Euro Manganese Inc (ASX:EMN, TSX-V:EMN, OTCQX:EUMNF) has signed an offtake term sheet with French company Verkor, a low-carbon battery manufacturer, for the sale of high-purity manganese sulphate monohydrate (HPMSM) from the Chvaletice Manganese Project in the Czech Republic.
The non-binding term sheet is the company’s first for a long-term offtake. It signals the parties’ intention to enter an offtake agreement, at which time the pricing mechanism and minimum tonnages outlined in the term sheet would become binding.
Price reflects traceable European supply
Offtake tonnages are equivalent to a percentage of the company’s annual HPMSM production on a take-or-pay basis. Deliveries are to commence from first production, anticipated in 2027, for an initial tenure of eight years with the potential to renew.
This initial term will kick off subject to successful qualification of the company’s HPMSM from the Chvaletice Demonstration Plant in Verkor’s supply chain.
The price, based on an index-adjusted western benchmark price, will reflect several key characteristics of HPMSM from Chvaletice.
Notably, that it originates from a secure, traceable, local European supply source, with excellent ESG credentials and a low carbon footprint that is expected to be around one-third of the incumbent Chinese industry.
The price for Chvaletice HPMSM will rise and fall proportionally with the movement of a published HPMSM index, on a rolling three-month quotational period. Pricing is subject to a floor price which ensures the company will meet its project financing debt covenants.
EMN shares have been as much as 14.93% higher in ASX trading to an intraday high of A$0.385.
Major milestone
EMN anticipates more term sheets or agreements will arise in the wake of an offtake tender process that is currently underway.
EMN president and CEO Dr Matthew James said: “This is a major milestone for Euro Manganese and for the European battery value chain.
“I am immensely proud of the team and their hard work in negotiating the first long-term offtake term sheet, with a pricing structure, from a western supplier in the high-purity manganese market.
“Verkor has undertaken due diligence on our completed feasibility study and has placed their confidence in us and in our product.
"We look forward to supplying to them as they advance on their goals of delivering batteries to their customers, including Renault (EPA:RENA) Group.
“Together, we are aligned in our pursuit of helping to create a cleaner world by enabling the green energy transition.”
Verkor CEO Benoit Lemaignan said: “This announcement is a further concretisation of the efforts undertaken over the last two years to build the future of electric mobility in Europe.
"Euro Manganese’s project meets our goals of securing traceable, local raw materials which align to European highest ESG standards.
"I know we can continue to count on them for the next milestone of our development as we make our first gigafactory project a reality.”