emn.jpg

Euro Manganese Inc. Limited

ASX:EMN

Last Price:

$0.285

Our Investment Summary

Date of
Initial Coverage

04-Sep-20

Initial
Entry Price

$0.065

Returns from
Initial Entry

338%



Investment Memo: Euro Manganese Inc. (ASX:EMN) - LIVE

Opened: 17-Jun-2022

Shares Held at Open: 1,733,000


What does EMN do?

Euro Manganese (ASX:EMN) is developing a High Purity Manganese project in the European Union (Czech Republic) through the recycling of a tailings resource from a historical mine site.

What is the macro theme?

Manganese is a key input for EV batteries and European nations are adopting pro EV policies with the ultimate aim of phasing out fossil fuel powered vehicles by 2035.

The EU region currently accounts for ~45% of all EV sales. With the size of the global EV fleet expected to grow from 11 million now to ~145 million in 2030, we expect domestic demand for battery metals like manganese to increase exponentially.

Why did we invest in EMN?

Unique exposure to High Purity Manganese

Increasing demand is not being met with increasing supply because the demand outlook is less clear in the short-term. However we have made our investment ahead of time, anticipating exponentially higher demand in the future. EMN has five MOU's signed to supply customers with product as part of the supply-chain qualification process. These, if successful, could form the basis for long-term off-take agreements.

Strategically located in Europe

EMN is strategically located in the heart of Europe, where over 25 EV plants and 30 battery plants will soon be operating. High Purity Manganese is a key raw-material in their supply chain. With VW and Daimler committing to EUR$34/EUR$60B+ in investments over the next 5-10 years into their battery metals supply-chain, EMN may benefit from the increased domestic demand.

New CEO - Appointed in December 2021

We are looking forward to what Dr. Matthew James can accomplish for EMN in 2022/2023. Dr. James is particularly skilled at getting major mining projects operational having helped Lynas raise over A$1 billion of equity and debt funding between 2002 and 2011.

What do we expect EMN to deliver in 2022?

Objective #1: Construction of the Demonstration Plant

EMN has designed a Demonstration Plant to produce large-scale samples of High Purity Manganese products. The plant will enable the company to show potential off-take partners they have production capabilities & a commercially viable product. Commissioning of the plant is now expected in September 2022.

Milestones

Receive final shipment of Demonstration Plant Parts (July 2022)

Commission Demonstration Plant (September 2022)

First delivery of samples to customers (Q4 2022)

Objective #2: Definitive Feasibility Study (DFS)

The DFS will give an updated look at EMN's project economics & assist with the financing process going into a final investment decision. Expected in the second half of 2022.

Milestones

Delivery of Definitive Feasibility Study (late Q2 - early Q3 2022)

Objective #3: First Offtake Partner

Large scale samples of High Purity Manganese need to be assessed for quality by end users who then sign an offtake agreement for future supply - an offtake agreement would be a major achievement for EMN in 2022.

Milestones

First offtake partner (Q3 2022?)

Bonus: second offtake partner (Q1-Q2 2023?)

Objective #4: Early Progress on Project Financing

With a new CEO at EMN that is skilled in financing resource development projects, it would be a win to see some early progress on 2023 financing goals come from these offtake agreements.

Milestones

New institutional investor/further institutional investment

Debt or equity financing agreement

What could go wrong?

Product risk

EMN’s Demonstration Plant is unable to produce qualified, commercially viable High-Purity Manganese products that are of interest to potential customers.

Development risk

Tailings recycling projects inherently have a lower-grade ore versus conventional deposits, which can impact the project’s economics, sometimes making it non-viable to operate a tailings mine. Additionally, development of the project also hinges on successful processing of manganese tailings and scaling that operation to produce economic quantities of the product.

Regulatory / permitting risks

Every mine needs a social licence to operate and there are risks associated with any new mining development.

Market risk

There’s a risk that manganese prices decrease and a tailings resource is not seen as attractive to investors, or there is a general market collapse/financial crisis.

