15/04/2021 - 14:50

Element 25 processes first ore at WA manganese play

15/04/2021 - 14:50

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First ore has been successfully run through ASX-listed Element 25’s new processing plant at its developing Butcherbird manganese mining and beneficiation operation in WA as part of its current commissioning program. Commissioning activities have been “progressing well”, according to the company, and a saleable manganese concentrate has now been produced.

First ore has been successfully run through Element 25’s new processing plant at its developing Butcherbird manganese mining and beneficiation operation in WA as part of its current commissioning program. Commissioning activities have been “progressing well”, according to the company, and a saleable manganese concentrate has now been produced.

Perth-based Element 25 achieved the milestones of project development and commencement of commissioning at Butcherbird within just 11 months of the delivery of its original pre-feasibility study last year. Commercial production start-up appears imminent as optimisation and ramp-up continues on schedule.

Punters have taken a shine to the company’s rapid pathway to production too, culminating in an impressive market cap of $350 million for Element 25.

Management says it expects to square away commissioning of the plant in a relatively short time frame and that all efforts are being made to accelerate production rates to nameplate capacity as quickly as is practicable.

According to the company, initial indications during commissioning have been encouraging in relation to potential plant throughput and its reliability and consistency in processing the various types of ore feed identified in the Butcherbird starter pits.

As part of the commissioning phase optimisation work, Element 25 says it will look to enhance plant availability, processing throughput and product quality.

The company says other infrastructure projects such as the mine’s access road connection to the Great Northern Highway are nearing completion in preparation for the first manganese concentrate cargo to be trucked to Port Hedland for export via the Utah Point export facility.

In December last year, Element 25 released an impressive updated PFS on Butcherbird predicting pre-tax free cash flows of $39.6 million a year for the first five years of manganese concentrate production at the “stage one” annual output level.

Stage one, or the base case, envisaged annual production of about 365,000 tonnes of manganese concentrate per annum across a whopping 40-year life of mine.

The PFS base-case net present value and internal rate of return numbers for Butcherbird came in at a “compelling” $583 million and 387 per cent before tax, respectively.

Open-pittable proved and probable ore reserves at Butcherbird, located approximately 130km south of Newman in the southern Pilbara region, currently stand at 50.6 million tonnes grading an average 10.3 per cent manganese for 4.27 million tonnes of recoverable manganese.

Pre-production CAPEX for the first-stage project development totals an incredibly low $17 million and the capital payback period has been estimated at just six months.

An annual ore throughput rate of 1.3 million tonnes per annum has been used as the design capacity in the PFS for the base-case, stage one production operations.

The PFS also shows Butcherbird has the potential for significant expansions beyond the initial stage-one production volumes, which Element 25 says it aims to expedite once stage one has reached steady-state production.

According to the PFS, doubling the ore throughput to 2.6 million tonnes per annum increases the annual manganese concentrate production rate to 590,000 tonnes per annum over a 20-year mine life and free cash flows before tax jump to $60.2 million a year under this scenario.

The NPV and IRR under this expansion scenario convert to $926 million and 342 per cent, respectively.

Under a second expansion option in the PFS involving the trebling of the ore throughput to 3.9 million tonnes per annum, annual manganese concentrate production at Butcherbird rises to 852,000 tonnes per annum over a 14-year mine life and free cash flows before tax hike to $78.8 million a year.

The larger expansion sees the NPV and IRR figures adjust to $1.13 billion and 359 per cent, respectively.

In addition to its concentrate export business, Element 25 says it has undertaken extensive research and development examining the possible production of high purity high purity manganese products including lithium-ion battery grade manganese sulphate monohydrate for electric vehicle batteries.

According to management, test work to-date points to Butcherbird ore being amenable to an ambient temperature, atmospheric pressure leach process, resulting in an efficient extraction of the manganese into solution, a key requirement for the production of high purity manganese sulphate monohydrate.

Element 25 says a recent $35 million capital raise will help it accelerate the processing flow sheet and plant design work towards the eventual production of lithium-ion battery-grade manganese sulphate from the concentrate produced at Butcherbird for EV batteries.

 

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au

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