life.
While the company warns the scoping study is based on insufficiently vigorous technical and economic assessments, the project would be strongly leveraged to service the emerging electric vehicle market, especially lithium-ion batteries.
HPMSM is used in the energy storage industry for battery cathode materials, a vitally important component of any ion-based battery.
HPMSM processing facility
Element 25 is assessing the viability of moving into downstream processing for its large resource of manganese ore available at its Butcherbird Project in WA.
The scoping study was undertaken to assess the potential of developing an HPMSM facility within Southeast Asia.
This proposed facility will consist of up to three processing trains each capable of producing a total of 66,650 tonnes per annum of manganese sulphate with 75% or 50,000 tonnes per annum at a battery-grade (HPMSM) and 25% or 16,650 tonnes per annum at a fertiliser grade (FGMSM).
Scoping study highlights
According to E25, the scoping study returned ‘robust’ net present value (NPV) with a ‘healthy’ base case internal rate of return (IRR).
The study used a life of project average HPMSM price of US $1,950 (A$2,600) per tonne free on board (FOB) and an FGMSM price of US$900 (A$1,200) per tonne FOB.
The development model investigated a stepped three-stage construction schedule, with a ‘modest’ start-up capital cost of about US$150 million (A$200 million) when employing E25’s proprietary leaching and sulphate purification solution developed in-house.
Test-work indicates manganese recovery may be as high as 85% – the base case assumption for the study – with life of project operating costs estimated at US$552 per tonne of HPMSM.
The study is based on manganese ore supplied from the company’s existing Butcherbird Manganese Project, which is based on a JORC proved and probable mineral reserve of 55 million tonnes at 10.8% manganese.
Element 25 says the study results confirm the company’s view that an HPMSM Project represents a long life, low operating cost opportunity to expand into the downstream processing of ore from Butcherbird to produce HPMSM.
The study indicated the facility would require modest capital in a stable jurisdiction with simple logistics and a growing market.
Finance and ESG
E25 says it has sufficient funding – supported by forecast revenues from existing production operations – to progress through to an HPMSM feasibility study and, subject to the outcome of the studies, finance and develop the project as soon as possible.
Production cost reduction opportunities, including use of hybrid energy systems and alternative export ports, will be investigated further during more detailed studies.
The company envisages a traditional debt-equity funding solution to be completed in 2023 post offtake finalisation.
Equity will be sourced via cash reserves, future revenues from operation and/or the issue of new shares to raise further equity.
The plant will be designed with a focus on ESG principles including carbon minimisation, social engagement and good corporate stewardship.
Energy will be sourced from renewable sources where available, in-line with the E25’s net-zero carbon strategy.
As a final cautionary note, Element 25 warns that there is no certainty the funding will be raised, and the company may still pursue other options such as sale or partial sale of the project.
“Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the scoping study,” the board wrote in the company’s ASX announcement.
About Element 25
Element 25 Ltd (ASX:E25) is developing a world-class manganese resource at the 100%-owned Butcherbird Project in Western Australia to produce high-quality manganese concentrate for export markets.
The Butcherbird Manganese Deposit is Australia’s largest onshore manganese resource comprising large tonnages of near-surface manganese oxide ore in seven deposits.
The project also has some excellent infrastructure advantages with a gas pipeline and main bitumen highway passing directly adjacent to and through the mineralised envelope.