ASX-listed manganese developer Element 25 has picked up a handy $1 million from the $3 million sale of the Cummins Range rare earths deposit in WA’s East Kimberley region which the company says will be ploughed into its developing $15 million Butcherbird manganese mine in the Pilbara.
The Perth-based company received an initial $1 million payment 12 months ago from RareX Ltd as part of the Cummins Range divestment deal. Element 25 has now secured the second tranche comprising $500,000 in cash and the issue of 7,462,687 fully paid shares in RareX at a deemed issue price of 6.7 cents per share. RareX shares are currently trading at 16 cents representing a useful paper profit for the budding manganese miner.
The third tranche involves a further $1 million deferred payment from RareX of cash, shares or a combination of both to Element 25 subject to the completion of a positive definitive feasibility study on the Cummins Range project.
In the event RareX does not complete a DFS within three years of settlement of the sale, Element 25 will waive the third instalment and instead assume a one per cent net smelter return royalty on future production from the Cummins Range project capped at $1 million.
Element 25 is currently fast-tracking towards manganese concentrate production start-up at the Butcherbird project in the March 2021 quarter.
Its recently released pre-feasibility study, or “PFS” on Butcherbird envisaged an eye-popping CAPEX of a mere $14.5 million for the planned development of a new operation producing concentrate for export, plus working capital of $9.3 million.
PFS figures show Butcherbird is projected to churn out about 357,000 tonnes of concentrate per annum and operating cash flow of about $32.1 million a year for an initial mine life of five years.
Commercial exploitation of the Butcherbird deposit is aided by the very simple outcropping geology that paves the way for a low strip ratio and free-dig, low-cost mining.
Element 25’s smaller-scale first-stage mine development is designed to generate quick cash flows with only low capital outlays needed. The plan is to establish financial flexibility that will allow the company to investigate and contribute funding towards the potential staged ramping up to a larger, higher-purity manganese production operation.
Latest stated proved and probable reserves for Butcherbird stand at 50.55 million tonnes of manganese ore going 10.3 per cent manganese for an estimated 4.27 million tonnes of recovered manganese.
The project straddles the Great Northern Highway and the Goldfields Gas Pipeline, which offer turnkey logistics and energy solutions, according to Element 25.
The company also says there remains a possibility that, should the economics prove favourable, Butcherbird’s life of mine could blow out to more than four decades based on its prodigious total measured and indicated resources of 263 million tonnes of manganese ore grading 10 per cent manganese.
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