Orion Resource Partners to Support Euro Manganese with US$100
Million Funding Towards the Development of the Chvaletice Manganese
Project
Euro Manganese Inc. (TSX-V and ASX: EMN; OTCQX: EUMNF; Frankfurt:
E06) (the "Company") is pleased to announce that it has signed
definitive agreements with OMRF (BK) LLC ("Orion"), which is
managed by the Orion Resource Partners Group, for US$100 million in
non-dilutive financing (the "Funding Package") to advance the
development of the Chvaletice Manganese Project (the "Project") in
the Czech Republic.
Highlights
- The US$100
million Funding is split into two US$50 million components:
- A US$50 million
loan facility, convertible into a 1.29-1.65% royalty on Project
revenues (the "Convertible Loan Facility"), with US$20 million to
be received upon closing and an additional US$30 million received
upon meeting milestones that have been developed together with
Orion to match Euro Manganese’s plans on a Final Investment
Decision ("FID"); and
- Receipt of US$50
million in exchange for a 1.93-2.47% royalty on Project revenues
following FID (the "Royalty Financing") by the Company’s Board of
Directors and other conditions precedents typical for this type of
financing.
- The royalties in
both agreements have an embedded sliding scale mechanism. The
royalties will be calculated on a quarterly basis and the sliding
scale rate is dependent on the high-purity manganese products
prices achieved during the respective quarter. As the realised
price increases from a lower price forecast to a higher price
forecast, the royalty rates decrease from the higher royalty rate
down to the lower royalty rate.
- All aspects of
the Funding Package were structured to meet Project finance
bankability requirements. Both the Convertible Loan Facility and
the Royalty Financing sit alongside, and reduce, the project
finance debt and equity required for the full Project
financing.
- Closing is
expected prior to month end and proceeds from the Funding Package
will fund development activities related to the advancement of the
Project, including G&A expenses related to the Project, which,
as the only manganese resource in the European Union, is of
strategic importance to domestic electric vehicle battery supply
chains and the energy transition.
- In connection
with the Funding Package, Orion have an off-take option of between
20-22.5% of the Project’s high-purity manganese total production
for a term of 10 years from first delivery, matching the commercial
terms of the Company’s sales.
Dr. Matthew James, President & CEO of Euro
Manganese, commented:
“This is a transformative transaction for Euro
Manganese, providing a Funding Package that facilitates the best
possible pathway to a final investment decision and representing a
collaboration between Euro Manganese, Orion, and Stifel. The
non-dilutive, tranche structure minimises cost of funds and reduces
future project financing requirements. This further validates the
robust nature of the Chvaletice Project and our Team’s ability to
deliver this strategic battery raw material project for Europe to
the highest of standards.”
Stifel Nicolaus Europe Limited (“Stifel”) is
acting as financial advisor to the Company and Norton Rose
Fulbright LLP is acting as legal counsel to the Company. In
connection with the Funding Package, the Company has agreed to pay
a cash placement fee equal to 2.5%, due and payable to Stifel on
the date of closing of each portion of the Convertible Loan
Facility, and on the closing of the Royalty Financing.
About Euro Manganese
Euro Manganese is a battery materials company
focused on becoming a leading producer of high-purity manganese for
the electric vehicle industry. The Company is advancing development
of the Chvaletice Manganese Project in the Czech Republic and
exploring an early-stage opportunity to produce battery-grade
manganese products in Bécancour, Québec.
The Chvaletice Project is a unique
waste-to-value recycling and remediation opportunity involving
reprocessing old tailings from a decommissioned mine. It is also
the only sizable resource of manganese in the European Union,
strategically positioning the Company to provide battery supply
chains with critical raw materials to support the global shift to a
circular, low-carbon economy.
Euro Manganese is dual listed on the TSXV and
the ASX and is also traded on the OTCQX.
www.mn25.ca
About Orion Resource Partners
Group
The Orion Resource Partners Group is an $8.2
billion global asset management firm that specializes in
institutional investment strategies in precious and energy
transition metals and minerals. Headquartered in NYC and with
offices in Denver, London, and Sydney, The Orion Resource Partners
Group includes a team of 80 professionals with backgrounds in
metals finance, physical metals logistics and sales, and in-house
technical professionals responsible for risk assessment and
portfolio management.
www.orionrp.com
Authorized for release by the CEO of Euro
Manganese Inc.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) or the ASX accepts responsibility for the
adequacy or accuracy of this release.
Inquiries
Dr. Matthew JamesPresident &
CEOmjames@mn25.ca |
|
Louise BurgessSenior Director, Investor Relations
& Communicationslburgess@mn25.ca+1 (604) 312-7546 |
Company Address
#709 -700 West Pender StreetVancouver, British Columbia, Canada,
V6C 1G8
Table 1 – Summary of Key Terms of US$100 million Orion
Funding Package
Borrower / Grantor of Royalties: |
Mangan Chvaletice s.r.o. (wholly owned subsidiary of Euro Manganese
Inc.) |
Guarantors: |
Euro Manganese Inc. |
Funding amount: |
US$100 million, split into two US$50 million components. |
Structure: |
- US$50 million Convertible Loan Facility:
- US$20 million to be received on closing, expected by end of
November 2023.
- US$30 million to be received upon meeting key milestones.
