Dr. Matthew James reports

EURO MANGANESE REPORTS FOURTH QUARTER AND YEAR-END 2023 FINANCIAL RESULTS AND PROJECT DEVELOPMENTS

Euro Manganese Inc. has discussed key developments during the fourth fiscal quarter 2023 and to date. The company has now filed its Sept. 30, 2023, year-end financial statements, management's discussion and analysis, and other financial reports.

Key developments during and subsequent to the quarter

Chvaletice project, Czech Republic

• A total of $100-million (U.S.) non-dilutive funding package announced to advance development of the Chvaletice manganese project; $20-million (U.S.) received on closing. Definitive agreements signed with OMRF (BK) LLC (Orion), which is managed by the Orion Resource Group, for a $100-million (U.S.) funding package, split into two $50-million (U.S.) components: a $50-million (U.S.) convertible loan facility and a $50-million (U.S.) royalty financing.
  • The 36-month secured convertible loan facility bears interest at 12 per cent per annum and is structured in two tranches: $20-million (U.S.), which was received upon closing, and an additional $30-million (U.S.) to be received upon meeting key technical and commercial milestones. The loan is convertible into a royalty stream on project revenue. The $50-million (U.S.) royalty financing can be drawn following a final investment decision by the board.
  • All aspects of the funding package were structured to meet project finance bankability requirements and will sit alongside, and reduce, the project finance debt and equity required for the full project financing. For further details on the convertible loan facility and royalty financing, please refer to the company's announcement on Nov. 28, 2023.
  • In connection with the funding package, Orion have an offtake option of between 20 to 22.5 per cent of the project's high-purity manganese total production, for a term of 10 years from first delivery and matching the commercial terms of the company's sales. Such right is exercisable until the company signs 60 per cent of the total project offtake.
• Production of HPMSM from the Chvaletice demonstration plant derisks the process flow sheet. Two independent external laboratories confirmed samples sent for testing met the demonstration plant target specifications for high-purity manganese sulphate (HPMSM) with low levels of impurities.
  • Third party high-purity electrolytic manganese metal (HPEMM), with similar product impurity levels to those of the Chvaletice HPEMM product, was used as feedstock during the commissioning of the dissolution and crystallization module. As part of the final commissioning stages of the demonstration plant, the company will use HPEMM produced from the electrowinning circuit for HPMSM production.
  • The team is gaining valuable insights from operation of the demonstration plant, which are leading to engineering and operational process improvements.
• Revised ESIA resubmitted to Czech Ministry of Environment, no anticipated effect on timeline to final investment decision. Work was completed to address the comments received related to noise abatement. The company anticipates the issuance of a positive decision on the revised Environmental Social Impact Assessment (ESIA) in early 2024.
• Preparation of other key permits is progressing well. Documentation for the land planning permit is substantially complete and will be finalized upon receipt of the conditions in the approved ESIA. The land planning permit will be submitted on approval of the ESIA. The construction permit is a deliverable of the FEED phase of engineering and is expected to be submitted in H2 2024.
• Definitive lease agreement with CEZ a.s. provides access to approximately 60 per cent of the proven and probable manganese reserves in the historic tailings area. Land access is granted in return for a royalty on gross sales from the project. During the seven-year project finance debt period, the royalty will operate on a sliding scale from 0.2 to 1.8 per cent, dependent on the average prices received for the project's high-purity manganese products. The sliding-scale royalty is designed to ensure anticipated project finance debt covenants are met. Post the debt period, the royalty will be 1.8 per cent of gross sales from the project.
• Access to approximately 85 per cent of Chvaletice proven and probable reserves secured. The CEZ lease agreement, together with previously announced land access agreements, secures access to approximately 85 per cent of the total reserves of the project. Negotiations with respect to acquisition of the balance of the surface rights with the remaining landowner are progressing.
• Rezoning of all land required for the project now complete. The Municipality of Chvaletice formally approved the rezoning of tailings land for mining use and certain areas within the commercial plant site that were required to be reclassified for heavy industrial use. Together with the rezoning of the Village of Trnavka's tailings land for mining use, announced in March, 2022, the rezoning requirements for the project are now complete.
• Chvaletice project selected for support under intergovernmental mineral security partnership (MSP). The MSP is a collection of 13 countries and the European Union that aims to catalyze public and private sector investment to build diverse, secure and responsible critical mineral supply chains globally. Chvaletice was the only manganese project amongst the 17 projects the MSP is working to advance. Projects are to receive support by leveraging the collective financial and diplomatic resources of the MSP's 14 partners and private sector financiers partnering with the MSP.
• A total three-billion-euro fund proposed by the European Commission to boost growth in EU (European Union) battery industry a potential opportunity. Starting in 2024, up to 3 billion euros in funding is proposed to be provided via the Commission's Innovation Fund to incentivize investment in the European Union's battery manufacturing capacity. The commission intends to set up a dedicated instrument under the Innovation Fund to provide support, possibly as a fixed premium to European manufacturers of the most sustainable batteries, creating impact across the entire battery value chain, including its upstream raw material segment.

