Electric Royalties Ltd (TSX-V:ELEC, OTC:ELECF) has noted that Manganese X Energy Corp (TSX-V:MN, OTCQB:MNXXF) has filed a preliminary economic assessment (PEA) for the Battery Hill manganese project in New Brunswick, Canada, where it holds a 2% gross revenue royalty.
The report on the project, which lies 6 kilometres northwest of Woodstock, pegs the after-tax net present value (NPV) using 10% discount at US$486 million and an internal rate of return (IRR) of 25%. Capital costs are US$350 million with a payback of 2.8 years.
"We congratulate our royalty asset partner Manganese X Energy on this milestone, which shows significant gross revenue projections for the Battery Hill project of US$177 million per year over an initial forecast mine life of 47 years," said Brendan Yurik, CEO of Electric Royalties, in a statement.
"Electric Royalties' 2% gross revenue royalty entitles us to 2% of those gross revenues which, once in production, could present a source of significant cash flow to the company moving forward.
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"The Battery Hill PEA forecasts robust economics and a short payback period for a relatively low capital investment which bodes well for Manganese X Energy as it strives to become the first North American company to commercialize high purity, battery-quality manganese," he added.
The PEA mine plan assumes conventional open-pit mining using a contract miner at a total rate of 1 million tonnes per year (TPY) to provide mill feed of 365,000 TPY, or 1,000 tonnes per day (TPD).
The base case market price used in the study of US$2,900 per tonne for battery-grade high-purity manganese sulphate (HPMSM) is also well below the long-term forecast price of US$4,200 per tonne HPMSM, which was estimated by the independent commodities and research firm CPM Group, added Electric Royalties.
Electric Royalties has a growing portfolio of 19 royalties, including one, which currently generates revenue. The company was established to take advantage of the demand for such commodities as lithium, vanadium, manganese, tin, graphite, cobalt, nickel, zinc and copper, which will benefit from the drive toward electrification of a variety of consumer products.
Contact the author at giles@proactiveinvestors.com