Euro Manganese Announces Positive Feasibility Study Base Case Results for the Chvaletice Manganese Project; After-Tax NPV8% of US$1.34 Billion, IRR of 21.9% CPM Group’s HPMSM and HPEMM price forecast, as upside case, shows after-tax NPV8% increasing further to US$1.79 Billion, IRR of
Euro Manganese Announces Positive Feasibility Study Base Case Results for the Chvaletice
Manganese Project; After-Tax NPV8% of US$1.34 Billion, IRR of 21.9%
CPM Group’s HPMSM and HPEMM price forecast, as upside case, shows after-tax NPV8% increasing further to US$1.79 Billion, IRR of
24.1%
VANCOUVER, British Columbia, July 27, 2022 -- Euro Manganese Inc. (TSX-V and ASX: EMN; OTCQX: EUMNF; Frankfurt: E06) (" Euro
Manganese ", the " Company" or " EMN") is pleased to release highlights of its completed Feasibility Study (" FS" or " Study") for the Company’s
flagship Chvaletice Manganese Project ("CMP" or "Project") located in the Czech Republic.
All financial figures are in US dollars unless otherwise stated.
HIGHLIGHTS
• Robust base case project economics
◦ After-tax Net Present Value (" NPV") of US$1.34 billion and pre-tax NPV of US$1.75 billion, using an 8% real discount rate and risk-
adjusted base case price forecast.
◦ Ungeared after-tax Internal Rate of Return ("IRR") of 21.9% with a 4.1-year payback period; and pre-tax IRR of 24.9% with a 3.6-year
payback period.
◦ Initial capital (" Capex ") of US$757.3 million, including contingencies of US$103.2 million (US$78.4 million on direct costs and
US$24.8 million of growth capital).
◦ Sustaining capital ("Sustaining Capex ") of US$117.0 million over the 25-year life of project ("LOP").
◦ LOP revenues of US$13.9 billion with gross revenues expected to average US$554 million per year over the 25-year project life.
◦ Project earnings before interest, taxes, depreciation and amortization (" EBITDA") and annual average EBITDA forecasted to be
US$8.1 billion and US$326 million respectively, averaging 58.8% EBITDA over the LOP.
• Project of strategic importance to Europe with exceptional environmental and social benefits and production of in-demand
products
◦ Uniquely positioned to provide a secure, traceable, and responsibly produced supply of high-purity manganese products to the
European electric vehicle ("EV") market.
◦ CMP is the only sizable, Proven and Probable Reserve of manganese in the European Union.
◦ Located in the Czech Republic, a sophisticated, stable, and business-friendly jurisdiction that is highly supportive of new, green
investments.
◦ Excellent transportation, energy and community infrastructure, and land for the processing plant and related infrastructure.
◦ Unique green project credentials with a low carbon footprint and net positive environmental benefits resulting from recycling and
remediation of the Chvaletice historic tailings.
◦ Significant support from local communities, municipalities, the Czech government, and the European Union.
◦ Wide-ranging benefits for local communities and the Czech Republic in the form of jobs and revenues:
◾ The Project expects to employ ~400 people during operation.
◾ An estimated US$1.5 billion in payments are expected to be made to the Czech Republic from corporate taxes and royalties.
• High Purity Manganese market forecasted to increase significantly over the life of Project
◦ According to CPM Group LLC ("CPM Group"), a leading, independent commodities market research firm with expertise in high-purity
manganese, the market for high-purity manganese sulphate monohydrate ("HPMSM") and high-purity electrolytic manganese metal
("HPEMM") is forecast to be radically transformed as a result of the ‘electric vehicle revolution’. Most lithium-ion batteries that power
electric vehicles are expected to use manganese ("Mn") in their cathodes and these manganese-containing battery chemistries are
expected to dominate the battery market for the next two decades.
◦ As a result, CPM Group expects the demand for high purity manganese to increase 13 times between 2021 and 2031 (from 90 kt to
1.1 million tonnes ("t") of Mn contained) and 50 times between 2021 and 2050 (to 4.5 million tonnes of Mn contained).
◦ The total Mn market in 2022 is approximately 22 million tonnes, with Mn use currently dominated by the steel industry, however, high
purity manganese suitable for the battery market makes up less than 0.5% of the global manganese market.
◦ The bottleneck in supply of HPMSM and HPEMM is the lack of high-purity refining capacity. Known expansions and new projects are
unable to satisfy this demand. CPM Group forecast’s the 2031 deficit to be 475kt Mn equivalent and if battery demand continues to
grow as expected and no additional new projects come to the market, the deficit would increase to 1 million tonnes by 2037.
• European HPMSM and HPEMM base case pricing with further potential upside outlined in sensitivity analysis
◦ Base case project economics are based on Tetra Tech Canada Inc.’s ("Tetra Tech ") adoption of a risk-adjusted short-term price
forecast that follows CPM Group’s forecast for HPMSM and HPEMM to 2031 and then holds prices flat over the remaining LOP,
resulting in average prices of $4,019 per tonne of HPMSM containing 32.34% Mn and $10,545/t of HPEMM containing 99.9% Mn.
