Element 25 is on track to meet an aggressive development schedule at its Butcherbird manganese project in the Pilbara, with a production water bore drilling program now underway. The bore holes will supply process water for Element 25’s proposed manganese beneficiation plant and they are a very necessary piece of infrastructure required to catapult the project into production.
Element 25’s feasibility results are quite extraordinary by comparison to many other more grandiose projects that require hundreds of millions to build and despite promises of a hundred million or so a year in profits, they never really get off the ground because of cost, size, scale, dilution and risk.
By comparison, Element 25 says it needs to spend just $15m in CAPEX to churn out AUD$24.4m a year in free cash from its Butcherbird manganese project in the Pilbara.
The market seems to believe it too, with Element 25’s stock leaping from 20c to 40c upon the tabling of its PFS – interestingly, the price has pretty much stayed there ever since.
Its solid ore reserve is currently sitting at 5.21 million tonnes of contained concentrate grading 10.3 per cent manganese.
Manganese is an essential component in the steel-making process and without its addition, the finished material would have little strength and would break easily. It is also a key component of lithium battery cathodes, which offers Element 25 the opportunity to ride the rising electric vehicle wave.
With a pre-tax NPV in real terms of AUD$283m and an incredible IRR of 223 per cent, Element 25 has modelled a multi-generational mine life of 42 years.
The company’s planned timeline to pump out manganese concentrate for the global construction industry is tight and it is looking to generate some early cash flow for the mine’s phase two plan. Phase two will see it look to build a large West Australian high purity manganese production hub and with a mineral resource of some 263 million tonnes of ore, longevity, and therefore project net present values don’t look to be a problem.
The Butcherbird project is located south of Newman in Western Australia, just off the Great Northern Highway.
Is your ASX listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Matt Birney
