Euro Manganese Inc. (ASX: EMN) has signed definitive agreements with OMRF (BK) LLC, which is managed by the Orion Resource Partners Group, for US$100 million in non-dilutive financing to advance the development of the Chvaletice Manganese Project in the Czech Republic.
The US$100 million Funding is split into two US$50 million components:
- A US$50 million loan facility, convertible into a 1.29-1.65% royalty on Project revenues, with US$20 million to be received upon closing and an additional US$30 million received upon meeting milestones that have been developed together with Orion to match Euro Manganese’s plans on a Final Investment Decision (FID); and
- Receipt of US$50 million in exchange for a 1.93-2.47% royalty on Project revenues following FID by the company’s Board of Directors and other conditions precedents typical for this type of financing.
The royalties in both agreements have an embedded sliding scale mechanism. The royalties will be calculated on a quarterly basis and the sliding scale rate is dependent on the high-purity manganese products prices achieved during the respective quarter. As the realised price increases from a lower price forecast to a higher price forecast, the royalty rates decrease from the higher royalty rate down to the lower royalty rate.
All aspects of the Funding Package were structured to meet Project finance bankability requirements. Both the Convertible Loan Facility and the Royalty Financing sit alongside, and reduce, the project finance debt and equity required for the full Project financing.
Closing is expected prior to month end and proceeds from the Funding Package will fund development activities related to the advancement of the Project, including G&A expenses related to the Project, which, as the only manganese resource in the European Union, is of strategic importance to domestic electric vehicle battery supply chains and the energy transition.
In connection with the Funding Package, Orion hac an off-take option of between 20-22.5% of the Project’s high-purity manganese total production for a term of 10 years from first delivery, matching the commercial terms of the company’s sales.
This is a transformative transaction for Euro Manganese, providing a Funding Package that facilitates the best possible pathway to a final investment decision and representing a collaboration between EurocManganese, Orion, and Stifel,” Dr. Matthew James, President and CEO of Euro Manganese, said.
“The non-dilutive, tranche structure minimises cost of funds and reduces future project financing requirements. This further validates the robust nature of the Chvaletice Project and our Team’s ability to deliver this strategic battery raw material project for Europe to the highest of standards.”
Stifel Nicolaus Europe is acting as financial advisor to the Company and Norton Rose Fulbright LLP is acting as legal counsel to the Company. In connection with the Funding Package, the company has agreed to pay a cash placement fee equal to 2.5%, due and payable to Stifel on the date of closing of each portion of the Convertible Loan Facility, and on the closing of the Royalty Financing.