◦ CPM Group’s unaltered price forecast was used as the upside case in the sensitivity analysis with average LOP prices of $4,509/t for
HPMSM and $12,075/t for HPEMM.
• Attractive proposition for potential financial partners
◦ Euro Manganese recently appointed Stifel Nicolaus Europe Limited, a wholly owned subsidiary of Stifel Financial Corp. (NYSE:SF)
("Stifel"), as financial adviser to assist with the structuring and securing of financing for the Project.
◦ The Company believes the FS confirms that the Project is an attractive proposition for potential financial partners due to its robust
project economics, in-demand products, unique environmental credentials, excellent jurisdiction located in the heart of European EV
market, and strong support from leading financial European institutions.
• Conversion rate of ~99% Resources to Reserves supports a 25-year project life
◦ Tetra Tech used appropriate modifying factors to convert the Mineral Resource to a 27 million tonne Proven and Probable Reserve
(98.3% Proven) with a grade averaging 7.41% Mn.
◦ Study is based on the reprocessing of historic tailings without the requirement of any hard rock mining, crushing or milling.
◦ FS outlines a 25-year project life producing 1.19 million tonnes of HPEMM, approximately two-thirds of which is expected to be
converted into HPMSM on-site.
◦ Saleable product includes 2.5 million tonnes of HPMSM (32.34% Mn) and 372,300 tonnes of HPEMM (99.9% Mn) over the LOP,
averaging 98,600 tonnes of HPMSM and 14,890 tonnes of HPEMM annually, focused principally on Europe's rapidly growing EV
battery industry.
◦ Flexibility to supply either HPMSM or HPEMM, to suit customer preference.
Dr. Matthew James , Euro Manganese’s President and CEO, commented:
“I am extremely pleased with the results of the Feasibility Study, which further validate the financial credibility of the Chvaletice Manganese Project,
even in the current inflationary environment and using conservative risk-adjusted pricing for HPMSM and HPEMM. The strength of the Project
economics, its green credentials and the forecast demand from the EV industry for our highly specialized products support a wide range of financing
alternatives.
Several factors uniquely position Euro Manganese to transform into a leading supplier to the European EV market. The supply security, traceability,
sustainable production, and low impurity, high quality nature of Chvaletice’s battery grade manganese products, make our HPEMM and HPMSM
increasingly desirable to customers.
I am proud of the team’s accomplishments in delivering this very positive Feasibility Study and confirming the viability of the Project. We remain
focused on progressing our key milestones towards making a final investment decision, including securing our financing package for the Project,
and have already commenced work alongside our recently appointed project finance adviser, Stifel Nicolaus Europe Limited.”
Mr. John Webster , Chair of the Board of Euro Manganese, commented:
“The global automobile industry has been transformed in recent years with manufacturers focused on the transition to electric vehicles. This focus
has not only resulted in an increased demand for battery raw materials, but specifically for those sourced from a sustainable and responsible supply
chain. At the same time, manganese has emerged as a key component in the dominant formulations of lithium-ion batteries. This has created an
unprecedented opportunity for us.
The Chvaletice Project is a key pillar in ensuring the security of supply for Europe’s EV industry. Our strategic location in the Czech Republic,
central to an emerging cluster of electric vehicle plants and a related ecosystem of chemical, cell and battery producers, our 25-year operating life,
and our commitment to the responsible production of high-purity manganese products, has attracted the attention of lithium-ion battery, battery
precursor and cathode makers from around the world.
The completion of our Feasibility Study is a significant milestone for Euro Manganese and moves us a step closer to bringing the Chvaletice
Manganese Project into production.”
FEASIBILITY STUDY SUMMARY AND PROJECT ECONOMICS
The following table summarizes the material assumptions used in and the results of the FS, assuming a targeted start of production in 2027. Plant
commissioning is anticipated to commence in 2026.
