TSX-listed battery materials company Euro Manganese has entered into an C$8.5-million strategic investment agreement with multilateral lender the European Bank for Reconstruction and Development (EBRD) to support development of the Chvaletice manganese project, in the Czech Republic.
“Euro Manganese's relationship with the EBRD is expected to be highly strategic as the European Union (EU) charts a path towards greater supply security and sustainability. Supporting the development project of Europe’s only primary producer of high-purity manganese – an essential battery raw material – aligns with these EU goals,” the company said in a January 3 statement.
The Chvaletice project entails reprocessing a significant manganese deposit hosted in mine tailings from a decommissioned mine, strategically located in the Czech Republic.
Euro Manganese’s goal is to become a competitive and environmentally superior primary producer of ultrahigh-purity manganese products in the heart of Europe, serving the lithium-ion battery industry, as well as other high-technology applications.
As part of the due diligence process, the EBRD engaged an independent, international natural resources consultancy to undertake a technical and environmental review of the Chvaletice project.
The investment will see the private placement of 17.8-million common shares of Euro Manganese to be issued to EBRD at a price of C$0.4775 a share, after which the EBRD will hold about 4.5% of the company’s common shares on a non-diluted basis.
In connection with this share placement, Euro Mangaese and EBRD will enter into a project support agreement whereby, subject to certain conditions, the EBRD will be granted rights that allow participation in future financings to maintain its pro rata equity interest in Euro Manganese.
“The proceeds from the placement will increase Euro Manganese’s flexibility in financing the Chvaletice project, including the feasibility study, site preparation and operating costs for the demonstration plant, as well as environmental works, including permitting and other activities related to the final environmental and social impact assessment,” Euro Manganese said in the statement.
Further, the EBRD’s Environmental and Social Policy is progressive and in keeping with international best practices, which Euro Manganese met. Euro Manganese has undertaken to maintain compliance with the EBRD's environmental, social and economic inclusion and equal opportunity standards.
“EBRD is delighted to support Euro Manganese and is very pleased with its management’s commitment to implement best practices for modern, responsible mining. As a new shareholder, the EBRD will help Euro Manganese develop a local source of high purity manganese, which will improve Europe’s security of battery raw material supply,” said EBRD natural resources director Eric Rasmussen.
“Euro Manganese welcomes this strategic investment, which aligns the company’s interest with the EBRD and opens a pathway to potentially securing project financing from the EBRD and other European financial institutions.
"The successful completion of the technical and environmental due diligence process is a testament to the quality of our team and a strong vote of confidence in our Chvaletice project. We are proud to have met the bank’s high environmental, social and governance standards,” said Euro Manganese president and CEO Dr Matthew James.
The agreement between EBRD and Euro Manganese was facilitated by sustainable energy innovation organisation EIT InnoEnergy, which entered into an agreement with Euro Manganese to assist in securing access to project financing and customer offtake agreements.
“The EBRD investment is an affirmation that Euro Manganese's Chvaletice project is an important part of establishing a strong, sustainable European electric vehicle battery supply chain to support Europe’s accelerating transition to e-mobility. This agreement also highlights the value of the company's relationship with EIT InnoEnergy,” said James.
Further, on completion of the placement, Euro Manganese will pay EIT InnoEnergy a cash finder’s fee of C$254 985, which is 3% of the gross proceeds of the placement.