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Independent Reviews for Venture Investors

EMN.V - Shareholders.


Euro Manganese Inc. (EMN.V) is focused in advancing the development of the Chvaletice Manganese Project, in which it holds a 100% interest. The Project entails re-processing a significant manganese deposit hosted in mine tailings from a decommissioned mine, strategically located in the Czech Republic. EMN.V’s goal is to become a leading, competitive and environmentally superior primary producer of ultra-high-purity Manganese Products in the heart of Europe, serving both the lithium-ion battery industry,and other high-technology applications.


Coverage was initiated May 2021. with a note issued on February 2022


News releases


Mar. 23 - Local Municipalities Support Chvaletice Manganese Project:


Village of Trnavka council has approved the rezoning of land underlying the Chvaletice Manganese Project deposit. In addition, land access agreement have been approved for the Project land owned by the Municipality of Chvaletice.


Apr. 25 - Appoints Ms. Hanna Schweitz to its Board and Announces Q2 2022 Conference Call Details:


Ms. Hanna Schweitz to its Board of Directors effective April 25, 2022. She is currently Director of Battery Materials and Asset Development at WMC Energy, an independent physical commodity merchant and asset development company.


May 15 - Reports Second Quarter 2022 Financial Results and Project Developments: Completion of commissioning and the start of production from the demonstration plant is targeted for September. The demonstration plant will be used for customer supply chain qualification of high-purity manganese products.


Our near-term focus remains on the delivery of sample products from our pilot plant, followed by larger samples from the demonstration plant once it commences production. This will allow customers to continue or initiate their supply chain qualification.


Other targets anticipated this year include the completion of our Feasibility Study, the acquisition of the remaining land access rights, and the submission of our final Environmental and Social Impact Assessment. On Track to complete Feasibility Study in June 2022; Pilot Plant Production to start in September 2022.


May 16 - Reports Shipment of the Final Demonstration Plant Modules: Second and final consignment of the demonstration plant modules was shipped by ocean freight from Shanghai, China to Hamburg, Germany.


Commissioning is targeted for September and first delivery of samples to customers expected in Q4 2022.


June 27 - Appoints Stifel Nicolaus Europe Limited as Project Finance Advisor for the Chvaletice Manganese Project: To assist with the structuring and securing of project financing for the development of the Company’s flagship Chvaletice Manganese Project ("CMP" or "Project"), located in the Czech Republic.


The key major milestones to help secure project financing include: i) Completion of the Feasibility Study for the Chvaletice Manganese Project (expected in the coming weeks). ii) Execution of binding off-take agreements. iii) Finalizing land access agreements. iv) Approval of the Environmental and Social Impact Assessment ("ESIA") and final permitting. The ESIA is expected to be submitted to the Czech Ministry of the Environment in Q3 2022.


July 19 - Joins the Global Battery Alliance: A partnership of leading organizations from across the battery value chain, governments, academics and NGOs who have mobilized to ensure that battery production not only supports green energy, but also safeguards human rights and promotes environmental sustainability. Euro Manganese is the first high-purity manganese company to join the GBA. The Company intends to participate in discussions around battery materials transparency and traceability, particularly as the GBA advances development of the Battery Passport.


July 27 - Announces Positive Feasibility Study Base Case Results for the Chvaletice Manganese Project; Positive Feasibility Study ("FS") announced for the Chvaletice Manganese Project ("the Project"). The FS outlines robust base case project economics of after-tax NPV8% of US1.34 billion and an ungeared IRR of 21.9% with a 4.1-year payback period. Initial capital is estimated at US$757.3 million, including total contingencies of $106.5 million. Forecast life of project net revenues are US$13.3 billion with an EBITDA of US$8.1 billion.


High Purity Manganese market forecasted to increase significantly over the life of Project: i) According to CPM Group LLC ("CPM Group"), a leading, independent commodities market research firm with expertise in high-purity manganese, the market for high-purity manganese sulphate monohydrate ("HPMSM") and high-purity electrolytic manganese metal ("HPEMM") is forecast to be radically transformed as a result of the ‘electric vehicle revolution’. Most lithium-ion batteries that power electric vehicles are expected to use manganese ("Mn") in their cathodes and these manganese-containing battery chemistries are expected to dominate the battery market for the next two decades. ii) As a result, CPM Group expects the demand for high purity manganese to increase 13 times between 2021 and 2031 (from 90 kt to 1.1 million tonnes ("t") of Mn contained) and 50 times between 2021 and 2050 (to 4.5 million tonnes of Mn contained).iii) The total Mn market in 2022 is approximately 22 million tonnes, with Mn use currently dominated by the steel industry, however, high purity manganese suitable for the battery market makes up less than 0.5% of the global manganese market. iv) The bottleneck in supply of HPMSM and HPEMM is the lack of high-purity refining capacity. Known expansions and new projects are unable to satisfy this demand. CPM Group forecast’s the 2031 deficit to be 475kt Mn equivalent and if battery demand continues to grow as expected and no additional new projects come to the market, the deficit would increase to 1 million tonnes by 2037.