Table 1: Summary of Chvaletice Feasibility Study (Base Case)
Metrics Units Results
Project Summary
Type of operation Tailings reprocessing
Life of Project (“LOP”) Years 25
Price Assumptions - average LOP (2027-2051)
High purity manganese sulphate monohydrate (“HPMSM”) $/tonne 4,019
High-purity electrolytic manganese metal (“HPEMM”) $/tonne 10,545
Production Average Annual LOP
Total tailings extracted & processed Dry Kt 1,066 26,644
Total manganese grade % 7.41 7.41
Contained manganese (Mn) Kt 78.9 1,973.5
Total HPEMM produced Kt 47.8 1,194.5
HPEMM further processed into HPMSM Kt 32.9 822.3
HPEMM sold kt 14.9 372.2
HPMSM produced / sold Kt 98.6 2,465.0
Total Mn contained in HPEMM & HPMSM Kt 46.8 1,171.9
Overall total Mn recovery % 59.4 59.4
Revenues Average Annual LOP
Revenue from HPEMM $M 157 3,931
Revenue from HPMSM $M 397 9,931
Total revenue $M 554 13,862
Operating Costs (per tonne of dry plant feed)
Tailings extraction $/t 2.44
Magnetic separation, HPEMM & HPMSM processing $/t 143.18
Tailings stacking/storage, site services, land rentals, and water
treatment $/t 27.11
General & Administrative $/t 12.79
Contingency $/t 9.28
Site operating costs $/t 194.79
Freight and insurance, and selling costs $/t 15.22
Czech government royalty(1) $/t 4.53
Total operating costs $/t 214.54
Capital Costs and Working Capital
Initial capital $M 757.35
Sustaining capital over Life of Project $M 117.0
Initial working capital(2) $M 78.7
Project Economics Pre-Tax After Tax
NPV (8% real discount rate) $M 1,750 1,342
IRR % 24.9 21.9
Payback period, from start of processing Years 3.6 4.1
Cumulative cash flow, undiscounted $M 7,309 5,912
Notes:
1. Czech government royalty is 2,308 Czech Koruna (CZK) per tonne of Mn produced, translated to USD at a projected CZK to USD exchange
rate of 22.43.
2. Initial working capital represents the build up of $29.1 million in inventory and $49.6 million in receivables over the course of the first year.
CASH FLOWS
Table 2: Project Revenue, Costs and Cash Flows (Base Case)
Projected Cash Flows Average Annual
($M)
Life of Project
($M)
HPMSM revenue 397.2 9,931.2
HPEMM revenue 157.2 3,930.9
Gross revenues 554.5 13,862.1
Freight and insurance, and selling costs 16.2 405.6
Czech government royalty 4.8 120.6
Net revenues 533.4 13,335.9
Site operating costs 207.6 5,190.1
Capital costs (initial, sustaining and demolition less salvage value) 33.5 836.4
Projected cash flow (pre-tax) 292.4 7,309.4
Corporate taxes 55.9 1,397.4
Undiscounted cash flows 236.5 5,912.0
The Czech corporate income tax rate is 19%. In addition to the royalty of CZK 2,308 per tonne of unit Mn produced, the Czech Republic has various
payroll and other taxes. The Company has modeled the economics of the Project conservatively from a tax perspective, with a full tax burden, based
on Czech legislated tax rates.
For a detailed table of cash flows, please see Appendix 2 .
HPMSM and HPEMM PRICING
HPMSM and HPEMM pricing used in this FS is based on price projection assumptions developed by CPM Group, a leading, independent
commodities market research firm, with expertise in high-purity manganese.
CPM Group’s price forecast for HPMSM and HPEMM was driven by supply and demand dynamics. Factors taken into consideration of CPM
Group’s analysis include:
• A significant increase in forecasted demand for HPMSM and HPEMM markets, resulting from an estimated 30-fold increase in the use of
manganese in lithium-ion batteries for electric vehicles between 2021 and 2036;
• A project supply pipeline with six non-Chinese HPMSM projects potentially coming on stream by 2030, plus an assumption of supply coming
from recycling batteries and an increase in Chinese supply; and
• A deficit in 2031 of 475kt Mn equivalent. If battery demand continues to grow as expected and no additional projects come to the market, the
deficit would increase to 1 million tonnes by 2037.
CPM Group calculated a European HPMSM price based on the Chinese HPMSM price plus the cost of transportation to Europe (sea freight and
land transport), import duties (currently suspended), and premiums for purity, traceability and ESG credentials. CPM Group’s estimate puts these
European premiums at 15-25% of the Chinese HPMSM price. It should be noted that published HPMSM prices cover many different purities of the
product traded, much of which is unable to meet European EV battery producers’ specifications.
Current HPEMM pricing is based on EMM being predominantly a metallurgical market metal, however HPEMM is expected to become
predominantly a battery market metal in the near future as this metal can be converted into HPMSM. CPM Group estimates that the demand for
HPEMM will significantly increase, leading to competition for supply between the metallurgical industry and a significantly larger battery industry
with a supply deficit. Therefore, future HPEMM pricing is forecast to be derived from the HPMSM price as set by the EV battery industry rather than
set by the metallurgical market.
This price differential between battery market grade HPEMM and HPMSM is estimated to equate to the cost of conversion of metal into sulphate,
plus the profit of the converter, plus an element of amortization of the converter’s capital expenditure incurred when building the dissolution plant,
conservatively estimated to be a total of approximately $2,000/mt of metal. Therefore, this differential is subtracted from the European price of
HPMSM, on a metal basis, to provide a European price of HPEMM.
