Firebird Metals Ltd (ASX:FRB, OTC:FRBMF) has made further progress in the development of its Stage 1 Battery Grade Manganese Sulphate Plant in China, signing “critical” financing and construction agreements with the Jinshi Government, China Construction Bank (Jinshi division) and leading chemical engineering contractor China Chemical.
The Battery Grade Manganese Sulphate Plant will utilise third-party manganese ore to produce high-purity manganese sulphate as part of Firebird's long-term strategy to become a key producer within the manganese industry and provide security of supply across traditional and new material outputs with a focus on the fast-growing new energy industries.
Once in production, Firebird is well placed to become one of the lowest-cost manganese sulphate producers at a time when the Lithium Manganese Iron Phosphate (LMFP) battery market is forecast to experience significant growth in coming years.
A feasibility study outlined a very low capex of US$83.5 million and highly competitive opex of US$609 per tonne for battery-grade manganese sulphate. This is underpinned by major competitive advantage given the plant’s strategic location within the Chinese industrial ecosystem that provides major cost-saving and operational synergies.
The financing agreements
The combined indicative and non-binding agreements (all at advanced stages) up to US$56 million account for about 60% of the estimated financing needed for Firebird to construct and commission its plant:
- Non-binding indicative offer from China Construction Bank (Jinshi Division) to provide a maximum of 50% of estimated plant capex requirements of US$83.5 million at “very attractive” terms, plus 70% of required estimated working capital of US$10.6 million;
- Non-binding agreement with China Chemical to provide up to 20% of construction and installation costs (around US$35 million) on a deferred payment basis, interest-free and repayable 12 months after the commencement of commercial production; and
- Binding agreement with Jinshi local government to receive a 62.5% rebate (totalling ~US$4.2 million) on the ~US$6.8 million land purchase.
Firebird expects to provide further updates on financing arrangements as it works towards a Final Investment Decision on the plant during the first half of 2024.
The company notes that its flagship Oakover Project in Western Australia continues to be an integral part of its long-term manganese battery materials strategy, with its underlying value and importance as a key future operation demonstrated by recent significant manganese supply disruptions.
“Overwhelmed by the ongoing support”
Firebird managing director Peter Allen said: “We are extremely proud to announce these critical financing and construction agreements with the Jinshi Government, China Construction Bank (Jinshi division) and leading chemical engineering contractor China Chemical.
“Since announcing our plans to establish operations in China to produce high-purity manganese sulphate, we have been overwhelmed by the ongoing support and engagement from key stakeholders in China, led by the Jinshi Government, to ensure the company has the resources required to deliver on our LMFP battery strategy. This strong in-country support has been a key contributor to the rapid growth we have delivered on the ground in China.
“I believe that Firebird is in a unique and extremely competitive position, as highlighted by our feasibility study, which showed a very low-capex pathway to establish operations in China in the next 18 months. Importantly, the study highlighted the significant cost, development and operational advantages of building a plant in China and the exciting opportunity to transition Firebird into producer status.
"The company is well positioned to deliver on its strategy to become one of the lowest-cost high-purity manganese sulphate producers when compared to existing Chinese producers and western peers.
“With approximately 60% of our financing requirements now at an advanced stage, we are steadily gaining strong momentum towards securing the necessary funds to build our plant. The value proposition and expedited market entry potential we anticipate in China are truly remarkable. Our progress underscores our commitment to swift and effective execution of our unique growth strategy.
“We are now planning a second investor site visit for mid-to-late June, following the success and feedback from the first visit in April. We are looking forward to demonstrating our key in-country advantages, Chinese Government support, speed to market opportunity and Chinese industrial ecosystem within the Jinshi High-Tech Industrial Park.
“We will continue to deliver on a busy pipeline of news at a time when the supply and demand fundamentals for manganese have never been stronger, particularly following the suspension of operations at Groote Eylandt. Timing is always critical, and we will be turning our plant on at a time when the LMFP battery market is forecast to experience substantial and rapid growth, with the potential to become a >US$20 billion market by 2030.”