Element 25 Riding High Post Another Important Milestone: Inks Offtake MoU with OM Holdings

Summary

• Demand for manganese is growing, and supply has constraints
• Element 25 is building a globally significant, low cost, high purity manganese project turbocharged by early cashflow from a low capex concentrate export opportunity
• Butcherbird manganese project, PFS of which has highlighted outstanding economics, is located in Western Australia, which the Company reports to be the top mining investment jurisdiction globally
• Soon after commencing a water bore drilling programme and signing a significant Access Agreement, the Company has entered into a non-binding MoU, that MD Mr Justin Brown regards as an “important milestone”

Deeming itself to be Australia’s next manganese producer, Element 25 Limited (ASX:E25) is on the path of transitioning from an explorer to a miner. Investors seemed to have garnered special attention towards the Company after it announced that it has entered into a non-binding memorandum of understanding (MoU) with OM Materials (S) Pte Ltd.

The E25 stock was trading up by 7.5 per cent at $ 0.43 at 1:48 PM AEST on 29 June 2020. In the past three months, the stock has delivered returns of a whopping 263.64 per cent (as on 26 June 2020).

Element 25 and OM Holdings Offtake MoU

The Company inked the MoU for the future supply of manganese concentrate products from its proposed development at its 100 per cent owned Butcherbird manganese project. The MoU demonstrates the first formal milestone in Element 25’s engagement with OM Holdings Limited (ASX:OMH)- OM Materials (S) Pte Ltd is a wholly-owned subsidiary of OMH.

Under the MoU, following the development of the project, both parties will negotiate a formal offtake agreement over upcoming months which will also be dependent on the outcome of continuing due diligence investigations on manganese ore from the Project. The MoU offers a structure for discussions around the following key parameters-

The Board of OMH intimated that the MoU is effective for 9 months from the date of signing unless both parties formally agree to terminate or extend the term mutually.

Reportedly, the MoU was signed post several positive discussions between the parties over recent few weeks, specifically after Element 25 released its manganese concentrate Pre-Feasibility Study (PFS) on 19 May 2020.

DON’T MISS, Element 25’s PFS Details- Element 25’s Butcherbird Manganese Project PFS: Robust low-capital Rapid Production Start-Up; Stock Spikes 100%

Management View

Element 25’s Managing Director Mr Justin Brown regarded the MoU to be an “important milestone” for the Company. He stated that the Company hopes for this to be a long and mutually beneficial relationship with OMH. He further commented that discussions with OMH and several other parties have shed light upon the demand for high quality, reliable supply of manganese from Australia.

OMH, on the other side, opines that the relationship with Element 25 is expected to complement its vertically integrated business model. Moreover, it is envisaged to augment OMH’s raw material sources, increasing procurement flexibility at its smelters and create opportunities for further distribution to external third parties.

Acquainting with OM Materials (S) Pte Ltd

Based in Singapore, OM Materials (S) Pte Ltd is the strategic trading hub of OMH, which takes care of OMH’s logistics, procurement, marketing, and distribution activities. It should be noted that OMH has an established history of over 25 years in the industry and is an integrated manganese and silicon company engaged in the business of mining and trading raw ores and smelting and marketing of processed ferroalloys.

Core businesses of OM Materials (S) Pte Ltd comprise of ore sales from OMH’s wholly-owned Bootu Creek Mine, marketing of ferroalloys produced from OMH’s Samalaju smelter plant and distribution of third-party ores to OMH’s global network of customers.

Casting Eye Over Element 25 & Butcherbird Manganese Project

Element 25 is focussed on the development of the world-class 100 per cent owned Butcherbird Manganese Project to produce high quality manganese concentrate for export markets. The Project is located in the southern Pilbara region of Western Australia, and its current JORC resources are currently in excess of 263 Mt of manganese ore.

A robust, compelling PFS, the first stage of a staged ramp up for the Project, showcases outstanding economics with low capital and operating costs to generate near term cashflows and drive further growth.

Moreover, aiming to place Butcherbird at the forefront of sustainable metal production, Element 25 intends to integrate renewable energy into the power solution to minimise the carbon intensity of the Project as well as reducing energy costs. Project is likely to offer a cleaner, lower carbon flowsheet and high penetration renewable energy stance to the Company.

MUST KNOW! Other recent milestones of the Company include:

Commencement of a water bore drilling programme- Element 25 Launches Drilling Programme to Affirm Process Water Supply at Butcherbird

The signing of Access Agreement in relation to the granting of mining lease application M52/1074- Element 25 Inches Towards Butcherbird’s Mining Lease, Final Milestone Agreement Inked

(Note: All currency in AUD unless otherwise specified)