Dr. Matthew James reports

EURO MANGANESE MAKES SIGNIFICANT PROGRESS ON ITS BÉCANCOUR FACILITY TO SUPPLY BATTERY GRADE MANGANESE IN NORTH AMERICA

Euro Manganese Inc. has made key developments on its Becancour plant, which provide an opportunity to accelerate the company's plans to produce high-purity manganese products in Canada for the North American electric vehicle (EV) market.

Highlights

• A scoping study was completed evaluating the development of a dissolution plant in Becancour, Que., capable of producing 48,500 tonnes per annum (tpa) of battery-grade manganese sulphate (HPMSM). The scoping study delivered strong preliminary project economics with a posttax net present value (NPV) of $190-million and a posttax internal rate of return (IRR) of 26 per cent.
• The company has selected WSP Canada Inc. to complete a feasibility study for the plant, which will further refine plant design, costs, economics and customer offtake opportunities.
• In addition, the company has signed a memorandum of understanding (MoU) with MMC, a South African producer of high-purity electrolytic manganese metal (HPEMM), to supply the Becancour dissolution plant with battery-grade, selenium-free, 99.9 per cent HPEMM feedstock. HPEMM is an already refined metal product that requires further processing to produce battery-grade manganese sulphate.
• The MoU is strategically significant for the company as it enables the potential acceleration of the plant to supply the North American market, possibly as early as mid-2026, thus bringing forward cash flows for the company.
• The company has signed a co-operation agreement with the Grand Conseil de la Nation Waban-Aki (the W8banaki), a tribal council of the Abenaki communities, on whose ancestral territory the Becancour project would be situated.
• Becancour is fast becoming a leading battery materials hub within Canada and the company's site is strategically located adjacent to a cluster of planned cathode active material manufacturing plants.
• The Becancour plant could produce up to 20 per cent of projected North American 2027 demand for HPMSM. CPM Group forecasts demand for North American HPMSM to rise to approximately 250,000 tpa in 2027 and over 800,000 tpa by 2031. American EV tax credits from the Inflation Reduction Act have stimulated growth of the North American EV vehicle market and the upstream supply chain. However, there remains no current processing capacity or production of battery-grade manganese in North America.

Becancour scoping study

Ausenco Vancouver completed a positive scoping study which evaluated the development of a high-purity manganese metal dissolution plant in Becancour, Que., capable of producing 48,500 tpa of HPMSM based on sufficient supply of HPEMM feedstock. The plant site is a 15-hectare land parcel within the Becancour industrial park on which the company has an option agreement to purchase. The company has also completed site due diligence.

The scoping study delivered strong preliminary project economics with a posttax NPV of $190-million using an 8-per-cent discount rate, a posttax IRR of 26 per cent and a payback period of approximately four years. The economic analysis was run on a constant dollar basis with no inflation, no government grants and was unlevered.

Initial capital was estimated at $110.8-million, including contingencies of $15.1-million. A key aspect of the plant is a short build time; the study estimated an approximate two-year engineering/construction duration.

The plant design allows for production of both high-purity manganese sulphate monohydrate crystals (HPMSM) and high-purity manganese sulphate solution (HPMSS), which provides customer offtake flexibility. The plant design leverages extensive process development and engineering work already completed for the company's Chvaletice manganese project (CMP) in the Czech Republic.

Producing HPMSS provides both cost and environmental benefits. An HPMSS product could be pumped as a solution to nearby precursor cathode active materials (pCAM) manufacturers, which eliminates the need to crystallize, dry and package an HPMSM product. As HPMSM is ultimately dissolved in water by pCAM plants, delivering a solution saves costs and reduces water consumption and CO2 (carbon dioxide) emissions.

Minimal infrastructure improvements are required to build the plant. Off-site infrastructure is limited to a powerline connection from the main Becancour power distribution network and the potential construction of a railway spur from the Becancour site railway line. On-site infrastructure includes roads, plant and administrative buildings, power distribution, and storage buildings for HPEMM feedstock and HPMSS/HPMSM products.

Feedstock optionality via a third party metal supply was modelled, which may facilitate operation of the Becancour plant as early as mid-2026, ahead of the CMP. This would potentially enable the company to be first to market in North America and bring projected cash flows for the company forward by at least a year. This projected timeline and feedstock mix will be assessed as key outputs of the feasibility study, which is expected to be complete in mid-2024, subject to financing.

The company has selected WSP Canada to complete a feasibility study for the plant, which will further refine plant design, costs, economics and customer offtake opportunities. Permitting is expected to advance in parallel with the feasibility study.

Becancour is fast becoming a leading battery materials hub within Canada due to the excellent regional infrastructure, the green and competitively priced energy, a very supportive government with grant programs, and with a qualified local work force. The company's site is strategically located adjacent to a cluster of planned cathode active material manufacturing plants, including GM/Posco and BASF.

