Manganese Market Shifts: Element 25’s Butcherbird Faces Financing and Resource Risks

Project Expansion and Economic Strength

Element 25 Limited (ASX: E25) has released an updated feasibility study for its Butcherbird manganese project in Western Australia's southern Pilbara region. The study outlines a significant expansion to 1.1 million tonnes per annum (Mtpa) of manganese concentrate production, extending the mine life to 18.3 years. This expansion leverages updated mineral resource and reserve estimates, reflecting a robust economic outlook with a pre-tax net present value (NPV) of AU$561 million and an internal rate of return (IRR) of 96%.

The project’s capital cost is estimated at AU$64.8 million, inclusive of contingency, with a rapid payback period of just 16 months from the start of operations. Operating costs are projected at a competitive US$2.86 per dry metric tonne unit (dmtu), positioning Butcherbird as a low-cost manganese producer on the global stage.

Mining and Processing Innovations

The feasibility study incorporates expanded open-cut mining methods and a refined processing circuit featuring a mineral sizer crusher and dense media separation (DMS) technology. This upgrade is expected to improve manganese recovery rates to 59.1% overall, with DMS alone achieving an 83.7% recovery, substantially enhancing product grade and reducing ore loss compared to previous ore sorting methods.

The mine plan utilizes 68% of the total mineral resource inventory within the granted mining lease, focusing on measured and indicated resources to underpin the long mine life. The project benefits from a low strip ratio of 0.45:1, reflecting efficient waste to ore handling, and includes infrastructure expansions such as an enlarged processing plant, camp facilities, and tailings storage.

Strategic Market Position and Offtake Partnerships

Butcherbird’s manganese concentrate is tailored for both traditional steel alloy markets and emerging battery applications. The project aligns with Element 25’s broader strategy to supply high-purity manganese sulphate monohydrate (HPMSM) for electric vehicle (EV) battery cathodes through its planned processing facility in Louisiana, USA. Offtake agreements with automotive giants General Motors LLC and Stellantis NV underscore the strategic importance of Butcherbird’s product in the evolving battery materials supply chain.

The study’s manganese price assumptions are based on a consensus forecast averaging US$6.06/dmtu (44% CIF China basis), with sensitivity analyses confirming project resilience even under price fluctuations. Logistics plans include trucking concentrate 580 km to Port Hedland for export, leveraging existing infrastructure and contracted haulage services.

Environmental and Social Governance

Element 25 has completed comprehensive environmental and heritage assessments, securing necessary approvals and maintaining strong relationships with Native Title groups and pastoral leaseholders. The project design incorporates water recycling, dust suppression, and plans to explore renewable energy integration to reduce carbon footprint.

Risk management strategies address operating costs, revenue variability, and social license considerations, with ongoing engagement to ensure compliance and community support.

Next Steps and Financing Outlook

The company anticipates a 14-15 month timeline from final investment decision to production commencement. Financing discussions are advanced with a mix of debt, equity, and strategic partners, including the Northern Australia Infrastructure Fund (NAIF). While funding is not guaranteed, Element 25 expresses confidence in securing capital aligned with the project’s strong financial metrics and market fundamentals.