Euro Manganese receives major funding boost for Chvaletice project

Euro Manganese (ASX: EMN) has confirmed $150 million in new funding for the development of the Chvaletice manganese project in the Czech Republic.

The company has made a major breakthrough in finding funding for Chvaletice with the signing of definitive agreements with the Orion Resource Partners Group-managed OMRF (BK) LLC, for $150 million in non-dilutive financing.

The $150 million funding is split into two equal components – a $75 million loan facility, convertible into a 1.29-1.65% royalty on project revenues, with $30 million to be received upon closing and an additional $45 million to be received upon meeting milestones that have been developed together with Orion to match Euro Manganese’s plans on a final investment decision (FID).

Euro will also receive $50 million in exchange for a 1.93-2.47% royalty on project revenues following the FID and other conditions precedent typical for this type of financing.

Strategically-structured funding

Dr Matthew James, president and chief executive officer of Euro Manganese, said all aspects of the funding package had been structured to meet project finance bankability requirements.

Notably, he said, the convertible loan facility and the royalty financing sit alongside and in fact reduce the project finance debt and equity required for the full project financing.

“This is a transformative transaction for Euro Manganese, providing a funding package that facilitates the best possible pathway to a final investment decision and representing a collaboration between Euro Manganese, Orion and Stifel,” Dr James said.

“The non-dilutive tranche structure minimises cost of funds and reduces future project financing requirements. This further validates the robust nature of the Chvaletice project and our team’s ability to deliver this strategic battery raw material project for Europe to the highest of standards.”

Stifel Nicolaus Europe is acting as financial advisor to the company and Norton Rose Fulbright is acting as legal counsel to the company.

Major European critical minerals asset

Chvaletice is sited within a region where many of the world’s leading electric vehicle (EV) manufacturers are located and on the doorstep of one of the globe’s fastest-growing EV markets.

Earlier this month, Euro Manganese reported the successful production of high-purity manganese sulphate monohydrate (HPMSM) from the dissolution and crystallisation module at the Chvaletice demonstration plant (DP) in the Czech Republic.

Two independent external laboratories confirmed samples sent for testing have met the DP target specifications for HPMSM with low levels of impurities.

Third-party high-purity electrolytic manganese metal (HPEMM), with similar product impurity levels to those of the Chvaletice HPEMM product, was used as feedstock during the commissioning of the dissolution and crystallisation module. As part of the final commissioning stages of the DP, the company will use HPEMM produced from the DP electrowinning circuit for HPMSM production.

Significant milestone

Dr James said producing high-purity manganese sulphate from the demonstration plant is a significant milestone for the company.

“HPMSM is an almost pharmaceutical-grade product and specification of impurities is tight. While this result has taken longer than planned, the insight gained is leading to engineering and operational process improvements and awareness, which is why having a demonstration plant is so important in project development.”

“Euro Manganese continues to demonstrate it is a leader in developing western high-purity manganese processing capacity. I look forward to providing customers with high-purity manganese from our demonstration plant so they can either get started on, or continue with, their qualification process of our products.”

HPMSM is sometimes used to describe (battery-grade) manganese sulphate, but is more-accurately described as having a higher purity than the standard battery-grade.

It is estimated that HPMSM demand has unparalleled growth potential as a raw material for the EV sector as well as the energy storage sector.