Manganese mine out of action due to landslide in Gabon

Bullish for any manganese producer such as South32, JMS but more so E25.

Butcherbird is still burning cash after the last update, but the news from Gabon could mean higher prices for Mn which is good given E25 is a higher cost producer.

https://news.metal.com/newscontent/102054764/mixed-stockpiling-in-manganese-industry-ahead-of-cny

Imported manganese ore: Downstream manganese alloy producers normally restock ahead of CNY holidays. SMM survey showed that other than several manganese alloy plants that suspended production for maintenance amid severe losses, most of the other manganese alloy factories will remain in production, ensuring the demand for manganese ore in January. Meanwhile, the landslide at one manganese mine in Gabon triggered market concerns over shipments in the near term. Domestic market participants will therefore raise their quotes. The prices of manganese ore are likely to rise in the short term.

E25 (the one I mentioned in the Current State forum post which rallied heavily) released a presentation on ASX without any update on progress of manganese production (stage 1) and instead touted the HPMSM project (High purity managanese sulphate monohyrdrate) and how relevant the project is in regards to the inflation reduction bill.

My guess is they are raising funds (possible CR??) for this and may explain the fall today.

Rather disappointing there are no updates on production or cost numbers for stage 1.

Recommencement of Operations and Record Daily Production

• Repair and modification works completed on schedule, plant operating normally.

• Processing Plant demonstrating improved production volumes in line with expectations.

• New record daily production of 1,209 tonnes of concentrate produced on 3 January 2022.

• Record average daily production of 934 tonnes since 23 December 2021.

• Additional optimisation opportunities identified for follow up.

Element 25 Limited (E25or Company) (ASX:E25) is pleased to advise that the processing plant at the Company’s Butcherbird Manganese Project (Project) is demonstrating significant performance improvements since the log washer repair and engineering modification works were completed on schedule in December 2021.The Works undertaken during December 2021 focussed on the repair of the shaft failure as announced and updated on 22 November and 13 December 2021 respectively and the implementation of a range of engineering improvements that had already been planned prior to the plant failure. Pleasingly, plant production volumes have shown significant improvements since re-commissioning of the plant,with a new daily production record of 1,209 tonnes being achieved on 3 January 2022, well above the target nameplate production of 1,000 tpd for the Stage 1 production plant. In parallel with the repair works, a range of modifications have been made to the plant to improve plant access for maintenance, manage material flow through the plant, reduce wear on key components, improve noise and dust control as well as adjusting the overall site layout to increase operational and maintenance scheduling flexibility and throughput.

Maybe made the wrong call selling (my sell price 1.45)

If they keep achieving above nameplate then maybe operations could go back to breakeven. Won't know until the next update.

No longer hold.

Just an update that I no longer hold E25 since November 2021. The last operations update with the negative cash flow as a result of freight costs being on the higher end unfortunately forced my hand.

For the record, the project was meant to achieve positive cashflow by some time this year after commissioning which would be used to fund stage 2. Looks like they didn't forecast freight and trucking to be so high caused by supply chain and shipping disruptions. Overall I still exited at a small profit despite adding around $2+ but fortunately got out before the share price really collapsed.

Update: if you draw a route on Google Map from where Butcherbird is approximately located to the port, you can see how far it is and why I sold.

For those that still hold, best of luck. While China holds the upper hand in supply of high purity mangainese, I believe E25 may struggle.

Investor update

Commissioning progressing as planned

Seems like FOMO happening after the market overreacted from the Euroz broker downgrade (Spec buy to hold $1.80).

Might be a good time to top up as the last capital raise from 2.30

Please note this is without risk and I get the feeling there are lots of skeptics (including Euroz) of how Element 25 are using a new method in processing the ore (enriching it from 10% to 33%). The flipside is holding a company with multiple revenue streams generated from conventional Mn Manganese and HPMA (High purity manganese) with a low carbon footprint once the process is proven and reliable.

Presentation link

Holding E25 (bought 0.40, topped up at 2.30 and 2.10)

Investor Presentation

https://twitter.com/Element25Ltd/status/1372341595282968579

Just a comment that the latest presentation shows the discount rate to be 5% instead of 8% (that was in the original PFS)

Obviously this conveniently bumps the NPV by an extra $100m. See slide 7.

Even though rates are low, I am a bit disappointed by this lack of consistency. But I will continue to hold nonetheless.

Butcherbird Closing in on Stage 1 Commissioning

• Project on schedule for substantial mechanical completion by month end.

• Dry commissioning scheduled for first half of March 2021.

• First ore processing scheduled for the second half of March 2021.

Element 25 Limited (E25 or Company) (ASX:E25) is pleased to confirm that the delivery of the first stage of a planned multi-stage development at the Company’s 100% owned world class Butcherbird Project (Project) continues with completion scheduled for March 2021, in line with the original target of Quarter 1, 2021.

