Euro Manganese Inc buys out Chvaletice royalties to boost project economy
The Company will purchase and phase out net smelter royalties on the project, resulting in value growth and cost savings.
() () (OTCMKTS: EUMNF) (FRA: E06) will purchase and extinguish a 1.2% global royalty in its flagship Chvaletice Manganese project as part of a move that will boost the project’s economy.
The 1.2% net smelter royalty was granted when Euro Manganese acquired the Chvaletice project in the Czech Republic in May 2016 from three arm’s length parties.
By buying back the royalties and removing them, Euro expects the after-tax net present value (NPV) of Chvaletice to increase by US $ 25.3 million, while eliminating US $ 91.1 million in expenses on 25 year lifespan of the project and reducing operating costs by US $ 3.40 per tonne of plant feed.
The expected benefits of the operation are based on a preliminary economic assessment carried out in 2019.
Purchase of royalties a no-brainer
Euro Manganese CEO Marco Romero said buying back the net smelter royalties would unlock more value at Chvaletice.
“Based on the results and assumptions of the 2019 preliminary economic assessment, this royalty buyback improves the profitability of the project and the payment terms allow the company substantial financial flexibility,” he said.
“We are continuing to assess other potential opportunities for valuing the project. “
Chvaletice as it is
EMN is strong growth with pre-development activities at Chvaletice following the closing of the second tranche of an oversubscribed AU $ 30 million private placement earlier this month.
The project is designed to produce high purity manganese products by reprocessing manganese-rich tailings from a disused mine, 90 kilometers east of Prague in the Czech Republic in the heart of Europe.
The REM remains on track with the licensing process, demonstration plant, feasibility study and trade negotiations.
All assumptions and economic results will be updated as part of the feasibility study for the project, which is expected to be completed in the first quarter of 2022.
The euro will pay the former holders of the royalty $ 900,000 in cash, with the remaining 80% to be paid either in cash or in a combination of cash and up to 50% in ordinary shares of the REM.