Manganese X Energy Corp (TSX-V:MN, OTCQB:MNXXF) has announced positive results from an independent Preliminary Economic Assessment (PEA) for its wholly-owned Battery Hill project located near Woodstock in New Brunswick, Canada.
The company said the PEA, prepared by independent engineering services group Wood Canada Ltd, points to a project with an after-tax net present value of $486 million, using a 10% discount rate (NPV10), and a 25% internal rate of return.
“Our Battery Hill Mineral Resource has the potential to be the most impressive manganese properties in North America and has several attributes that make it attractive for development and commercialization,” CEO Martin Kepman said in a statement. “Battery Hill has robust economics, strong value metrics and a short payback period for a relatively low capital investment,” he added.
Read: Manganese X Energy boss Kepman highlights company's strategic asset as battery driven demand for manganese grows
Other highlights of the PEA include:
- Capital costs of $350 million with a payback of 2.8 years;
- Average annual gross revenue of $177 million per year over the 47 years project life;
- Average annual gross revenue of $220 million over the first seven years;
- Life of mine operating cost (LOM) of $122/tonne (t) material processed;
- Base case market price of $2,900/t for battery-grade high-purity manganese sulphate (HPMSM) is well below the long-term forecast price of $4,200/t HPMSM estimated by CPM Group;
- Price sensitivity: Base case undiscounted after-tax cashflow: $3.4 billion;
- Sensitivity analysis shows after-tax NPV10 reaches $914 million at $4,200/t;
- Long mine life: 40-year mine production life and seven years of stockpile reclaim feed;
- Total LOM production of 3.2 million tonnes of HPMSM;
- Average annual HPMSM production of 68,000 tonnes over the LOM;
- Average annual HPMSM production of 84,000 tonnes in the first seven years of production;
- Low environmental impact: Flowsheet produces a filtered residue leach product with initial acid-base accounting and non-acid generating test results showing no acid drainage risk.
“The PEA represents the most significant milestone to date for Manganese X and makes us the forerunner of becoming the first publicly-traded company in Canada and the US to commercialize high-purity electric vehicle (EV) quality compliant manganese,” Kepman continued.
Kepman noted that due to its proprietary extraction process, the company can develop a superior quality manganese product by eliminating selenium, considered a toxic pollutant and yet utilized by some of the high-purity manganese sulphate (HPMSM) producers worldwide to reduce their costs of production.
“Given selenium is a highly toxic element, its use negatively impacts the environment and is known to affect the quality of downstream products, particularly for high-end applications such as lithium-ion-battery production,” Kepman said. “Our final product should be able to justify a premium to the market price.”
Manganese X said the project is now advancing towards a pilot project, pre-feasibility study as well as advancing a drilling program to upgrade and expand manganese resources.
"The company has been working diligently on corporate development beyond the PEA and is currently in discussion with a number of interested parties,” Kepman concluded. “This is a very exciting time in history for manganese as it relates to battery chemistry and the EV revolution, making it an equally exciting time for Manganese X. We intend to be at the forefront of a domestic supply as well as meeting the expectations of North American battery manufacturers.”
Contact the author at stephen.gunnion@proactiveinvestors.com