- US$50 million Royalty Financing to be received following a
final investment decision.
|
Interest rate and tenor of the Convertible Loan
Facility: |
- 12% per annum, payable
quarterly.
- Initial maturity date of 36 months;
may be extended by Orion up to an additional 36 months.
- Orion may convert the Convertible
Loan Facility into a royalty at any time.
- The Company may convert the
Convertible Loan Facility into a royalty upon a successful
completion test of the commercial plant.
|
Royalty: |
Royalty Rates:
- 1.29-1.65% of Project revenues
following conversion of the Convertible Loan Facility.
- 1.93-2.47% of Project revenues for
the Royalty Financing.
- Royalty rates to be calculated on a
quarterly basis dependent on high-purity manganese prices achieved
during the respective quarter.
Term:
- Life of project, estimated to be 25
years, based on current Proven + Probable Reserves.
|
Security: |
Comprehensive security over assets and rights of the Chvaletice
Manganese Project. |
Key Conditions Precedent to drawdown: |
- For the US$30 million tranche of the
Convertible Loan Facility: completion of offtake agreements for 40%
of the Project’s high-purity manganese production for the first
five years of production and securing a strategic investor.
- For the US$50 million Royalty
Financing: completion of Front-End Engineering Design, the Project
being fully funded, and following a final investment decision by
the Company’s Board of Directors.
|
Orion offtake option: |
- Orion have
off-take rights of between 20-22.5% of the Project’s high-purity
manganese total production for a term of 10 years from first
delivery.
- The off-take
terms will match the commercial terms of the off-takes achieved by
the Company, thus ensuring they meet the bankability requirements
of the Project.
- Orion’s right is exercisable until
the Company signs 60% of the total Project offtake (on a tonnes of
metal equivalent basis).
|
Covenants and events of default: |
Customary covenants and undertakings and events of default for a
secured facility of this nature, including, but not limited to,
completion of key commercial agreements, securing a strategic
investor, and completion of various technical milestones aligned
with the Company’s progress to final investment decision. |
Forward-Looking Statements
Certain statements in this news release
constitute “forward-looking statements” or “forward-looking
information” within the meaning of applicable securities laws. Such
statements and information involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance, or achievements of the Company, its Chvaletice
Project, or industry results, to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking statements or information. Such statements can
be identified by the use of words such as “may”, “would”, “could”,
“will”, “intend”, “expect”, “believe”, “plan”, “anticipate”,
“estimate”, “scheduled”, “forecast”, “predict” and other similar
terminology, or state that certain actions, events or results
“may”, “could”, “would”, “might” or “will” be taken, occur or be
achieved.
Such forward-looking information or statements
include, but are not limited to, statements regarding the Company’s
intentions regarding the development and advancement of the
Chvaletice Project, the closing of the first tranche of the
Convertible Loan Facility and related US$20 million draw down,
closing of the second tranche of the Convertible Loan Facility and
related US$30 million draw down, conversion of the loan into a
royalty, the rates of the respective royalties that may be granted,
the Company's ability to meet the conditions precedent required to
trigger funding obligations or sale of the royalty, the Company’s
ability to advance the Project if it receives some or all of the
Funding Package, the Company’s ability to satisfy the conditions
precedent and make a final investment decision in order to complete
the sale of the US$50 million royalty and the Company's ability to
meet Project finance bankability requirements and secure additional
project finance debt and equity required to fund the full
development of the Project.
Readers are cautioned not to place undue
reliance on forward-looking information or statements.
Forward-looking statements are subject to a number of risks and
uncertainties that may cause the actual results of the Company to
differ materially from those discussed in the forward-looking
statements and, even if such actual results are realized or
substantially realized, there can be no assurance that they will
have the expected consequences to, or effects on, the Company.
All forward-looking statements are made based on
the Company's current beliefs including various assumptions made by
the Company and information currently available to the Company.
Factors that could cause actual results or events to differ
materially from current expectations include, among other things:
risks and uncertainties related to the ability to obtain, amend, or
maintain necessary licenses, or permits; risks related to
acquisition of surface rights; risks related to granting security;
securing sufficient offtake agreements; the availability of
acceptable financing for developing and advancing the Chvaletice
Project and for continued operations; the availability and
reliability of equipment, facilities, and suppliers necessary to
complete development; the ability to develop adequate processing
capacity with expected production rates; timing to start of
production and total costs of production; the presence of and
continuity of manganese at the Chvaletice Project at estimated
grades; the potential for unknown or unexpected events to cause
contractual conditions to not be satisfied; developments in EV
(Electric Vehicles) battery markets and chemistries; and risks
related to fluctuations in currency exchange rates, changes in laws
or regulations; and regulation by various governmental agencies.
For a further discussion of risks relevant to the Company, see
"Risk Factors" in the Company's annual information form for the
year ended September 30, 2022, available on the Company's SEDAR+
profile at www.sedarplus.ca.
Although the forward-looking statements
contained in this news release are based upon what management of
the Company believes are reasonable assumptions, the Company cannot
assure investors that actual results will be consistent with these
forward-looking statements. These forward-looking statements are
made as of the date of this news release and are expressly
qualified in their entirety by this cautionary statement. Subject
to applicable securities laws, the Company does not assume any
obligation to update or revise the forward-looking statements
contained herein to reflect events or circumstances occurring after
the date of this news release.
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