Aug. 2 - Announces Results of Life Cycle Assessment for the Chvaletice Manganese Project: Euro Manganese engaged Minviro Ltd. ("Minviro"), a UK-based and globally recognized sustainability and life cycle assessment ("LCA") consultancy, and RCS Global Ltd. ("RCS Global"), a leading global auditor of battery material supply chains, to conduct a cradle-to-gate, critically reviewed study quantifying the environmental impacts, including the carbon footprint, of producing high-purity manganese products from manganese-rich historic mine tailing at the CMP.


The results of the LCA validate the environmental value proposition of the CMP and identify potential opportunities for further impact reduction. Delivery of the LCA is timely as Euro Manganese continues to engage with customers in the Electric Vehicle ("EV") battery/automotive space, each of whom are testing and qualifying both the chemistry and environmental credentials of EMN’s high-purity manganese products.


Minviro is also undertaking a benchmarking exercise where the CMP’s GWP will be compared against similar projects and operations producing high-purity manganese products. The Company intends to release the results of this analysis once complete. These LCA results are a crucial part of customer qualification, as transparency into the origin and environmental footprint of battery metal production is increasingly important as automotive manufacturers use strategic procurement to meet their targets of lower carbon emissions across their supply chains.


Aug. 15 - Reports Third Quarter 2022 Financial Results and Project Developments:Key Developments: Arrival of the demonstration plant modules in Europe. One of the two shipments of the demonstration plant modules was unloaded in early August and the second shipment is currently scheduled to be unloaded later this month.


Congestion and strikes at the Port of Hamburg delayed the arrival and unloading of the demonstration plant shipments, originally anticipated in July. Buildings at site have been refurbished and readied for delivery and installation of the demonstration plant modules. Assembly of the plant modules will commence upon arrival at the Chvaletice Project site.


Aug. 30 - Announces the Third Tranche of EIT InnoEnergy’s Investment: Receipt of the third and final investment tranche from EIT InnoEnergy of €62,500 (CAD$80,606): Total of three-tranche investment of €250,000.


The funds were used to support work on the Chvaletice Manganese Project’s (the “Project”) definitive feasibility study.


The first two InnoEnergy investment tranches totalling €187,500 (CAD$278,012) were advanced in 2021, for which the Company issued 478,027 common shares ("Shares") on January 6, 2022 (refer to EMN news release dated January 6, 2022). The third and final investment tranche of €62,500 (CAD$80,606) was advanced to the Company on August 26, 2022. Accordingly, the Company will issue an additional 237,077 Shares to EIT InnoEnergy at the price of CAD$0.34


Sep. 7 - Confirms Arrival of all Demonstration Plant Modules at Site: All modules of the Demonstration Plant, have now arrived at the Chvaletice Project site in the Czech Republic.


Commissioning of the Demonstration Plant, including cold, hot and performance testing, will commence once all modules and ancillary equipment are in place, inspected and connected. The Demonstration Plant is expected to be in full operation and producing to customer specifications by the end of 2022.


The Demonstration Plant is designed to produce larger-scale product samples to be used for customer supply chain qualification of Euro Manganese’s high-purity manganese products (HPEMM and HPMSM). It will also enable process optimization and serve as a training facility. The Demonstration Plant is expected to operate for up to three years and will be available for testing of potential additional feedstock for the commercial Chvaletice plant, as well as testing production of potential alternative manganese end products requested by the market.


The Company estimates that the cost of the Demonstration Plant, including fabrication, delivery, commissioning, laboratory set-up and an operator training program, as well as the cost of operation for one year, will be approximately US$5.8 million, of which US$3.1 million has already been paid.


Sep. 14 - Announces Filing of NI 43-101 Technical Report and the JORC Code Report for the Project Feasibility Study:


Sep. 26 - Signs MoU with Statkraft to Form a Renewable Energy Supply Agreement for the Chvaletice Project: Norwegian state-owned company Statkraft for the long-term supply of carbon-free renewable energy for Euro Manganese’s flagship Chvaletice Manganese Project (the "CMP" or the "Project") in the Czech Republic.


Statkraft is Europe’s largest generator of renewable energy. The MoU lays the foundation for the strategic cooperation between Euro Manganese and Statkraft to support the ongoing net-zero objectives of the Project’s proposed processing plant. The aim is to establish a long-term corporate Power Purchase Agreement to provide carbon-free power to the Project, in coordination with Statkraft’s renewable power supply portfolio. The power supply is planned to commence between 2026 and 2027, according to the current estimated construction and commissioning timeline.