Financing risk

Due to a combination of any or all of the above risks, financing for the project is hard to come by or unavailable, and the project does not become operational.

What is our investment plan?

We invested in EMN at 6.5¢, 20¢ and 60¢. We have held EMN shares for over 21 months now and have free carried and taken some profit. We continue to hold 1,733,000 shares of EMN.

We are very interested to see if the new CEO can increase the pace at which the 2022/2023 objectives are achieved.

During the next 12 months if some of the key objectives are achieved and the share price re-rates we will aim to sell about 20% of our position to take some profit. Our long term aim is to hold a position into first production in 2025.


Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 1,733,000 EMN shares at the time of publication. S3 Consortium Pty Ltd has been engaged by EMN to share our commentary on the progress of our investment in EMN over time.


Next Investors Investment Milestones

Initial Investment: @6.5c
Increase Investment: @20c
Increase Investment: @60c
Price increases 500% from initial entry
Price increases 1000% from initial entry
🔲 Price increases 2000% from initial entry
12 Month Capital Gain Discount
Free Carry
🔲 Take Some Profit
🔲 Hold remaining Position for next 2+ years


Our Past Commentary on Euro Manganese Inc.

Date Title
21-May-2022 $ 0.345 Commodities super cycles
12-Feb-2022 $ 0.500 Energy Transition Metals, Raw Materials, McKinsey, Supply and Demand Economics
05-Feb-2022 $ 0.470 The "Lesser Kown" Energy Transition Metals: Copper, Aluminium, Graphite, Helium, Rare Earths
31-Jan-2022 $ 0.465 Inflation, US Fed Reserve, Bond Yield, Cash Buffer Portoflio
08-Jan-2022 $ 0.550 Early-year trading indicates market is set for an up-and-down year
05-Jan-2022 $ New Year, New Strategic Investor and New CEO for EMN
06-Nov-2021 $ 0.560 COP26, Battery Metals, Green Energy
09-Oct-2021 $ 0.480 Investing 101: Key lessons for small cap investors
05-Oct-2021 $ 0.525 EMN Enters Joint Development Agreement with Battery Tech Developer Nano One
24-Jul-2021 $ 0.665 Why stocks go into "Quiet Execution Mode", how to spot a cap raise, stock "Confession Season"
17-Jul-2021 $ 0.635 Cash is King, Gold Stocks and Enough of VUL and EMN
16-Jul-2021 $ 0.615 VUL and EMN: Key takeaways out of Europe this week
13-Jul-2021 $ 0.585 Two more key events coming out of Europe in the next 48 hours...
10-Jul-2021 $ 0.560 Breaking News: Stellantis signs offtake MoU with VUL
09-Jul-2021 $ 0.560 Stellantis EV Day: Mystery European Geothermal Lithium MoU & Manganese to be used in all batteries
08-Jul-2021 $ 0.520 Move over Musk. Yet Another Auto giant to reveal Electric strategy tonight at 11:30pm AEST
03-Jul-2021 $ 0.540 End of Financial Year, and what happened to 88E's share price?
19-Jun-2021 $ 0.530 What is Tax Loss Selling?
16-Jun-2021 $ 0.580 Last night VW announced it wants to secure battery metals directly from miners...
29-May-2021 $ 0.520 Green Hydrogen in the news, Investment Milestones released, stock portfolio news
24-May-2021 $ EMN Releases Operations Update as Global Manganese Supply Tightens
27-Apr-2021 $ 0.590 Our Portfolio Performance from January 1st to March 31st 2021
23-Mar-2021 $ 0.680 TRIPLE DOWN ALERT - Plus 6 Hot Stocks
16-Mar-2021 $ 0.645 Power Day Launches Volkswagen’s EU Electric Vehicle Future
05-Mar-2021 $ 0.470 Our Top Two Stocks to Cop a Post-Drop Price Pop
23-Feb-2021 $ 0.650 EMN Joins an Exclusive Club: EIT InnoEnergy has Entered the Game
18-Jan-2021 $ 0.765 EMN Reached an Important Milestone on Friday
12-Jan-2021 $ 0.555 What we are Watching Over the Next 48 Hours
07-Jan-2021 $ 0.505 Our Stock Picks for 2021
18-Dec-2020 $ 0.415 New EU Regulations to Drive our Second Biggest Holding - EMN
11-Dec-2020 $ 0.460 EU Climate Policy - Battery Materials Supply Regulations Leaked?
13-Nov-2020 $ 0.255 EMN to Ride Global Battery Metals Surge
23-Sep-2020 $ 0.140 Tesla’s Elon Musk Makes Manganese a Priority: Could EMN Be Front and Centre of EU Supply Chain
04-Sep-2020 $ 0.062 Introducing Our Next EU Battery Metals Portfolio Investment – Our Previous Pick is Up 311%



