Euro Manganese Inc (ASX:EMN)
Progress Tracker
Disclaimer: We are NOT manganese processing experts - this document is used by our team to internally to try and visualise the progress made by EMN, it should not be relied upon by anyone to make any decisions. For all disclaimers and disclosures please visit our website
Our Big Bet:
“EMN significantly re-rates to a $1BN+ on becoming a high purity manganese producer.”
NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved, and it will require a significant amount of luck. There is no guarantee that it will ever come true. Some of these risks we list in our EMN Investment Memo.
What does EMN do?
EMN is developing a High Purity Manganese project in the European Union (Czech Republic) through the recycling of a tailings resource from a historical mine site.
High Purity Manganese is an important part of new EV battery chemistries and we think EMN could play a key role in the battery supply chain of Europe and potentially North America.
EMN has a dual-sided appeal - the company is cleaning up an old mine (great ESG credentials) AND putting that mine’s material to good use.
We see EMN as a processing oriented Investment - its resource is well established. In other words, there’s plenty of manganese so the product just needs to work for EV makers.
EMN is project developer and is seeking offtakes and a Final Investment Decision.
Background on EMN’s Chvaletice Project
We’ve been Invested in EMN since September 2020, and the company is approaching a critical juncture.
Manganese is abundant in the Earth’s crust but the processing of manganese into High Purity Manganese is heavily concentrated in China.
Europe currently imports 100% of its manganese requirements and China supplies over 90% of the global high purity manganese market
EMN has the largest manganese deposit in Europe on its hands (see right) - which it acquired in May 2016.
The Chaveletice mine was first operating in the early 1900’s and the deposit is very well defined.
Why does EMN’s project matter?
High Purity Manganese could prove critical as part of a cost reduction component of EV batteries.
CPM Group forecast a 30-fold increase in the use of manganese in EV batteries in the 15 years from 2021 to 2036. This translates to a forecast deficit in 2031 of 475kt Mn equivalent.
But if battery demand keeps growing as expected and no additional projects come to the market, that deficit could reach 1 million tonnes by 2037.
Tesla, Volkswagen, Stellantis, and Renault have each announced moves to batteries with high manganese content.
If the Europe and North America are serious about decarbonisation - we think EMN’s High Purity Manganese will be important.
4 September 2020 - Initiating Coverage Report
Since Initiating Coverage of EMN, EMN is now transitioning into a funding phase to make the project a reality.
EMN is already backed by EIT InnoEnergy which along with Stifel ($6BN capped US financial services company) are advancing project financing.
Securing funding is vital for this project and we think the new CEO Dr. Matthew James will play an instrumental role in transitioning EMN from developer to producer.
Quick Recap: 2020-2021
19 November 2020 - Euro Mang. orders Chvaletice Demo Plant and Provides Update
EMN Orders a Demonstration Plant from China.
This is key as it allows for the production of high-purity manganese sulphate monohydrate (HPMSM) and high-purity electrolytic manganese metal (HPEMM).
These two high purity manganese products have different use cases.
This Demonstration Plant is designed to show how EMN can convert its manganese deposit into usable material.
15 January 2021 - Chvaletice Project reaches Important Regulatory Milestone
The Czech Republic’s Ministry of the Environment completes its initial screening procedure
for the Chvaletice Manganese Project’s preliminary Environmental Impact Assessment.
EMN needs buy in from local Czech stakeholders and this milestone is an important part of building EMN’s ESG credentials.
Demonstration Plant delivery expected in summer 2021 - and DFS targeted for the end of 2021.
23 February 2021 - EIT InnoEnergy to support Chvaletice Manganese Project
EIT InnoEnergy will invest €250,000 to fast track EMNs project AND also help EMN secure up to €362M to develop their project.
EIT InnoEnergy is the innovation engine for sustainable energy across the European Union - a deeply connected organisation.
EIT InnoEnergy knows all the key players in Europe, including funds, development banks, battery metal offtakers
Final Environmental and Social Impact Assessment: Due Q1 of 2022.
Demonstration Plant: The demo plant is a 7x scale up of the EMN’s 2018 pilot plant, and is critical to the supply chain qualification of EMN’s manganese for potential buyers.
97% of equipment has been procured. EMN says operation of the plant to begin in Q1 of 2022 .
Definitive Feasibility Study: The DFS will get us an updated look at EMN’s project economics - EMN says Q1 2022.
EMN continues to have discussions with potential offtake buyers for the project’s high purity manganese.
16 June 2021 - Euro Manganese to Restart Pilot Plant
Customer demand drives EMN to restart its Pilot Plant - this is needed for product qualification.
EMN needs to make sure that its High Purity Manganese is suitable for EV makers - so this move advances that goal.
EMN also says it is targeting production in late 2024 - 2025.
5 October 2021 - Nano One and EMN enter into Joint Development Agreement
EMN announced a joint development agreement with Nano One®, a clean technology company. TSX-listed Nano One® has patented processes for the low-cost, low-environmental footprint production of high-performance cathode materials used in lithium-ion batteries.
The co-development will use EMN’s manganese products with Nano One’s battery cathode technology. If it works, then we think it is likely that EMN will be a preferred supplier of manganese to Nano One (and/or its research and development partners).
Nano One already has partnerships with Volkswagen, as well two other unnamed major automotive companies.
We see this as a valuable relationship - one that could help unlock offtakes.
9 November 2021 - EMN Provides Chvaletice Manganese Project & Corporate Update
Delivery of the Demonstration Plant expected early in the New Year, with commissioning and targeted for the second quarter of 2022.
