Market Movers: Euro Manganese Jumps 105% On Project Financing Deal With Orion Resource Partners
Euro Manganese (TSXV: EMN) is a major market mover this morning, following a major funding package being secured from Orion Resource Partners for its Chvaletice Manganese Project in the Czech Republic.
A total of US$100 million in funding has been secured from Orion, which is to consist of two US$50 million rounds. The first US$50 million is to be provided via a loan facility, US$20 million of which will be provided upon closing, and the remainder to be provided once certain milestones are met. The facility is convertible into a 1.29% to 1.65% royalty on revenues from the project. The second US$50 million meanwhile will be issued in exchange for a 1.93% to 2.47% royalty on project revenues following a final investment decision being made on the project.
Both royalties contain a sliding scale mechanism, based on the manganese product pricing achieved on a quarterly basis. The higher the price of the manganese products, the lower the royalty rate.
An off-take option for between 22% to 22.5% of the manganese produced for a period of ten years is also in play.
Funding from the financing package is slated to be used for development activities related to the project.
The Chvaletice project
Euro Manganese’ flagship Chvaletice project is found 90 kilometres east of Prague within the Czech Republic. As the only sizeable, classified resource of manganese in the European Union, the project stands out as unique for the region.
Even more unique, is that the mineral is found within the tailings for a decommissioned mine that ran for over two decades beginning in 1951. Because of this, the project is not technically classified as a mining project, but rather a “waste recycling initiative,” which will clean up the contaminated site and eliminate a long time source of water pollution.
The project itself once operational is estimated to have a “mine life” of 25 years, while providing up to one fifth of the projected demand for manganese in Europe. A July 2022 feasibility study outlined a $1.3 billion post-tax NPV(8%) for the project, with an internal rate of return of 22% and payback period of 4 years.
The project is estimated to produce 48,000 tonnes per annum of manganese, resulting in annual revenues of $554 million. Proven and probably reserves meanwhile amount to 26,644 kilo tonnes at 7.41% manganese.
In terms of development, a final investment decision is expected to be made in mid-2024, while offtake contracts and project financing discussions are ongoing, with the Orion transaction just once piece of the puzzle. The financing package is expected to contain a mix of debt and equity, with 35% of funding coming from the latter. European institutions, export credit agencies, ESG funds and commercial banks are expected to make up the balance of debt financing.
Securing financing from Orion however has proved to be bullish for the company, who this morning hit a high of $0.19, and is currently trading at $0.185, up 105% on the day amid volume of over 1.0 million shares traded.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.