Sep.27 - Validate Manganese Metal in M2CAM Process with Euro Manganese: Highlights: i) The companies have jointly demonstrated cathode materials made directly from Euro Manganese sourced electrolytic manganese metal using Nano One’s One-Pot Process align with automotive battery demands in Europe and North America for sustainably sourced critical minerals and environmentally superior and differentiated supply chains.


In this first milestone, pilot plant samples from Euro Manganese’s Chvaletice Manganese Project have been successfully validated as feedstock for Nano One’s patented One-Pot and M2CAM cathode production technologies.


Nov. 10 - Commences Demonstration Plant Commissioning: i) Strong demand for Demonstration Plant and Pilot Plant samples from the Chvaletice Project by 12 companies, including automotive OEMs, EV battery and cathode manufacturers, and specialty alloy manufacturers. ii) Demonstration Plant installation substantially complete and commissioning underway. iii) Samples from second Pilot Plant run ready for shipping.


Demonstration Plant

On-spec products of high-purity electrolytic manganese metal (“HPEMM”) and high-purity manganese sulphate monohydrate (“HPMSM”) are expected in the first quarter, 2023. We are in advanced discussions on off-take arrangements, which are not conditional on these sample qualification tests being completed.


Pilot Plant

Due to strong demand for samples of the Company’s high-purity manganese products, Euro Manganese has completed a second run from its small-scale Pilot Plant in China. Samples are now ready for shipping.


Nov. 17 - Explores Opportunity to Produce Battery-Grade Manganese in North America:A scoping study is underway to evaluate a site in Bécancour, Québec ("the Bécancour Project") for production of high-purity manganese products following discussions with cathode and battery manufacturers, and automotive OEMs in North America.


The Bécancour Project scoping study will evaluate the dissolution of high-purity electrolytic manganese metal ("HPEMM") to produce a high-purity manganese sulphate monohydrate ("HPMSM") powder and/or a high-purity manganese sulphate solution ("HPMSS").


Euro Manganese has an exclusive due diligence agreement on a strategic site at the Bécancour industrial park where a cluster of precursor cathode active material manufacturing ("pCAM") plants are currently under development


EMN.V has signed a three-month Land Access and Exclusivity Agreement with The Société du parc industriel et portuaire du Bécancour, a Québec state enterprise and owner of the proposed EMN 15-hectare land parcel within the Port of Bécancour. The Agreement allows to exclusively conduct due diligence on the land parcel, after which the Agreement allows the Company the opportunity to conclude an option agreement for the purchase of the site.


The Company has engaged SNC-Lavalin, a global engineering services company based in Montréal, who has extensive knowledge of the area, to conduct site due diligence and advise on permitting processes. In parallel, the Company has commissioned the Vancouver office of Ausenco Engineering Canada Inc., a global engineering consultancy firm with expertise in battery metals, to conduct a scoping study for the Dissolution Plant.



Summary


Feasibility Study

July 2022, a Positive Feasibility Study ("FS") was released for the Chvaletice Manganese Project ("the Project"). The FS outlines robust base case project economics of after-tax NPV8% of US1.34 billion and an ungeared IRR of 21.9% with a 4.1-year payback period. Initial capital is estimated at US$757.3 million, including total contingencies of $106.5 million. Forecast life of project net revenues are US$13.3 billion with an EBITDA of US$8.1 billion.


The NI 43-101 Technical Report was filed in September 2022.


Life Cycle Assessment.

August 2022, result of the Life Cycle Assessment (LCA) were disclosed. Theses validated the environmental value proposition of the CMP and identify potential opportunities for further impact reduction. The LCA results are a crucial part of customer qualification, transparency into the origin and environmental footprint of battery metal production.


EIT InnoEnergy

August 2022, the third and final investment tranche from EIT InnoEnergy of €62,500 (CAD$80,606) was received. A Total of three-tranche investment of €250,000. For the third tranche, EMN.V will issue an additional 237,077 shares to EIT InnoEnergy at the price of CAD$0.34 cents.


Pilot Plant (PP)

As Per Q3 2022 MD&A

Following discussions with prospective customers, the Company made a decision to re-start its pilot plant in order to deliver product samples in advance of the production from the demonstration plant. This will allow prospective customers to continue or initiate their supply chain qualification of the Company's products in advance of larger samples. The pilot plant production run has been completed, producing approximately 37kg of HPEMM and 151kg of HPMSM. Samples will be made available to potential customers upon delivery to the Czech Republic and once Certificates of Analysis have been completed


November 2022, an update was provided: Due to strong demand for samples of the Company’s high-purity manganese products, EMN.V has completed a second run from its small-scale Pilot Plant in China.