Base Case vs Upside Case Pricing
Tetra Tech adopted a risk-adjusted, short-term forecast for the base case price used in this FS that follows CPM Group’s forecast for HPMSM and
HPEMM to 2031 and then holds prices flat over the remaining LOP.
The upside case uses CPM Group’s unaltered forecast, which increases pricing through to 2035, then holds prices flat between 2035 and 2040,
recognising that a price will be reached which would stimulate additional supply in a growth market. Based on potential additional supply, CPM
Group assume prices begin to fall after 2040, despite a continually growing market.
Table: 3 Base Case vs Upside Case Pricing (1) by Product
Base Case Pricing Upside Case Pricing
Year HPMSM
($/t)
HPEMM
($/t)
HPMSM
($/t)
HPEMM
($/t)
2027 3,266 8,197 3,266 8,197
2028 3,542 9,058 3,542 9,058
2029 3,810 9,893 3,810 9,893
2030 3,873 10,091 3,873 10,091
2031 4,094 10,780 4,094 10,780
2032 4,094 10,780 4,366 11,630
2033 4,094 10,780 4,658 12,541
2034 4,094 10,780 4,970 13,515
2035 – 2040 4,094 10,780 5,399 14,855
2041 4,094 10,780 5,120 13,984
2042 4,094 10,780 5,000 13,609
2043 4,094 10,780 4,760 12,860
2044 4,094 10,780 4,580 12,298
2045 4,094 10,780 4,400 11,736
2046 4,094 10,780 4,220 11,174
2047 4,094 10,780 4,040 10,612
2048 4,094 10,780 3,980 10,425
2049 4,094 10,780 3,920 10,238
2050 4,094 10,780 3,860 10,050
2051 4,094 10,780 3,860 10,050
Notes:
1. The prices in Table 3 are real prices (i.e. excluding inflation) as at 2021.
PROJECT SENSITIVITY ANALYSIS
A detailed sensitivity analysis for the Chvaletice Manganese Project was completed to determine the effects of key variables in relation to the after-
tax NPV of $1.34 billion at a discount rate of 8%. The results of the sensitivity analysis are presented in Tables 4 and 5 below.
As discussed above, Tetra Tech adopted a risk-adjusted, short-term forecast of CPM Group’s pricing for the base case. The upside case is based
on CPM Group’s unaltered forecast prices. The downside prices are the same average price differences, in the reverse direction, between the short
term (base case) and the unaltered CPM Group forecast (upside case). This results in -12.3% from the base case for HPMSM and -14.9% for
HPEMM for the downside case.
Table 4: Selected Financial Metrics based on Price Sensitivities
Metrics Units Downside Case Base Case Upside Case
HPMSM price (average LOP) $/t 3,524 4,019 4,509
HPEMM price (average LOP) $/t 8,974 10,545 12,075
Post-tax undiscounted cashflow ($B) 4.46 5.91 7.37
Post-tax NPV 6% ($B) 1.35 1.92 2.51
Post-tax NPV 8% ($B) 0.90 1.34 1.78
Post-tax NPV 10% ($B) 0.59 0.93 1.27
IRR (%) 18.1 21.9 24.1
Payback period (years) 5.0 4.1 4.1(1)
Notes:
1. Payback period for upside case is the same as the base case as upside payback is calculated on forecast pricing which is the same as the
base case pricing for the first 5 years of operations (as detailed in Table 3).
Table 5: After-Tax NPV 8% Sensitivity Analysis of Initial Capex, Opex and Recoveries
Sensitivity -20%
($/M)
-10%
($/M)
Base Case
($/M)
+10%
($/M)
+20%
($/M)
Initial capital costs 1,464.5 1,403.1 1,341.7 1,280.3 1,218.9
Total operating costs 1,571.5 1,458.0 1,341.7 1,222.5 1,100.6
Recoveries 914.1 1,127.9 1,341.7 1,555.5 1,769.3
CAPITAL COST SUMMARY
Capital expenditure estimates were prepared for both initial and sustaining capital. A projected summary of scheduled capital costs is shown in
Appendix 2 .
The expected initial capital expenditures for the Project, inclusive of capitalized operating start-up costs, as estimated by Tetra Tech, with inputs
from Tractebel Engineering a.s. (" Tractebel "), a Czech local engineering firm, BGRIMM Technology Group (Beijing General Research Institute of
Mining and Metallurgy) ("BGRIMM"), Sudop Praha a.s. (" Sudop") a Czech local engineering firm, and EMN/Mangan Chvaletice, s.r.o. (" Mangan "),
as of Q2 2022, are $757.3 million, including all development-related costs incurred prior to the envisaged commencement of commercial operations.
Initial capital expenditures include $24.8 million of growth capital, a provision for expected cost increases on known expenditures. Contingencies on
initial capital expenditures have been added at appropriate percentages to each component of the Project, excluding capitalized operating costs,
resulting in an overall contingency of $78.4 million or 15.6% of direct costs. Capital costs incurred after start-up are assigned to sustaining capital
and are projected to be paid out of operating cash-flows (see Table 6).
