Euro Manganese boosts Chvaletice after-tax NPV by US$25 million
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Euro Manganese Inc. (TSX-V/ASX:EMN) has entered into royalty termination agreements (Royalty Termination Agreements) to purchase and extinguish an aggregate 1.2% net smelter royalty (NSR) interest in the Chvaletice Manganese Project for an aggregate consideration of US$4.5 million (approximately CAD$5.45 million).
The 1.2% NSR was granted in connection with the company’s acquisition of its 100% interest in Mangan Chvaletice s.r.o. in May 2016 from three arm’s-length parties.
The Chvaletice Manganese Project entails reprocessing a significant manganese deposit hosted in mine tailings from a decommissioned mine strategically located in the Czech Republic in reasonably close proximity to industrial hubs where there is expected to be substantial demand for battery materials.
Based on a preliminary economic assessment (PEA) completed in early 2019, extinguishing the NSR interests would eliminate US$91.1 million in expenditures over the project’s 25-year life, reduce operating costs by US$3.40 per tonne of plant feed (or 2.5% of total cost per tonne of plant feed), while increasing the after-tax NPV of the project by US$25.3 million (approximately 4%) using the PEA’s 10% discount rate.
All economic assumptions and results will be updated as part of the project’s feasibility study targeted for completion in the first quarter of 2022.
Part of the consideration for the royalty purchase (US$900,000) was paid on May 21, 2021, while the remainder will be paid on or before 31 January 2022 in the form of all-cash or a combination of cash and up to 50% in shares.
Highlighting the financial impact of royalty termination, chief executive Marco Romero said, “Based on the 2019 PEA results and assumptions, this royalty buy-out enhances the project’s economics, and the payment terms allow the company substantial financial flexibility.
“We continue to evaluate other potential value-enhancing opportunities for the project.’’