Element 25’s (ASX:E25) PFS reflects express pathway to production at Butcherbird

• Manganese explorer Element 25 (E25) has an express pathway to production based on the pre-feasibility study (PFS) for its Butcherbird project
• The project is estimated to contain 4.28 million tonnes of recoverable manganese, with the potential to economically deliver medium-grade ore over a 42-year mine life
• Based on the PFS, E25 estimates capex costs would be repaid within six months of operation, yielding a nominal internal rate of return of 255 per cent
• The project also has a low capital requirement of around $14.5 million, plus $9.2 million working capital to see it through to production
• All E25 has to do now is raise the cash and it should remain on track for first production in early 2021
• Element 25 has had a huge boost off the back of the positive PFS, with shares trading 65 per cent higher at 33 cents each

Manganese explorer Element 25 (E25) has a solid pathway to production based on the pre-feasibility study (PFS) for its Butcherbird project in northwest Western Australia.

A promising project

Butcherbird is estimated to contain 4.28 million tonnes of recoverable manganese, with the potential to economically deliver medium-grade ore over a 42-year mine life.

Based on the PFS, E25 estimates capex costs would be repaid within six months of operation, yielding a nominal internal rate of return of 255 per cent.

The project also has a low capital requirement of around $14.5 million, plus $9.2 million working capital to see it through to production, with first ore predicted in early 2021.

The resource is easily recoverable via open-pit mining with no need for drilling or blasting, and is located near enough to required infrastructure so as to require minimal extra construction expenditure.

All processing testwork also revealed a resource which is easily refined to the medium grade required for use in a wide number of applications, with Butcherbird estimated to produce between 270,000 and 370,000 tonnes of manganese ore per annum.

The 100 per cent-owned project spans a large area (approximately 600 square kilometres), with a footprint which crosses into several pastoral and Native Title areas. The bulk of the usage agreements are already in place, with just one pastoral access agreement still pending the final paperwork.

There appear to be no complications relating to water or environmental concerns either, which further streamline E25’s pathway to production at Butcherbird.

Outlook

The demand for medium-grade manganese ore has been expanding in recent years due to a number of factors.

Its increasing use as an additive in the steel and aluminium industries, along with reduced production from China, all place the Butcherbird resource in a relatively safe and economically viable position.

The project’s low-cost base, high quality, and proximity to market all benefit its longer-term outlook as well.

In the short term, the fact many offtakers worldwide are looking for single-source imports due to COVID-19 restrictions also plays into E25’s hands as a potentially large producer in what is deemed one of the safest zones in the world.

While the company still has a lot of work to do to raise the required finance for the project, the estimated returns on the project make it a solid investment prospect.

All E25 has to do now is raise the cash and it should remain on track for first production in early 2021.

Element 25 has had a huge boost off the back of the positive PFS, with shares trading 65 per cent higher at 33 cents each as at 12:15 pm AEST.