Table 6: Capital Cost Estimate
Item Initial Capital
($M)
LOP Sustaining Capital
($M)
Overall site costs 57.9 -
Mining/tailings extraction 4.6 6.1
Processing HPEMM 295.1 28.0(1)
Processing HPMSM, from 99.9% HPEMM 42.2
Residue Storage Facility 5.4 82.9
Onsite infrastructure 98.1 -
Sub-total direct costs 503.3 117.0
Indirect costs 128.4 -
Owner’s costs 47.2 -
Contingency 78.4 -
Total capital costs 757.3 117.0
Notes:
1. Includes total LOP sustaining capex for processing HPEMM and HPMSM.
Project Infrastructure
The Chvaletice Manganese Project is located approximately 90km east of Prague in the Czech Republic, and is served by excellent existing
infrastructure, including rail, highway, a gas pipeline, and water supply systems, and is adjacent to an operating power plant. The proposed plant
site is zoned for industrial use and is the site of the former process plant that produced the Chvaletice tailings.
New and refurbished infrastructure that will be built to service the Project include: a tailings excavation and handling facility; a south and north site
connection utility bridge for transporting tailings slurry, return water pipes and the tube conveyor that returns a mixture of non-magnetic tailings and
washed leach residue to the residue dry stacking area; enclosed and winterized process plant buildings and various reagent storage facilities and
product warehouse; an upgraded rail spur system with related loading/unloading facilities; an internal road network; an incoming electrical 400kV
high voltage grid connection including transformers, GIS switchgear, and local distribution step-down transformers; a process equipment
maintenance workshop; a mobile fleet maintenance workshop; spare part and maintenance supply warehouses; a comprehensive water
management system, onsite laboratories; and general administrative offices.
OPERATING COST SUMMARY
Onsite operating costs are expected to average $194.79 per tonne plant feed ($4.43 per kg Mn equivalent) with offsite operating costs estimated to
average $19.75 per tonne plant feed ($0.45 per kg Mn equivalent), as shown in Table 7.
Table 7: Operating Cost Estimate
Item $/t of Plant Feed $/kg of Mn Equivalent LOP Total
($M)
Mining/tailings extraction costs 2.44 0.06 64.9
Magnetic separation and processing to HPEMM 123.35 2.81 3,286.6
Processing HPEMM to HPMSM 19.83 0.45 528.4
Residue storage, site services and water treatment 26.12 0.59 696.0
General & Administrative and other 13.77 0.31 367.0
Contingency 9.28 0.21 247.2
Sub-total onsite opex 194.79 4.43 5,190.1
Freight and insurance, selling costs 15.22 0.35 405.6
Czech government royalty(1) 4.53 0.10 120.6
Sub-total offsite opex 19.75 0.45 526.2
Total operating costs 214.54 4.88 5,716.3
Notes:
1. Czech government royalty is 2,308 Czech Koruna (CZK) per tonne of Mn produced, translated to USD at a projected CZK to USD exchange
rate of 22.43.
Power
The Project is expected to consume approximately 490GWhr/year of baseload electrical energy, of which up to two thirds will be required to power
the operation of the electrowinning circuit. The Company is actively engaged in procuring a long term, stable supply of renewable, carbon-free
electricity for the Project and has engaged the services of Baringa Services Ltd., a UK based power markets forecasting analyst.
Filtered Dry-Stacked Tailings
High pressure filter press technology has been adopted for the washing and dewatering of the tailings and leach residue, which is considered an
industry best practice. To realize optimum material strength, several dewatering technologies were tested and evaluated during the FS with the
ultimate objective of achieving average moisture content in the 23-25% range for ultimate strength and stability, while minimizing water losses and
consumption.
CHVALETICE FEASIBILITY STUDY AND TECHNICAL REPORT
The FS was prepared by Tetra Tech, an independent engineering services group with extensive experience in mineral processing, tailings
management and mining. Tetra Tech oversaw the project, the resource and reserve estimates and the design of the mine and residue storage
facility. BGRIMM acted as lead process plant design engineer as well as completed validation bench scale test work required in order to finalize the
process flowsheet. Tractebel provided Czech and European cost inputs, localization, and GET s.r.o (" GET") and Bilfinger Tebodin Czech Republic
("Tebodin") provided environmental services. Sudop provided railway infrastructure design.
The FS is based on a Proven and Probable Reserve Estimate that will be detailed in the updated National Instrument (" NI") 43-101 Technical Report
on the Chvaletice Manganese Project. The NI-43-101 report will include results of the FS and be filed within 45 days of this release on SEDAR at
www.sedar.com and made available on the Company’s website. The JORC Technical Report is expected to be lodged with the Australian Securities
Exchange ("ASX") within the same time period.
