Element 25 is poised to start shipping manganese from its new Butcherbird operation after nailing down a multi-user access agreement with the Pilbara Port Authority. The port access contract allows the company to dispatch manganese concentrate from its Butcherbird mining and beneficiation operation through the Utah Point bulk handling and loading facility at Port Hedland.
ASX-listed Element 25 is currently commissioning the processing plant at Butcherbird, about 130km south of Newman in the southern Pilbara region, and recently produced an initial concentrate.
Commencement of commercial manganese concentrate production looms large, with optimisation of the plant and ramp-up of ore throughput to design capacity well advanced and the company hoping to make the first shipment next month.
Element 25 finalised an offtake agreement with Singapore group, OM Materials in the March quarter this year covering manganese concentrate deliveries for five years under a binding take-or-pay contract.
The port agreement ticks a final box for the company.
Element 25 Managing Director, Justin Brown said: “This is another important milestone on the way to our first sale of manganese concentrate, and we are excited to be closing in on our first shipment of Butcherbird’s material to our offtake partners.”
Latest published open-pit proved and probable ore reserves at Butcherbird stand at 50.6 million tonnes at an average grade of 10.3 per cent manganese for 4.27 million tonnes of recoverable manganese.
A robust revised pre-feasibility study tabled by the company late last year forecasts Butcherbird spitting out free cash flows averaging $39.6 million a year before tax for the first five years of “stage one” manganese concentrate production levels up to 390,000 tonnes per annum.
An ore throughput rate of 1.3 million tonnes per annum has been assumed as the nameplate capacity in the PFS for the stage one operation.
Element 25 intends trucking its Butcherbird product from the mine site via an access road to the Great Northern Highway and then along the highway to the Utah Point export facility.
According to the PFS mark II, the base-case, stage one net present value and internal rate of return for Butcherbird improved to a “compelling” $583 million and 387 per cent before tax, respectively.
With a pre-production capital cost for the stage one project development put at a staggeringly low $17 million, the capital payback period for Butcherbird is expected to be next to nothing.
Element 25 says the low-CAPEX stage one project gives it a springboard for growth at a time when global carbon steel output, driven by major producer China, continues to grow.
Carbon steel is the main end-product for manganese, for which there is no substitute.
With manganese prices supportive of expansion, Element 25 will look to advance its plans to grow supply into the potentially high-growth, high-purity manganese market.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Matt Birney