Stifel to advise EMN on project finance

ASX:EMN Jun 28, 2022 Announcement


Investment Memo: EMN 2022

Objective #4: Early Progress on Project Financing


It’s good to see our European battery metals Investment Euro Manganese (ASX:EMN) getting its financing ducks in a row ahead of the commissioning of its Demonstration Plant.

EMN appointed US financial services company Stifel (market cap ~US$6B) as Project Finance Advisor for EMN’s Czech Republic high-purity manganese project.

Stifel is very experienced in the battery metals financing space, and is expected to help with moving EMN towards a final investment decision in 2023.

This appointment is good progress on Objective #4 from our EMN Investment Memo:

What’s next for EMN? Completion of the Feasibility Study for the Chvaletice Manganese Project is expected in the coming weeks. EMN has been in “quiet execution mode” for the first half of this year but we expect the second half of the year to be a busy period for EMN with plenty of news flow.


Demo plant modules en route to Europe

ASX:EMN May 17, 2022 Announcement


Investment Memo: EMN 2022

Objective: Construction of the Demonstration Plant


Our European battery metals Investment Euro Manganese (ASX: EMN) today confirmed that the second and final shipment of its demo plant modules had been completed out of China.

EMN confirmed that the delivery of the modules is expected in June/July of this year with assembly on site at its manganese project to commence as soon as the items arrive.

EMN also confirmed that commissioning is still on schedule for ~September and that the first delivery of samples to customers is expected in Q4 2022.

When we launched our 2022 EMN Investment Memo, we had initially expected that the demo plant would be up and running during Q2 of this year. We suspect that the lockdowns in China and all of the impacts the Russia/Ukraine conflict has had on logistics have contributed to the delays.


First samples from demo plant expected in Q4 2022

ASX:EMN May 17, 2022 Announcement


Investment Memo: EMN 2022

Objective: First offtake partner


Our European battery metals Investment Euro Manganese (ASX: EMN) has detailed an updated timeline for the commissioning of its demonstration plant for its high purity manganese project in the European Union (Czech Republic).

With all of the plant modules now en route to Europe, EMN confirmed that it expected the modules to arrive in June/July with commissioning of the plant expected in ~September.

Importantly, EMN also confirmed that it expects to be able to deliver the first samples from the demo plant in Q4 2022.

As part of our 2022 EMN Investment Memo, we set the securing of an offtake partner as key Objective #3 for what we wanted to see EMN achieve in 2022.

We think that the demo plant is likely to be a precursor for any major offtake deal, given that customers interested in securing long term manganese supply will want to see the product specifications EMN can produce.

With the shipment of first samples now due in Q4 2022, we are hoping to see some newsflow regarding offtake discussions towards the back end of this year.


Where to catch the EMN conference call tomorrow

ASX:EMN May 16, 2022 Announcement


Investment Memo: EMN 2022

General: Investor Conference


The EMN conference call is tomorrow (17/5/2022) at 8:30AM AEST, and the webcast can be found here:

https://edge.media-server.com/mmc/p/8avtssir

We’re looking forward to an update from CEO Matt James and CFO Martina Blahova and hope to hear more about the timetable for a number of operational milestones, as Matt James puts his stamp on EMN.