RESOURCE ESTIMATE
Tetra Tech was engaged to oversee the planning and execution of sampling and assaying, to prepare the Resource Estimate for EMN's Chvaletice
Manganese Project, to prepare the Technical Report in accordance with NI 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"), and
to prepare the independent JORC Code technical report in accordance with the Joint Ore Reserves Committee Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves 2012 Edition (" JORC Code"). The 43-101 Technical Report, entitled “Technical Report
and Mineral Resource Estimate for the Chvaletice Manganese Project, Chvaletice, Czech Republic”, with an effective date of December 8, 2018 (the
"Mineral Resource Estimate "), was filed on SEDAR on January 28, 2019. No additional drilling or data collection pertaining to the technical
disclosure of mineral inventory has been undertaken since the completion of the Mineral Resource Estimate, and the effective date for the Mineral
Resource Estimate is revised to July 1, 2022. The Project's combined Measured and Indicated Mineral Resources amount to 26,960,000 tonnes,
grading 7.33% total manganese as detailed in Table 8 below.
Table 8: Chvaletice Mineral Resource Statement (effective July 1, 2022)
Historic Tailings Cell In-situ Dry Bulk Density
(t/m3)
Volume
(x1,000 m3)
Tonnage
(kt)
Grade Mn
(% total Mn)
Cell #1
Measured 1.52 6,577 10,029 7.95
Indicated 1.47 160 236 8.35
Cell #2
Measured 1.53 7,990 12,201 6.79
Indicated 1.55 123 189 7.22
Cell #3
Measured 1.45 2,942 4,265 7.35
Indicated 1.45 27 39 7.90
Total Measured 1.51 17,509 26,496 7.32
Total Indicated 1.50 309 464 7.85
Combined Measured +
Indicated 1.51 17,818 26,960 7.33
Notes:
1. Estimated in accordance with the Canadian Institution of Mining (" CIM") Definition Standards on Mineral Resources and Mineral Reserves
adopted by CIM Council, as amended, which are materially identical to JORC Code.
2. The Chvaletice Mineral Resource has a reasonable prospect for eventual economic extraction. Mineral Resources do not have demonstrated
economic viability.
3. Indicated Resources have lower confidence that Measured Resources.
4. A break-even grade of 2.18% tMn has been estimated for the Chvaletice deposit based on preliminary pre-concentration operating costs of
US$6.47/t feed, leaching and refining operating cost estimates of US$188/t feed, total recovery to HPEMM and HPMSM of approximately
60.5% and 58.9%, respectively, and product prices of US$9.60 kg/t for HPEMM and US$3.72 kg/t for HPMSM (GPM Group Report, June
2022). The actual commodity price for these products may vary.
5. A cut-off grade has not been applied to the block model. The estimated break-even cut-off grade falls below the grade of most of the blocks
(excluding 5,000 tonnes which have grades less than 2.18% total Mn). It is assumed that material segregation will not be possible during
extraction due to inherent difficulty of grade control and selective mining for this deposit type.
6. Grade capping has not been applied.
7. Numbers may not add exactly due to rounding.
RESERVE ESTIMATE
Mineral Reserves for the Project are based on the Measured and Indicated Resource and adhere to the guidelines set by the Canadian Institute of
Mining ("CIM"), NI 43-101 and the CIM Best Practices. Material economic modifying factors were applied to each block in the block model including
mined grade, contained metal, recovery rates for HPEMM and HPMSM, mining operating cost, processing cost, (including EMM to MSM conversion
cost), residue placement cost, general and administrative costs, site service costs, water treatment, shipping cost, product insurance, and
royalties. The Project’s combined Proven and Probable Mineral Reserve amount to 26,644,000 tonnes, grading at 7.41% total manganese as
detailed in Table 9 below.
Table 9: Chvaletice Mineral Reserve Statement (effective July 14, 2022)
Historic Tailings Cell In-situ Dry Bulk Density
(t/m3)
Volume
(x1,000 m3)
Tonnage
(kt)
Grade Mn
(% total Mn)
Cell #1
Proven 1.51 6,651 10,132 7.83
Probable 1.52 141 208 8.24
Cell #2
Proven 1.53 7,929 12,106 6.91
Probable 1.54 119 183 7.35
Cell #3
Proven 1.46 2,744 3,979 7.49
Probable 1.46 25 36 7.98
Total Proven 1.50 17,325 26,217 7.35
Total Probable 1.51 284 427 7.84
Combined Proven + Probable 1.51 17,609 26,644 7.41
Notes:
1. Estimated in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by CIM Council, as
amended, which are materially identical to the JORC Code.
2. The Mineral Resource is inclusive of the Mineral Reserves.
3. Probable Reserves have lower confidence than Proven Reserves. Inferred Resources have not been included in the Reserves.