Demonstration Plant (DP)

The initial target production date was September 2022. However, due to various delays the module of the DP did not arrive until September 2022.The production date was pushed back to end of 2022 which is likely to be early 2023.


The DP is designed to produce larger-scale product samples to be used for customer supply chain qualification of Euro Manganese’s high-purity manganese products (HPEMM and HPMSM). It will also enable process optimization and serve as a training facility. The DP is expected to operate for up to three years and will be available for testing of potential additional feedstock for the commercial Chvaletice plant, as well as testing production of potential alternative manganese end products requested by the market.


Cost for the DP are estimated to USD $6M of which $3.1M have already been paid.


Earlier this month (November 2022), Euro Manganese reported to have commenced commissioning. On-spec products of high-purity electrolytic manganese metal (“HPEMM”) and high-purity manganese sulphate monohydrate (“HPMSM”) are expected in the first quarter, 2023. EMN.V also reported: "We are in advanced discussions on off-take arrangements, which are not conditional on these sample qualification tests being completed."


Partnerships

July 2022, EMN.V joined that Global Battery Alliance (GBA): Of note, Euro Manganese is the first high-purity manganese company to join the GBA. The intent is to participate in discussions around battery materials transparency and traceability, particularly as the GBA advances development of the Battery Passport.


September 2022, an MOU with Statkraft to Form a Renewable Energy Supply Agreement for the Chvaletice Project. The goal is to establish a long-term corporate Power Purchase Agreement for carbon-free power to the Project.


Also in September, Nano One reported that it had validated M2CAM Process with Euro Manganese sourced electrolytic manganese metal using Nano One’s One-Pot Process. Note that a Joint Development Agreement (JDA) was signed a year ago with the aim of developing manganese products for use in cathode materials.


Appointments

Ms. Hanna Schweitz was appointed to its Board of Directors (April 2022).


Also, Stifel Nicolaus Europe Limited were appointed as Project Finance Advisor for the Chvaletice Manganese Project to assist with the structuring and securing of project financing (June 2022).


Permitting/License

In March 2022, the Village of Trnavka (land rezoning) and Municipality of Chvaletice (land access) both provided allowances to support the Chvaletice Manganese Project by approving permitting that enabled it to move forward.


Earlier this month (November 2022), EMN,V reportedly signed a three month Land Access and Exclusivity Agreement with The Société du parc industriel et portuaire du Bécancour, a Québec state enterprise and owner of the proposed EMN 15-hectare land parcel within the Port of Bécancour. Engaged SNC Lavallin to conduct site due diligence and permitting process. Ausenco Engineering Canada Inc was also hired for a scoping study.


In short

Euro Manganese (EMN.V) has continued to de-risk the Chvaletice Manganese Project in the past nine months.


A positive Feasibility Study was delivered along with a Life Cycle Assessment. In addition, the pilot plant was re-started and completed two production runs while the demonstration plant (DP) has commenced commissioning.


Approximately 55% of the DP’s planned first year production of HPEMM and HPMSM has been allocated to five prospective customers for testing, in the context of their supply chain qualification process.


Cost for the DP are estimated to USD $6M of which $3.1M have already been paid.


EMN.V also joined the Global Battery Allowance with aim to qualify for a battery passport. The company also entered with a MOU with Statkraft to Form a Renewable Energy Supply Agreement and also validated its product with Nano One M2CAM process for cathode production.


Recently, EMN.V signed a a three month Land Access and Exclusivity Agreement with The Société du parc industriel et portuaire du Bécancour to explore the production battery grade Manganese in North America. To this end, SNC-Lavallin and Ausenco Engineering Canada were hired to undertake a scoping study.


Finally, Euro Manganese also appointed Stifel Nicolaus Europe Limited as a Project Finance Advisor. This is critical as a FInal Investment Decision (FID) is expected in H2 2023.


Again, despite the progress exhibited during the past nine months, valuation continues to be relatively stagnant.

Overall, as of June 30 2022, there were only 8.5M warrants outstanding ranging from $0.30 to $0.58 cents.

EMN.V has $28M in cash and 401M shares outstanding with a significant portion owned by institutions (45%). However, the project financing strategy is crucial to current shareholders as it will impact the FID.


A three prong approach via Strategic Investments (including Off-takes), Private (including Private Equity, Institutions and EBRD) and a Public Offering is suggested. Indeed,$757M capital will be needed to initial production.


A sizable Strategic Investment, Private or Public Offering could be THE catalyst going forward. This is likely a precursor to facilitating a Final Investment Decision (FID). However, the absence of a meaningful re-rated share price could be problematic. Undoubtedly, the unfolding of this process will be critical to existing shareholders.



DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.

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