ASX-listed WA manganese producer, Element 25 has sold the first parcel of manganese concentrate from its new Butcherbird mining and beneficiation operation in the Pilbara to offtake partner OM Materials, a wholly-owned subsidiary of ASX-listed, Singapore-based vertically integrated manganese and ferroalloy group OM Holdings Ltd.
According to Perth-based Element 25, the manganese concentrate grade of 30-35 per cent and the level of impurities meet contract specifications as agreed under their offtake agreement.
The company, which has fast-tracked to this point only one year after tabling an initial pre-feasibility study on Butcherbird, plans to make the first export shipment to OM Materials next month.
Element 25 says the Butcherbird mine site about 130km south of Newman in the southern Pilbara has now progressed to around-the-clock processing as part of scheduled plant commissioning and ramp-up activities.
Element 25 Managing Director, Justin Brown said: “Delivering the first material under the offtake agreement within 12 months of publishing the pre-feasibility study is a testament to the hard work and dedication of the project team. This is another important milestone for the project and company, and we are excited to be heading for our first shipment of Butcherbird’s material to our offtake partners.”
The $357 million market-cap company is already turning its attention to a proposed “stage two” expansion of the Butcherbird manganese concentrate operation involving the doubling of ore throughput from the stage-one, or base case, of 1.3 million tonnes per annum to 2.6Mtpa.
According to the updated PFS on Butcherbird released late last year, that would translate to an increase in average annual manganese concentrate production to 590,000 tonnes per annum across an initial 20-year life of mine.
Under the stage-two scenario, free cash flows before tax would climb to an average $60.2 million a year, up from $39.6 million, and the pre-tax net present value and internal rate of return for the Butcherbird project adjust to $926 million and 342 per cent, respectively.
Element 25 this week also locked in a multi-user access agreement with the Pilbara Port Authority that allows the company to ship manganese concentrate from Butcherbird through Port Hedland’s Utah Point bulk handling and loading facility.
Its binding take-or-pay offtake contract with OM Materials speaks for all the stage-one manganese concentrate to be produced at Butcherbird up to about 390,000 tonnes per annum.
Element 25 is eyeing a start to the expanded stage-two output levels in the March quarter next year.
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By Matt Birney