4. A break-even grade of 2.18% total Mn has been estimated for the Chvaletice deposit based on preliminary pre-concentration operating costs
of $6.47/t feed, leaching and refining operating cost estimates of $188/t feed, total recovery to HPEMM and HPMSM of approximately 60.5%
and 58.9% respectively and product prices of US$9.60 kg/t for HPEMM and US$3.72 kg/t for HPMSM (CPM Group Report, June 2022). The
actual commodity price for these products may vary.
5. Grade capping has not been applied.
6. Numbers may not add exactly due to rounding.
7. Minimal dilution and losses of <1% are expected to occur at the interface between the lower bounds of the tailings cells and original ground
as the surface is uneven.
PROCESSING FACILITIES
Tailings Extraction, Residue Storage Facility and Reclamation
In the tailings extraction plan, the three tailings cells will be excavated in a counter clockwise sequence, starting with Cell #3, followed by Cells #1
and #2. Tailings will be extracted using shovel excavators and hauled by truck to an intermediate re-pulping and a covered storage station located
between Cells #1 and #2. The storage station will create a 5-day material stockpile. Re-pulped tailings will be fed to the magnetic separation plant
via a slurry pipeline on a continuous basis.
A blend of non-magnetic tailings and washed leach residue materials from the process plant will be conveyed using a tube conveyor to the storage
station and placed and compacted in the Residue Storage Facility (" RSF"). The excavated area exposed after extraction of the existing tailings will
be lined with a geomembrane liner. The facility will be constructed in stages to suit tailings storage requirements and to minimize the footprint of
tailings exposed to the air at any given time.
Design features of the filtered tailings storage facility include a geomembrane lined bottom, perimeter surface water diversion and a contact water
collection system that is integrated with the overall site water management system. Dust management includes the implementation of modern dust
suppression methods on open faces, interim stack surfaces and haul roads, as required.
Progressive reclamation will be undertaken as an integrated part of the tailings stacking procedure. The tailings stack cover will consist of a low
permeability soil and/or geomembrane cover to inhibit erosion and infiltration, and a growth layer to support vegetation growth.
The site is expected to be fully reclaimed and brought back into productive community use to be established in consultation with local communities,
regulators and national government agencies. The RSF will be monitored during the post-closure period for geotechnical and environmental
performance.
Table 10: Feasibility Study Tailings Extraction, Processing and Production Plan
Year 1
2027
Year 2
2028
Year 3
2029
Years 4-25
2030-2051
(Average)
Total
LOP
Tailings milled (kt)(1) 718 1,113 1,107 1,078 26,644
Mn grade (%)(1) 7.98 7.41 7.44 7.39 7.41
Contained Mn (kt) 57.3 82.5 82.4 79.6 1,973.5
HPEMM produced (kt)(2) 32.1 50.1 50.1 48.3 1,194.5
HPEMM converted to HPMSM (kt)(2) 21.7 33.4 33.4 33.4 822.3
HPMSM produced (kt) 65.0 100.0 100.0 100.0 2,465.0
Total Mn production (kt) 31.5 49.1 49.1 47.4 1,171.9
Overall recovery (%)(3) 55.0 59.6 59.6 59.3 59.4
Notes:
1. Tonnage and grade in Table 10 were calculated by Tetra Tech and includes an overall 0.5% manganese loss factor and no dilution.
2. Approximately two-thirds of the annual HPEMM production is converted to HPMSM on site, with the balance being sold as HPEMM.
3. The combined overall recovery of manganese from tailings to high purity manganese products is estimated to be 59.4% over the life of the
Project, excluding the extraction manganese loss factor of 0.5%. Manganese recoveries in the production of HPEMM and HPMSM are
expected to average 60.5% and 58.9%, respectively.
For a production table by year, please see Appendix 2 .
High-Purity Manganese Processing Facilities
The processing facilities, including ancillary facilities for HPEMM and HPMSM production from the CMP tailings were designed by BGRIMM
together with EMN and Tetra Tech, based on the comprehensive metallurgical test results conducted during the Preliminary Economic Assessment
and validated through bench scale tests during the feasibility study. The design work included process circuit and process equipment optimization.
Mass, energy, and water balances were simulated and estimated by a combination of METSIM modelling, calculations using results from the
metallurgical test work program, and BGRIMM’s experience. Key equipment items were sized and selected by the design team incorporating inputs
from potential Chinese equipment vendors.
The CMP process plant has been designed to a name plate nominal production capacity of 50,000 tonnes per annum of HPEMM by extracting
approximately 1.1 million tonnes of tailings per year. Two-thirds of the annual HPEMM flake production is expected to be converted to approximately
100,000 tonnes per annum of HPMSM (32.24% Mn). This product mix is expected to best meet the high purity manganese market demand
anticipated in current and future low-cobalt lithium-ion battery formulations. The HPEMM product containing >99.9% manganese is expected to be
sold as flakes and will be produced without the use of selenium and chromium. The CMP HPMSM product is designed to contain no less than
99.9% high purity manganese sulfate monohydrate and a minimum of 32.34% manganese and will be sold in powder form, produced without the use
of fluorine. The proposed process flow sheet is illustrated in Figure 1 below.
