OM Holdings (ASX: OMH) will earn up to 70% of Bryah Resources’ (ASX: BYH) manganese rights at the flagship Bryah Basin project in Western Australia under a new joint venture, which paves the way for the duo to fast-track the discovery and development of a commercially mineable manganese deposit within the project.
Integrated manganese miner and processor OM Holdings will spend $7.3 million on manganese exploration across the 660 square kilometre project, which will be broken down into various milestone payments, including an already paid $250,000 signing fee.
“The execution of this agreement with the highly regarded OM Holdings Group is a game-changing event for Bryah and its shareholders,” Bryah managing director Neil Marston said.
“The OM Holdings Group has manganese mining expertise and is seeking new sources of manganese ore to replace its Bootu Creek production in the near future. This means that we are both strongly aligned it Bryah’s stated aim of moving from explorer to manganese ore producer in the near-term.”
Mr Marston explained the joint venture “substantially de-risked” Bryah’s strategy to become a manganese miner, while the company focuses on exploring for copper and gold at the project.
Horseshoe South manganese mine
In May 2018, Bryah secured an option to purchase Horseshoe South and the manganese rights to 154sq km of adjoining ground.
Bryah has now exercised the purchase option for the mine and tenements, which gives OM Holdings the right to earn up to 70% of manganese rights of these assets under this latest agreement.
As the region’s largest historical manganese operation, Horseshoe South is located on a granted mining lease and was operated between 1948 and 1969, and, again, between 2008 and 2011.
During operation, around 1 million tonnes of high grade manganese ore was produced.
Recent rock chip sampling in the area returned up to 48.8% manganese.
In addition to Horseshoe South, Bryah uncovered high-grade manganese in numerous outcrops during preliminary exploration last year including Mudderwearie, Devils Hill, Black Hill, Brumby Creek, Black Cavier, Horseshoe North and Mount Labouchere prospects.
The prospects extend across the entire project from the north to the south.
In order to fast-track manganese exploration, OM Holdings will kick-off drilling early next month, which will involve 3,000m and test outcropping areas and extensions to the existing Horseshoe South pit.
“In the last 12 months, our exploration team at Bryah has conducted a significant amount of ground work ahead of the commencement of manganese drilling next month,” Mr Marston said.
“The plan under the joint venture agreement is for us to drill test targets at the Horseshoe South manganese mine and the Brumby Creek and Devils Hill prospects, as well as some other untested sights as quickly as possible.”
“We see excellent potential for shallow drilling to identify significant manganese resources in this largely unexplored landholding in the Bryah Basin,” Mr Marston added.
The majority of manganese is used in steel manufacturing to make ferroalloys such as ferro-manganese and silico-manganese. When added to steel, the manganese removes sulphur and deoxidises, while also acting as a hardening agent.
However, in a purer form, manganese is also used in lithium-ion batteries, chemicals, and in the aluminium sector.
As the uptake of electric vehicles continues to rise globally, demand for manganese in the vehicle’s battery is also expected to take off.
During 2018, China’s manganese imports rose 30%, with imports also growing across most major alloy producing countries.
As a result, during the year, prices of manganese remained higher than 2017 levels with Fastmarkets MB reporting an average price of US$7.24 per dry metric tonne unit for 44% manganese.