Offtake process

• Offtake process progressing with over 100 per cent of annual production capacity under discussion. Active discussions and negotiations are taking place with potential customers across the battery supply chain, including battery, chemical and automobile manufacturers. The company is targeting 80 per cent of production capacity under offtake contract to support project finance. In addition, several larger potential customers are yet to provide an allocation of tonnage to the company but have expressed an expectation to do so.

Becancour facility, Quebec, Canada

• Becancour dissolution plant scoping study delivered strong preliminary project economics. The scoping study outlined a posttax net present value (NPV) of $190-million using an 8-per-cent discount rate, a posttax internal rate of return (IRR) of 26 per cent and a payback period of approximately four years. The economic analysis has a margin of error of negative 30 per cent/positive 50 per cent, and was run on an unlevered and constant dollar basis with no inflation or government grants considered. Initial capital is estimated at $110.8-million, including contingencies of $15.1-million. Plant production capacity is estimated to be 48,500 tonnes per annum (tpa) of HPMSM, assuming sufficient supply of HPEMM feedstock. This could meet up to 20 per cent of projected North American 2027 demand for HPMSM, according to forecasts by CPM Group. There is no current processing capacity or production of battery-grade manganese in North America.
• MoU signed with Manganese Metal Company (MMC) for supply of HPEMM. 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 project. This enables the potential for the Becancour plant to supply the North American market as early as mid-2027, thus bringing forward cash flows for the company.
• WSP Canada selected for Becancour dissolution plant feasibility study. The feasibility study will further define project design, costs, economics and customer offtake opportunities, and is subject to financing. Permitting is expected to advance in parallel with the study to facilitate the path to production.
• Co-operation agreement signed with the Grand Conseil de la Nation Waban-Aki (W8banaki). 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.

Financial position

• Cash and cash equivalents of approximately $7.6-million at FQ4/fiscal year-end (Sept. 30, 2023); compared with $10.9-million at FQ3 (June 30, 2023) and $21.6-million at fiscal year-end 2022. The decrease in cash of $13.9-million year over year is a result of $10.8-million used in operating activities and $3.1-million used in investing activities, which included payment for the demonstration plant costs and certain land.
• Working capital of $5.7-million at FQ4/fiscal year-end (Sept. 30, 2023), compared with
• $9.2-million at FQ3 (June 30, 2023) and $19.8-million at fiscal year-end 2022.
• Sufficient funding for delivery of key project milestones. The net proceeds from the first $20-million (U.S.) tranche of the convertible loan facility, received post fiscal year-end, is expected to be sufficient funding to complete permitting of the project, commissioning of the Chvaletice demonstration plant and its operation, and acquisitions of certain land parcels. It is also expected to fund initiation of the FEED phase of the EPCM contract, certain site preparation works, and for general and administration expenses for more than 12 months.

Funding to progress the company's North American strategy, including the Becancour plant feasibility study, is expected to be provided by the company's current cash and cash equivalents and future equity raises, and funding by strategic industry investors and government programs.

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

"We continued to deliver to plan in 2023 and achieved several key milestones during and subsequent to the fourth fiscal and calendar quarter. Our team successfully produced on-spec HPMSM from our demonstration plant, advanced ESIA permitting and completed a significant land-lease agreement, which provides us with access to approximately 60 per cent of the project's manganese reserves and overall, secures land access to roughly 85 per cent of reserves. Outstanding land rezoning requirements were also completed.

"The Chvaletice project received high-level intergovernmental support during the fourth calendar quarter by being named as a project under the minerals security partnership. We aim to leverage opportunities to meet with private sector financiers partnering with the MSP as we advance with project financing.

"We were very pleased to announce the non-dilutive $100-million (U.S.) funding package with Orion in late November. The proceeds from the initial $20-million (U.S.) tranche allow us to further advance the project, particularly completing permitting, initiating the FEED phase of the EPCM contract and commissioning of the demonstration plant. We remain focused on delivering on these items, in addition to continuing negotiations with potential customers to enter offtake contracts and initiating the project finance debt process.

"I am proud of the ongoing commitment of our team to advance the Chvaletice project and look forward to continued delivery of key catalysts in 2024 and beyond. Together, we are moving closer to our vision of being a leading and environmentally responsible producer of high-purity manganese."

Q4 and year-end 2023 conference call details

Euro Manganese will host two separate fourth quarter and year-end 2023 conference calls to serve stakeholders in their respective time zones. Content of both calls will be the same. Replays and transcripts of both calls will be available on Euro Manganese's website.

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.

Euro Manganese is dual listed on the TSX-V and the ASX, and is also traded on the OTCQX.

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