Key study inputs and assumptions

A number of general assumptions were used in the scoping study to assess the economics of constructing and operating the Becancour dissolution plant. As such, the outcomes and economic metrics have a margin of error of negative 30 per cent/positive 50 per cent. Metal prices were based on market analyst long-term forecasts. An exchange rate of 77 U.S. cents per $1 (Canadian) was used. Forward escalation and contingencies for scope changes and associated costs were not considered. Cost estimates are based on Q4 2022 pricing without allowances for inflation.

Euro Manganese cautions that the study does not constitute a scoping study within the definition used by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), as it relates to a standalone industrial project and does not concern a mineral project of the company. As a result, disclosure standards prescribed by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects are not applicable to the scientific and technical disclosure in the study. Any references to scoping study or feasibility study by Euro Manganese in relation to the Becancour plant are not the same as terms defined by the CIM Definition Standards and used in NI 43-101.

MoU with MMC

The company has signed an MoU with MMC, a South African producer of HPEMM, to supply the Becancour dissolution plant with battery-grade, selenium-free, 99.9 per cent HPEMM feedstock.

The MoU provides feedstock optionality for the Becancour plant, allowing it to be fed with HPEMM from MMC and/or with HPEMM from the company's Chvaletice manganese project. The MoU allows for flexibility on the supply of HPEMM depending on market demand, MMC product availability and CMP metal sales.

The MoU is strategically significant for the company as this third party metal supply enables the potential acceleration of the plant to supply the North American market possibly as early as mid-2026, thus potentially enabling the company to be first to market and to bring cash flows forward for the company.

MMC has provided HPEMM samples to the company for testwork as part of the Becancour plant feasibility study and both parties intend to work together in good faith to conclude a definitive agreement.

Co-operation agreement with the W8banaki

The company has signed a co-operation agreement with the Grand Conseil de la Nation Waban-Aki, a tribal council consisting of the Abenaki communities of Odanak and Wolinak, on whose ancestral territory the Becancour project would be situated.

The agreement defines how the company and the W8banaki intend to communicate openly and regularly, and to work together for the mutually acceptable development of the Becancour project, especially during the evaluation and planning phases.

Dr. Matthew James, president and chief executive officer of Euro Manganese, commented:

"Our growth plans to supply the North American lithium-ion battery market with high-purity manganese are advancing. Completion of the Becancour plant scoping study, preparing for the feasibility study and signing the MoU with MMC lays the foundations to deliver significant additional value for our stakeholders. The MoU provides us with feedstock flexibility and enables us to potentially operate Becancour as a stand-alone project. More importantly, it outlines a potential pathway to bring company production and cash flow forward by at least a year, in advance of our Chvaletice manganese project in the Czech Republic.

"Equally, the co-operation agreement with the W8banaki Nation demonstrates our commitment to working with our partners from the beginning to develop the Becancour project in a mutually beneficial way with the ancestral and local community. I look forward to deepening this partnership as the project advances.

"While our flagship Chvaletice project remains at the heart of our focus, the Becancour project advances our vision of building a leading, multiasset high-purity manganese business to supply the rapidly growing EV market. We look forward to partnering with MMC, the only current Western provider of high-purity manganese metal, to develop a strong strategic relationship."

Louis Nel, chief executive officer of Manganese Metal Company, commented:

"The energy transition primarily focuses on critical materials and advanced technology. As the leading global manufacturer of high-purity electrolytic manganese metal (EMM), a critical metal for battery production, MMC employs a unique process technology that delivers 99.9-per-cent pure metal without needing selenium. Therefore, MMC is an obvious choice to supply additional units for the Becancour dissolution plant.

"MMC, the only supplier of high-purity EMM outside of China, servicing a variety of industries, is eager to expand its role in the battery market as the industry takes root beyond Asia. We have substantial existing supply of metal-for-dissolution into the ex-China production of precursor for cathode active material (pCAM). With our long-recognized reputation as a responsible producer, complete traceability, forward-thinking ESG (environmental, social and governance) practices, and a strategic location in South Africa -- known for its vast manganese deposits -- MMC is perfectly poised to aid the development of a sustainable North American battery and electric vehicle (EV) ecosystem. In this case, our agreement with Euro Manganese underlines our commitment."

About Euro Manganese Inc.

Euro Manganese is a battery materials company focused on becoming a leading producer of high-purity manganese for the electric vehicle industry. The company is advancing development of the Chvaletice manganese project in the Czech Republic and exploring an early-stage opportunity to produce battery-grade manganese products in Becancour, Que.

The Chvaletice project is a unique waste-to-value recycling and remediation opportunity involving reprocessing old tailings from a decommissioned mine. It is also the only sizable resource of manganese in the European Union, strategically positioning the company to provide battery supply chains with critical raw materials to support the global shift to a circular, low-carbon economy.

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