Join our daily newsletter At The Bell to receive exclusive market insights
- Element 25 (E25) has announced offtake agreement terms and a $9.75 million placement to support its Butcherbird Manganese Project in WA
- OM Holdings’ subsidiary, OM Materials will take up to 365,000 tonnes per annum of manganese ore from the first stage of the Butcherbird Project development
- The offtake agreement has an initial term of five years with the potential to be extended
- Amongst the terms, the parties have proposed a pricing mechanism calculated as a discount against the Fast Markets published 44 per cent manganese benchmark price
- The companies are also finalising a $2 million convertible funding agreement which will support the project
- Additionally, E25 has received commitments to raise up to $9.75 million under a two-tranche placement
- Company shares are up 5.29 per cent and are trading for 89.5 cents
Element 25 (E25) and OM Materials have agreed on the offtake terms for the sale of all the manganese ore produced from the Butcherbird Manganese Project in WA.
Under the non-binding term sheet agreement with ASX-lister OM Holdings’ (OMH) subsidiary, OM Materials, Element 25 will sell up to 365,000 tonnes per annum of manganese ore produced at its Butcherbird Project under stage one volumes.
The companies are negotiating the final terms of a $2 million convertible funding agreement which will be a part of the overall project financing.
The term sheet provides both parties with a 60-day exclusivity period during which time the definitive documents in relation to the offtake terms will be finalised.
The offtake agreement has a five-year period which can be extended.
The parties have proposed a pricing mechanism which is calculated as a discount against the Fast Markets published 44 per cent manganese benchmark price. The parties have agreed to the specification and pricing formula for the delivered ore between a grade of 28 to 35 per cent manganese. There are also minimum and maximum levels of impurities such as silica, phosphorous, iron and moisture however the ratios have not been disclosed.
“OMH is ideally placed to partner with E25 given their extensive smelting infrastructure in Malaysia and their experience in the Silico-manganese markets into which the E25 ore will be placed,” E25 Managing Director Justin Brown said.
“E25 regard this as the start of a long term mutually beneficial arrangement and looks forward to building on the progress to date,” he added.
The Placement
Element 25 has announced receiving firm commitments from sophisticated, professional and institutional investors to raise up to $9.75 million through a two-tranche placement. A total of 12.5 million fully paid ordinary shares will be issued at 78 cents.
The placement includes subscriptions from potential offtake partners. The company has also approved subscriptions from senior executives for $309,000.
The money from the placement will be used to develop E25’s Butcherbird Project. Specifically, funds will allow for the finalisation of equipment purchase, mobilisation and construction to establish the first stage of ore production as detailed in the pre-feasibility study.
Once the placement has been completed, the company will be fully funded to kick start first production.
Company shares are up 5.29 per cent and are trading for 89.5 cents at 3:41 pm AEDT.
