E25 HPMSM Project Update

Element 25 Limited (E25 or the Company) (ASX:E25) is pleased to provide an update with respect to the planned production of high purity battery grade manganese sulphate monohydrate (HPMSM) from manganese oxide concentrates currently produced at the Company’s 100% owned Butcherbird Project (Project) including key developments in the delivery of a Feasibility Study (FS) for the Company’s first HPMSM production facility (Facility).

Summary/Key Points

Project Location

• The United States Inflation Reduction Act (IRA) to inject hundreds of billions of dollars into clean energy EV incentives and programs.
  
• Geopolitical shifts associated with the IRA have caused a perceptible change in the appetite for North American produced battery materials including HPMSM.
• Offtake demand interest based on discussions with OEMs may therefore drive potential reprioritisation to a USA base case for the E25 Feasibility Study.
  
• Multiple suitable sites in the USA being actively assessed as location sites focussing on minimising project capital, local reagent supply, co-location opportunities and optimisation of the supply chain.
• E25 appoints Worley Group to lead the engineering studies for FS localisation for a USA site.
• Ernst & Young to advise on potential federal, state and local funding support for a USA based HPMSM Facility.
• Sarawak Malaysia remains a favourable location for a second E25 HPMSM facility subject to approval of federal government incentives.

Feasibility Study Timeline

• Redirection of engineering resources to cover a potential USA location will result in an adjusted FS delivery of Q1 CY23.
  
• The adjustment to the delivery schedule is not expected to materially delay the delivery of first product to market which remains in the project schedule for 2025.

Flowsheet Piloting Update

• Purification test work completed and produced very high-quality HPMSM liquor with very low impurity levels with results in line with processability and quality expectations. Full test results and confirmatory assays pending.
  
• Supports E25’s ambition to ultimately offer an ultra-high purity manganese sulphate monohydrate (UHPMSM) product.
• Product liquors will be utilised for continuous crystallisation testing commencing in January 2023 to confirm engineering input data for the crystallisation and separation equipment design.

Project Financing

• The Company is pursuing a combined offtake/financing solution with OEMs and cathode manufacturers to provide substantial project funding.
  
• Project offtake and financing strategies scheduled to be finalised in line with the Feasibility Study.

Important macro-economic and geopolitical influences support the business case for HPMSM production from an Australian manganese source including widespread efforts to electrify the global vehicle fleet, as well as supply chain ESG considerations which require more scrutiny on material provenance and a move towards diversifying the source of supply of critical minerals.

E25 is assessing several locations in line with its ambition to develop multiple processing locations to serve the rapidly expanding lithium-ion battery material markets in different geographic regions, with a short-term focus on Asia and North America.

Flowsheet Development

Pilot Scale Test programmes

Purification test work has progressed in line with the originally defined plan and has produced some very high-quality liquor with very low levels of impurities which could potentially pave the way towards E25’s production of a new product specification, termed ultra-high purity manganese sulphate monohydrate (UHPMSM).

Australian produced manganese sulphate liquor was shipped to North America for subsequent piloting and the results obtained during 24/7 continuous operation piloting runs have met expectations, in processability and quality, with no significant issues that could not be managed. Full test results are presently being analysed and additional and confirmatory assays are being concluded.

Liquors produced will undergo continuous crystallisation testing commencing in January 2023, aiming to confirm the engineering data for the proposed crystallisation and separation equipment. This testing program is scheduled to be concluded during February 2023 and will also provide additional HPMSM samples to supplement the present inventory.

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