ASX-listed Element 25’s maiden shipment of manganese concentrate from its Butcherbird operation in Western Australia’s southern Pilbara region has left Port Hedland, only a little over a year since the company posted its initial project pre-feasibility study. The company not only graduated to manganese producer status at a cracking rate but also achieved the milestone having spent just $17 million on the capital cost of construction to get Butcherbird up and running.
Perth-based Element 25 says loading of about 27,000 tonnes of “high quality” Butcherbird manganese concentrate aboard a Handymax-size vessel was the culmination of a tireless effort by its construction and operations teams, with the ship departing Utah Point bulk handling facility yesterday.
The first commercial manganese concentrate cargo is heading for the company’s offtake partner OM Materials’ smelter in China.
OM Materials, a wholly owned subsidiary of Singapore-based and ASX-listed vertically integrated manganese and ferroalloy group OM Holdings, has entered into a take-or-pay agreement to buy all of the manganese concentrate Element 25 expects to produce across the first five years of “stage one” production totalling about 365,000 tonnes per annum.
Element 25 Managing Director, Justin Brown said: “It has been a testament to Australian ingenuity, persistence and hard work that Element 25 has managed to achieve this feat in such a short period of time with a pre-feasibility study completed only 14 months ago.”
“After thousands of man hours, multiple layers of permitting, engineering drawings, contracts, financing activities, and a healthy dose of passion and toil stage one of our project has come to life.”
According to Element 25’s well-honed second pre-feasibility study or “PFS” released late last year, the Butcherbird open-pit mining and beneficiation operation about 130km south of Newman is predicted to churn out average free cash flows before tax of $39.6 million a year over the first five years of manganese concentrate production under the stage one base case.
Management says the company will now quickly revert to advancing the proposed “stage two” expansion of Butcherbird involving a potential doubling or trebling of plant throughput within 12 months of commissioning of stage one.
Element 25’s PFS mark II featured expansion scenarios including 590,000 tonnes per annum of manganese concentrate production and 852,000tpa of manganese concentrate production corresponding to increases in plant throughput from stage one’s 1.3 million tonnes per annum to 2.6Mtpa or 3.9Mtpa, respectively.
The updated PFS shows pre-tax free cash flows from Butcherbird in turn swelling to $60.2 million a year or $78.8 million a year assuming the higher throughput levels.
Element 25, which has a market cap of about $329 million, is also looking at the prospect of producing high-purity lithium-ion battery-grade manganese sulphate or “HPMS” on the back of subsequent stages of project development.
Mr Brown said: "We fully intend for this to be the first step in a multi-stage growth journey for this world-class manganese project, with the expansion of concentrate production as part of our stage two plans to be followed by developing the processing infrastructure to produce battery-grade zero carbon manganese products for the lithium-ion batteries which will power the electrification of the global vehicle fleet.”
Manganese is becoming an increasingly important ingredient for electrical vehicle or “EV” batteries in light of potential constraints of nickel and cobalt supply, according to the company, which sees this prompting battery manufacturers to consider high-manganese cathodes to produce the cathode material required by the EV industry in coming years.
Element 25 suggests it is ideally placed to feed the predicted growth in demand, with flow sheet development work it has carried out over the past couple of years pointing to Butcherbird ores being amenable to a simple, unique, ambient temperature and atmospheric pressure leach process, resulting in an efficient extraction of the manganese into solution, the key requirement for the “cost effective and sustainable production of HPMS”.
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