60% of the way through Definitive Feasibility Study.
Consulting firms Minviro Ltd. and RCS Global Group to conduct a joint Life Cycle Assessment of the Chvaletice Manganese Project - which is good for ESG.
EMN at this stage is now looking for a new CEO to drive the next stage of the business’ development.
20 December 2021 - EMN appoints Dr. Matthew James as CEO Dec. 20 2021
EMN announces the company’s new CEO - Dr. Matthew James.
Dr. James worked as Vice President, Strategy & Corporate Communications at Lynas Rare Earths from 2002-2011.
This was a period where Lynas went from niche junior miner to rare earths juggernaut and a market cap of $3.5B (~$8BN now)
Dr. James is also ex-McKinsey and Deutsche Bank, so lots of finance pedigree.
His time at Lynas resulted in the raising of ‘over A$1 billion of equity and debt funding, including a US$250 million government backed loan and over US$800 million of long-term advanced sales contracts.’
Our take: the ideal candidate to get EMN through the financing stage.
2022
Our 2022 EMN Investment Memo
4 January 2022 - European bank takes stake in Euro Manganese
New CEO starts tenure with a big win - EMN got backing from the European Bank for Reconstruction and Development (EBRD) fpr C$8.5M (~A$9.3M) via a placement at C$.4775 (A$.52) per share.
With the EBRD onboard, EMN can now turn its attention to getting samples of its product into end-users’ hands - which could lead to binding offtake agreements and subsequently open up further financing options.
24 March 2022 - EMN Reports Shipment of Final Demonstration Plant Modules
The Demonstration Plant goes by ocean freight due to the start of the conflict in Ukraine.
Commissioning now targeted for September.
Meanwhile - new CEO Dr. Matthew James is settling into the role and laying out clearly defined timeframes for company milestones.
20 July 2022 - EMN Joins Global Battery Alliance
In anticipation of supplying high-purity manganese to European battery manufacturers, EMN has joined the Global Battery Alliance.
The Global Battery Alliance is a public-private partnership which brings together more than 100 businesses, governments, academics, industry actors, international and non-governmental organisations to promote a sustainable battery supply chain.
We see this as beefing up EMN’s relationships with key battery supply chain stakeholders.
28 July 2022 - Chvaletice Manganese Project Feasibility Study Announcement
This was the big one for us - the DFS.
While the timeline for delivery ended up being stretched we think it was worth the wait.
EMN’s DFS highlighted a US$757.3M total upfront cost (CAPEX) figure which is a ~US$350M increase on the previous preliminary economic assessment put out in 2019.
The project economics are strong with a 21.9% internal rate of return.
The high internal rate of return means the project has a low payback period of just 4.1 years on an after-tax basis.
All up: EMN after-tax Net Present Value (NPV) of US$1.34 billion ($1.92B) looks good. NPV at time of DFS release was 16x more than the company’s current market cap - something which we think means could lead to an outsized re-rate.
7 September 2022 - EMN Confirms Arrival of Demonstration Plant Modules at Site
It was a long haul - but the Demonstration Plant is now on site.
This is designed to produce larger-scale product samples to be used for customer supply chain qualification.
We think if EMN call scale up its sample production - this can only help with competitive tension around their High Purity Manganese products.
28 September 2022 - EMN & Nano One Validate Manganese Metal in M2CAM Process
EMN and Nano One jointly demonstrated cathode materials made directly from EMN sourced electrolytic manganese metal using Nano One’s One-Pot Process.
Layman’s terms - cheaper, more sustainable production of battery cathode material (a tech short-cut).
This is good for EMN to have in the back pocket as it chases down offtake agreements.
11 November 2022 - EMN Announces Commencement of Commissioning of Demo Plant
After much anticipation - EMN’s Demonstration Plant is now ready to run.
EMN says: “six companies from across the EV battery value chain and the speciality alloy industry have requested Demonstration Plant samples.”
AND:
“A further six companies, including European and North American automotive OEMs, battery manufacturers, and cathode manufacturers, who are currently testing Pilot Plant samples, are expected to request Demonstration Plant samples.”
This is what we want to see.
17 November 2022 - EMN Explores Opportunity to Produce HP Manganese in Canada
A scoping study is now underway to evaluate a site in Bécancour, Québec for production of high-purity manganese products following discussions with cathode and battery manufacturers, and automotive OEMs in North America.
North America has no domestic high purity manganese processing capacity.
We see this as a significant opportunity for EMN to tap into another rapidly accelerating EV market.
The more potentially interested offtake partners - the better, be they from North America OR Europe.
12 January 2023 - ⚠️ First ever offtake agreement ⚠️
Non-binding term sheet for an offtake agreement signed with Verkor.
Background on Verkor:
14 April 2023 - EMN Announces Production of HPEMM from Demonstration Plant
EMN has produced on spec samples for the metal version of high purity manganese with on spec high purity manganese for the main product (sulphate) to come soon.
“On spec” means the product has reached a purity level suitable for end users/potential EMN customers.
The production of the high purity manganese metal is a key prerequisite for production of the more desirable sulphate product as per the EMN flowsheet.
10 August 2023 - EMN Makes Significant Progress on its Becancour Facility
EMN just released a first glimpse of a scoping study on its future high purity manganese plant in the rapidly emerging Becancour battery hub in Quebec, Canada.
Even at this early stage, the scoping study has outlined economics that stack up:
This could see EMN being in production in Canada in mid-2026 - ahead of the planned start up of its Czech project.
What’s next for EMN?