Ann: E25 HPMSM project selected for US$166M DoE Grant, page-32

There is uncertainty about many parts of the deal and with that uncertainty comes progressively larger risk discounts. I would have thought that this deal removed a lot of that uncertainty but the share price says uncertainties still exist.

Manganese price
Future HPMSM prices are all over the place. Before factoring in byproduct prices, E25 is something under US$2,560/t. Within Manganese X's PEA they noted "Base case market price of US$2,900/t for battery-grade high-purity manganese sulphate ("HPMSM") is well below the long-term forecast price of $4,200/t HPMSM estimated by CPM Group". Giyani Metals Corp released a PEA last year for their K.Hill project in Botswana and assumed a price of US$3,553/t for years 1-5 and then US$3,780/t for years 6 onwards. Other companies have used higher prices than E25 but that doesn't mean E25 is correct.

In an earlier post I'd arrived at the price ~US$2,560 but with hindsight that price may be an over statement if E25 has assumed revenues from the disposal of byproducts. E25 has noted that their flow sheet avoids the need for a tailings waste landform but hasn't provided clarity on how much of the HPMSM case's assumed revenues come from HPMSM sales and how much comes from byproducts. E25 may be using a lower price point than US$2,560/t but how much lower is unclear. E25 has a difficult pathway to tread around revealing commercial details around the revenue sources that make the project work and keeping investors / potential investors informed. The US government, Stellantis and General Motors think it works.

A key factor in these future HPMSM price estimates is the extent to which East vs West pricing develops. If you have tight environmental controls, higher labour prices, higher capital construction prices and higher energy prices then the price of the end product will typically be higher. If the West wants its own supply chain, the price of that supply chain may well be higher than for Chinese sourced product. With ~95% of HPMSM produced in China there is no material western supply chain from which to determine an appropriate western price.

What is however clear is that any HPMSM price around $2k to $3k/t is going to be massively cheaper as a battery input material than Lithium, Nickel, Cobalt, Copper or any other specialty ingredients. Battery makers will not have a problem paying this sort of price if they get a high purity product that they can rely upon to make quality batteries. They are likely to look for chemistries that increase manganese and decrease other metals that can perform a similar function within the battery chemistry.