Figure 1: FS Simplified Process Flowsheet
The major steps in the CMP flow sheet are:
• Excavated tailings will be re-pulped and pumped via a pipeline carried by an overhead bridge that will cross a highway and a railway line and
related spurs that adjoin the process plant site located immediately south of the tailings piles.
• The tailings slurry will be upgraded in a wet, high-intensity magnetic separation circuit that upgrades the manganese grade of the leach feed
to approximately 15% total manganese and rejects approximately 58% of the feed to non-magnetic tailings, with an expected 86%
manganese recovery. The magnetic concentrate and non-magnetic tailings produced will be dewatered using thickeners and filters. The
concentrate will be fed to the downstream leach process and the dewatered tailings, together with the washed leach residue will be dry
stacked in the RSF.
• The magnetic concentrate cake will be re-pulped and leached using dilute sulfuric acid and residual acid from manganese electrowinning
circuit. Neutralization of the slurry will be achieved using hydrated lime. Air sparging of the neutralized slurry will be used to cost-effectively
coprecipitate the substantial quantities of impurities that leach with the manganese. The leach pulp will be filtered in automatic pressure
filters to separate pregnant leach solution from the leach residue.
• The leach residue will then be washed with process water in an on-stream washing/filtration circuit using pressure filtration prior to co-
disposal with the non-magnetic separation tailings in a lined dry-stack tailings storage facility that will be progressively constructed in
excavated areas of the CMP tailings cells.
• The wash water from the leach residue washing circuit will be treated for manganese and ammonia recovery to minimize manganese and
ammonia losses. The wash water recovery system recovers manganese units to the leaching circuit in the form of manganese carbonate.
The spent wash water solution will be treated to recover ammonia using a conventional lime boil process and will produce a gypsum by-
product. The recovered ammonia will be reused in the HPEMM production circuits. The inclusion of the leach residue washing circuit with its
associated wash water recovery circuit is expected to be a world-leading industry practice for the hydrometallurgical processing of
manganese ores. Returning washed tailings to the carefully prepared containment cells in the excavated areas of the tailings progressively
remediates the environmental impact risks of legacy mining operations.
• The pregnant solution from the leaching circuit will be purified to remove heavy metals and other impurities and stabilized to prevent
uncontrolled crystallization of salts to produce the solution for the downstream electrowinning process.
• Electrowinning will be conducted in electrowinning cells. The tank house will have the capacity to produce 50,000 t/annum HPEMM using an
energy efficient and selenium free process. The proposed electrowinning circuit is designed to have a plating cycle of 24 hours at a cell
voltage of 4.2 to 4.4 V and an average cathode-current density of 320 to 370 A/m 2. Cathodes will be harvested using semi-automatic
harvesting machines, washed, and stripped of electrodeposited manganese metal using industry-standard automatic cathode plate stripping
machines. Approximately two thirds of the HPEMM flakes will then be used as feed for HPMSM production. The remaining HPEMM flakes
will be packed and directly shipped to customers for onsite dissolution and/or the sale of flakes.
• A magnesium removal process has been incorporated into the process plant design to ensure efficient electrowinning operations and high-
quality product. The magnesium removal process will maintain the magnesium concentration in the electrowinning solutions at a level that
prevents uncontrolled precipitation of salts and scaling. The process uses low cost reagents without incurring significant losses of
manganese and reagent units.
• The base case FS production plan proposes to dissolve approximately two-thirds of the HPEMM flakes using sulfuric acid to produce
100,000 t/annum of HPMSM powder in a dust-free chemical processing facility. The dissolved HPMSM solution will be further purified to
remove trace impurities carried by the HPEMM flakes. This plant design assumes the feed solution will be concentrated using an energy
efficient, low temperature mechanical vapor recompression (MVR) crystallization process to generate a single specification of manganese
sulfate monohydrate crystals. The HPMSM crystals will be separated from the saturated crystal slurry using centrifuges. The dewatered
crystals will be dried using disc dryers to produce the final HPMSM powder, while the spent feed solution returns to the HPEMM dissolution
circuit. The dried HPMSM powder product will be packed prior to being shipped in trucks or containers to customers throughout the EU.
ENVIRONMENT, PERMITTING AND COMMUNITIES
Environmental Baseline Studies
The vicinity around the Chvaletice tailings area has been significantly impacted by past mining and related heavy industrial activities. Mining activity
at Chvaletice ended in 1975. Czech law exempts landowners and developers from impacts prior to 1989, when communism ended in then
Czechoslovakia.
Since 2017, GET, a Czech mining, geological and environmental services firm, has produced several studies for the Project, including environmental
baseline studies. These included ecosystem mapping, documentation of the physical and environmental characteristics of the CMP site and an
assessment of land use plans of the adjoining municipalities. Significant local features were recorded, including sensitive and protected areas,