Electric Metals stock nearly triples on North Star manganese PEA

Electric Metals’ (TSXV: EML) shares more than doubled on a new preliminary economic assessment (PEA) for its North Star manganese project in Emily, Minnesota, showing it’s among the strongest manganese projects outside China by capacity and economics.

The study outlines an after-tax net present value (at a 10% discount) of $1.39 billion and a 43.5% after-tax internal rate of return (IRR). The project starts with a capital cost of $474.8 million for the mine and processing facilities. Then, there’s an additional $150 million for plant expansion and $276 million for sustaining and closure costs over 25 years. Overall, it has a 23-month payback period from start-up.

“The results of this PEA confirm that the project has the potential to become the first fully domestic source of high-purity manganese sulphate monohydrate in the US,” CEO Brian Savage said in a press release. “North Star represents a strategically significant opportunity not only for our shareholders, but also for the US as it seeks secure, low-carbon supplies of critical battery materials.”

The development plan includes a flowsheet for making high-purity manganese sulphate. This is aimed at supporting US lithium-ion battery supply chains. Average yearly mined ore is 368,000 tonnes. This supports post-expansion output of around 180,000 tonnes per year of high-purity manganese sulphate monohydrate. The base-case model assumes a flat $2,500 per tonne product price.

Company shares achieved a fresh 12-month high at C$0.375 before settling back to C$0.35 by the late afternoon in Toronto. It has a market capitalization of C$65 million ($47m).

Top manganese players

North Star’s post-expansion capacity of about 180,000 annual tonnes of manganese puts it on par with peers such as South32’s (LSE, ASX: S32) Hermosa project in Arizona, which could produce 185,000 tonnes of manganese per year. Its capacity is higher than Euro Manganese’s (TSXV, ASX: EMN) Chvaletice project in the Czech Republic, which has an estimated annual capacity of about 100,000 tonnes of manganese.

By economics, North Star rivals its peer set. Giyani Metals’ (TSXV: EMM) K. Hill project in Botswana ranks second with a post-tax NPV of $984 million, and Manganese X’s (TSX: MN) Battery Hill project in New Brunswick is third with an NPV of $486 million.  

Comparing by its 43% post-tax IRR, North Star beats all peers, with K. Hill’s 29% IRR coming closest.

Domestic supply

Electric Metals pitches North Star as a mine-to-chemicals development, responding to a market still reliant on imports of manganese. It aligns with recent US executive actions on critical minerals.

In April, the White House used Section 232 to examine national-security risks in critical mineral supply chains. Electric Metals noted that this move supports the case for domestic production. In July the company joined a new industry collaborative with US electric car maker Lucid Group (Nasdaq: LCID) to promote US sourcing.

Economic resource

The study cites a new resource estimate, at a 10% manganese cut-off, of 3.7 million indicated tonnes grading 17% manganese and 7.6 million inferred tonnes at 19.1% manganese. Underground mining is to use an underhand cut-and-fill technique.

Management plans a two-year construction period followed by a three-year ramp-up to full mining and post-expansion plant rates.

The plan is to move the PEA to a full feasibility study to include both the mine and an integrated production facility, but no timeline has been given for its publication.