New details emerge from Half Year Report

ASX:EMN May 16, 2022 Announcement


Investment Memo: EMN 2022

Objective #1: Construction of the Demonstration Plant


EMN’s half year report revealed that its demonstration plant should arrive in the Czech Republic in the coming weeks (both parts of it).

The Chinese made plant had to be shipped, as opposed to transported by rail, due to the ongoing conflict in Ukraine.

Commissioning and first production is slated for September - you get some cool vision of what it looks like here, and here.

We’re glad to see EMN making progress on Objective #1 from our EMN Investment Memo (click the image below to see why we Invested in EMN):

To see all of the key objectives we want to see EMN achieve in 2022, why we continue to hold EMN in our portfolio and the key risks to our Investment thesis, check out our 2022 EMN Investment Memo here.


Director appointed, details of conference call

ASX:EMN Apr 28, 2022 Announcement


Our European battery metals Investment, Euro Manganese (ASX: EMN), appointed a well respected battery supply chain expert to its Board earlier this week.

Hanna Schweitz is Director of Battery Materials and Asset Development at WMC Energy and also held various roles at Boliden AB ($18.9B market cap), a large European metal producer and processor.

We’re also looking forward to the upcoming investor conference call which will be held on Tuesday 17 May. This call is open for any investor to listen in to.

In that call we hope to hear more from new CEO Matt James, particularly regarding EMN’s plans around its DFS and demonstration plant.

What’s next for EMN?

EMN has designed a Demonstration Plant to produce large-scale samples of High Purity Manganese products. Commissioning of the plant expected in Q2 2022.

EMN’s DFS will give us an updated look at EMN's project economics and assist with the financing process going into a final investment decision. We expect that to be delivered in the second half of 2022.

To see why we continue to hold EMN in our portfolio, what we want to see the company achieve in 2022 and the key risks to our investment thesis, check out our 2022 Investment Memo here.


Manganese on Tesla Menu?

ASX:EMN Mar 25, 2022 Announcement


Our European battery metals investment, Euro Manganese (ASX:EMN), could be a beneficiary of a Tesla battery chemistry pivot.

Elon Musk was quoted as saying at a recent Tesla event in Germany:

I think there’s an interesting potential for manganese.

Manganese is an essential ingredient in batteries for EVs and EMN is ideally located in the Czech Republic surrounded by European gigafactories in neighbouring countries that will crank out the batteries needed to electrify transport in Europe.

EMN’s project is specifically focussed on high purity manganese suitable for EV batteries.

The potential for higher manganese content in lithium-ion batteries has also been widely discussed in both academic and industry circles.

You can see a breakdown of the current performance of various battery chemistries that use manganese below:

Musk’s comments come at a time when VW has announced that its next battery cell factory will be located in Valencia, Spain. That follows its commitment last year to build out a strong European battery supply chain by investing in six gigafactories, including one in Eastern Europe yet to be announced.

We think 2022 promises to be an exciting year for EMN under new CEO Matthew James, with a number of key milestones to come.

James said in a recent interview that,

Historically the customers have been more focused on lithium, nickel and cobalt. There’s a sense now they’re turning their attention to manganese. The perception has been that there’s plenty of manganese, but where the bottle neck is in the high purity processing capacity.

EMN recently announced a deal with the local Czech government stakeholders as well, further adding to the legitimacy of their project.

What we’re looking for next is progress across our four key objectives for EMN in 2022 :

  • Objective #1: Construction of the Demonstration Plant
  • Objective #2: Definitive Feasibility Study (DFS)
  • Objective #3: First Offtake Partner
  • Objective #4: Early Progress on Project Financing

You can get a more complete high level summary of why we invested in EMN, key risks and our investment plan in our EMN Investment Memo.