The current work plan has dry commissioning scheduled for the first half of March 2021 followed by wet commissioning and first ore processing in the second half of the month.

This is the first stage of a multi-stage development strategy for the Project,which will then be expanded to produce high purity manganese sulphate monohydrate (HPMSM) for electric vehicle(EV) batteries to power the global transition away from fossil fuel powered mobility.

The Project is ideally placed to feed this demand, with advanced flowsheet development work in 2019 and 2020 confirminga simple, unique, ambient temperature and atmospheric pressure leach process for the E25 ores which, when combined with offsets, will targetthe world’s first Zero Carbon Manganese for EV cathode manufacture2.

E25 Managing Director Mr Justin Brown commented, “To deliver a mining project in such a short timeframe whilst maintaining a high level of safety and cost control is a fantastic achievementby the team.This is an important first step in the development of the Project which can then be expanded into the battery metals markets

Full announcement below:
https://quoteapi.com/resources/da9866271f9d0071/announcements/e25.asx/6A1021608/E25_Butcherbird_Closing_in_on_Stage_1_Commissioning.pdf?embed=1#page=1&zoom=auto,-13,843

Shares increasing since this announcement even during todays market rout. The "zero carbon" adds an extra twist to it. Also the shares are getting good press from the german markets

Please also note that they are producing manganese for steelmakers for stage 1 and will use the funding from this to start stage 2 to produce manganese for battery makers.

--Holding E25

Quarterly Activities Report

Updated PFS Stage 1 base case:

NPV pre tax:  583M
NPV post tax:  412M
IRR 387%
Mine life 41 years

Expansion case x2
NPV pre tax:  926M
NPV post tax:  651M
IRR 342%
Mine life 20 years

Also an non binding term sheet agreement with Semeru Energy has been made to sell 50% of manganese produced from Stage 2 of the project once it is developed.

Tried topping up this week but missed this once this quarterly update came out.

There is lots to read in this update. Will take me a weekend to go through it and see if it is worth "averaging up" at these levels.

Updated Pre-Feasibility and Expansion Studies Highlight Butcherbird Upside

Shares dropped on update but have since recovered. Maybe investors were expecting information about Stage 2 development study which is missing in this announcement.

https://www.element25.com.au/site/showdownloaddoc.aspx?AnnounceGuid=a608f817-b9a0-46f6-bd92-a6fb436af96b

NPV and IRR increased. But note they are now using a lower discount rate (5% vs 8% for last study)

Highlights
•This update builds on the Pre-Feasibility Study (PFS) released in May 2020 and
updates key macro-economic and other study parameters whilst also adding
expansion option study results.

Compelling Base Case and Expansion Case economics.
Base Case Expansion (1.3M tpa)
NPV 5 (Real) (Pre-tax) A$583M
NPV 5 (Real) (Post-tax) A$421M
IRR (Real) 387%
Mine Life 40
All material assumptions relating to production and financial
forecasts are detailed within the report.

• Low capital requirement of $17.0M plus $3.2M working capital.
Average base case annual operating cashflow of $39.6M Yr1-5.
• No changes to the Proven and Probable Ore Reserve of 50.55Mt at 10.3%
Mn containing 5.22Mt Mn (4.28Mt Recoverable Mn).
• Simple payback period of 6 months from start of operations.
• Beneficial production is scheduled to commence in Q1 2021.
• The base case involves the annual production and sale of 364,000tpa (Yr 1-5 range 300,000-390,000) of lump manganese ore grading 30-35% Mn.
• Mining requires no drill and blast, utilising dozer ripping and mining with loaders or excavators.
• All Statutory Approvals lodged in Q3 2020. Native Vegetation Clearing Permit (NVCP) and Project
Management Plan (PMP) have been approved, Mining Proposal, Works Approval and Water
Abstraction Licence are pending.
• The concentrate production strategy complements and enhances the Company’s plan to develop
Electrolytic Manganese Metal (EMM) and High Purity Manganese Sulphate (HPMS) plant to produce
battery grade manganese, and these will be the subject of separate studies

Butcherbrid Development Update

Highlights

• Appointment of Mining Contractor.

• Appointment of Resident Manager and initiation of operations team recruitment.

• Camp construction underway.

• Key processing plant equipment in transit from vendors.

• Work programme for the development of the borefield commenced.

• Expansion case PFS nearing completion.

Element 25 is currently developing the Butcherbird Manganese Project to supply manganese concentrate utilising technologies and processes developed in partnership with the CSIRO.

As the flowsheet developed with the CSIRO is "first of a kind", this is viewed as high risk despite successful small-scale tests. Possible huge upside if E25 pulls this off. Even so the share price has rallied on the back of a revision of this positive update.

Holding a small position of E25 shares since July.