PERTH (miningweekly.com) – ASX-listed Element 25 has inked a non-binding term sheet with a subsidiary of fellow-listed OM Holdings over all of the manganese ore produced at the first stage of the Butcherbird project, in Western Australia.
Under the terms of the agreement, OM Materials would take up to 365 000 t/y of manganese ore a year from the Butcherbird project under a take-or-pay offtake agreement.
The parties have agreed to the specifications and pricing formula for the delivered ore, and on minimum and maximum levels of certain impurities in the ore. The ore will be delivered on a free-on-board basis.
“This is a landmark agreement for E25 as it pursues the development of the Butcherbird project. OM Holdings is ideally placed to partner with E25 given their extensive smelting infrastructure in Malaysia and their experience in the silicomanganese markets into which the E25 ore will be placed,” said MD Justin Brown.
“E25 regards this as the start of a long-term mutually beneficial arrangement and looks forward to building on the progress to date.”
The parties are also negotiating the final terms for a A$2-million convertible funding agreement, which will form part of the overall project financing for Butcherbird.
A previously completed prefeasibility study estimated a capital investment requirement of A$14.5-million to fund the project, which is expected to generate average annual operating cash flows of A$32.1-million between years one and five of production. The study estimated a mine life of some 42 years, based on the base case annual production of 312 000 t/y of manganese concentrate.