Substantial Low-Cost Financial Support for Battery Grade Manganese Sulphate Plant

Firebird Metals Limited (ASX: FRB, “Firebird” or “the Company”) is pleased to announce an update on the financing of its Stage 1 Battery Grade Manganese Sulphate Plant in China, which will utilise third party manganese ore to produce high-purity manganese sulphate.

HIGHLIGHTS

• Strong progress and ongoing support received from the Jinshi Government, China Construction Bank (Jinshi division) and leading chemical engineering contractor, China National Chemistry Southern Construction and Investment Co Ltd (“China Chemical”), for the development and construction of the Company’s Battery-Grade Manganese Sulphate Plant (“Plant”), to be located in the Jinshi High-Tech Industrial Park, Hunan Province
• Combined indicative and non-binding agreements (all at advanced stages) up to US$56M account for approximately 60% of the estimated financing requirements for Firebird to construct and commission its Plant:
  • Non-binding indicative offer from China Construction Bank (Jinshi Division) to provide to a maximum of 50% of estimated plant CAPEX requirements of US$83.5 million (subject to conditions precedents), at very attractive terms, plus 70% of required estimated working capital of US$10.6 million;
  • Non-binding agreement with China Chemical to provide up to 20% of construction and installation costs (approximately US$35 million) on a deferred payment basis, interest-free and repayable 12 months after the commencement of commercial production; and
  • Binding Agreement with Jinshi local Government to receive a 62.5% rebate (totalling ~US$4.2 million) on the ~US$6.8 million land purchase. Rebate has been accounted within total CAPEX requirements
• Feasibility Study¹ outlined a very low CAPEX of US$83.5 million and highly competitive OPEX of approximately US$609/metric tonne (mt) for battery grade manganese sulphate, underpinned by major competitive advantage of strategic location within the Chinese industrial ecosystem, which provides major cost-saving and operational synergies
• Firebird on track to make a Final Investment Decision in H2 2024, with a 12–15 month construction timeline, ahead of first production
• Once in production, Firebird is well placed to become one of the lowest cost manganese sulphate producers, at a time when the Lithium Manganese Iron Phosphate (“LMFP”) battery market is forecast to experience significant growth in coming years
• True underlying value and importance of Flagship Oakover Project (Western Australia), as a key future operation is clearly demonstrated by recent significant manganese supply disruptions. Oakover continues to be an integral part of Firebird’s long-term manganese battery materials strategy

Cautionary Statement

The Feasibility Study referred to in this announcement is a Technical Feasibility of the establishment of the Battery Grade Manganese Sulphate Project Stage 1 Processing Plant in China (the Plant). Please refer to ASX announcement dated 7/5/24 for full Feasibility Study details.

The Feasibility Study is based on the material assumptions contained in the Feasibility Study document which accompanied the announcement. This announcement and the Feasibility Study include assumptions about the availability of funding. While the Company considers all the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated will be achieved.

Notwithstanding the developments set out in this announcement, investors should note that there is no certainty that the Company will be able to raise the amount of funding to develop the Plant when needed. It is also possible that such funding may only be available on terms that may be dilutive to or otherwise affect the value of Company’s existing shares.

It is also possible that the Company could pursue other ‘value realisation’ strategies such as a sale, partial sale or joint venture of the Plant. If it does, this could materially reduce the Company’s proportionate ownership of the Plant. Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Feasibility Study.

Firebird Managing Director Mr Peter Allen commented: “We are extremely proud to announce these critical financing and construction agreements with the Jinshi Government, China Construction Bank (Jinshi division) and leading chemical engineering contractor China Chemical. Since announcing our plans to establish operations in China to produce high-purity manganese sulphate, we have been overwhelmed by the ongoing support and engagement from key stakeholders in China, led by the Jinshi Government, to ensure the Company has the resources required to deliver on our LMFP battery strategy. This strong in-country support has been a key contributor to the rapid growth we have delivered on the ground in China.

“I believe that Firebird is in a unique and extremely competitive position, as highlighted by our Feasibility Study, which showed a very low-capex pathway to establish operations in China in the next 18 months. Importantly, the study highlighted the significant cost, development and operational advantages of building a plant in China and the exciting opportunity to transition Firebird into producer status. The Company is well positioned to deliver on its strategy to become one of the lowest cost high-purity manganese sulphate producers when compared to existing Chinese producers and western peers.

“With approximately 60% of our financing requirements now at an advanced stage, we are steadily gaining strong momentum towards securing the necessary funds to build our plant. The value proposition and expedited market entry potential we anticipate in China are truly remarkable. Our progress underscores our commitment to swift and effective execution of our unique growth strategy.

“We are now planning a second investor site visit for mid-to-late June, following the success and feedback from the first visit in April. We are looking forward to demonstrating our key in-country advantages, Chinese Government support, speed to market opportunity and Chinese industrial ecosystem within the Jinshi High-Tech Industrial Park.

“We will continue to deliver on a busy pipeline of news at a time when the supply and demand fundamentals for manganese have never been stronger, particularly following the suspension of operations at Groote Eylandt. Timing is always critical, and we will be turning our Plant on at a time when the LMFP battery market is forecast to experience substantial and rapid growth, with the potential to become a >US$20 billion market by 2030.”

Click here for the full ASX Release

This article includes content from Firebird Metals Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.