Of course this analysis by Canaccord which projects a LT share...

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    Of course this analysis by Canaccord which projects a LT share upside for EMN @$1.10 has not even imputed the more recent Elon Musk announcement that future EV batteries to include 1/3 manganese.

    Amazing that EMN despite the rise yesterday is still very much under the radar , trading at just $21m market cap!!

    EURO MANGANESE (EMN)

    This was Canaccord analysis on EMN dated 6 Feb 2019

    Czech mate! - Positioning the Manganese piece Strategic asset under the radar: EMN's primary asset is the 100% owned Chvaletice Manganese (Mn) Project (CMP) in the Czech Republic.

    The project has excellent infrastructure access, low cost base (taxes, transport, power) and is within the epicentre of a burgeoning European lithium ion battery (Li-B) manufacturing hub.

    As Europe's only sizeable Mn deposit, the CMP is a strategic asset with the potential to serve the commitments to fleet electrification of some of Europe's major automotive companies (currently nine battery and twelve EV factories in construction).

    In a market where product purity, traceability and extraction process are increasingly scrutinised by potential offtake customers, we view the CMP as demonstrating the credentials to be a key supplier in a high growth market.

    Attractive project economics highlighted in recent PEA: The CMP hosts 27Mt at 7.33% Mn (98%M+I) of waste tailings (no previous Mn recovery performed) that are proposed to be recycled with minimal environmental footprint to produce ultra high purity manganese (>99.9% Mn) products. A recent PEA indicated the potential for a 25 year operation producing ~50ktpa of high purity (>99.9%Mn) electrolytic manganese metal (HPEMM) with 65% to be converted to a sulphate product (HPMSM), used in the manufacture of Nickel-Manganese-Cobalt cathode materials for Lithium-ion batteries (Li-B).

    Low site operating costs (US$2,500/tMn) combined with high purity price premia (LT pricing of US$4,617/t for HPEMM and US$2,666/t for HPMSM) offer potential EBTIDA of +US$150m pa and a payback period of ~4 years, with total project capex at US$404m. As part of ongoing DFS work (due Q1’20) EMN have formed an MoU with Chinese Engineering major CINF to deliver a turn key EPCC package for the CMP. This EPCC package is intended to be an alliance model that in our view will reduce cost and timing risks, as well as providing EMN with more certainty on project financing.

    High purity Mn: The forgotten battery metal but for how long?

    While Mn is the fourth most shipped ore globally (60mtpa) product markets are clearly demarcated between traditional ferroalloys (90% of ore demand) and specialty products (10% of ore demand). Speciality chemicals consumers are less price sensitive, with the ability to achieve requisite purity fundamental in product acceptance. This is increasingly apparent in the Li-B sector where a rapid migration to ternary (NMC) cathode (CGe 8x growth by 2025) is occurring where Mn comprises <2% of input costs. The desire to thrift on higher cost metals (Co, Ni) while also pursuing higher performance will in our opinion, heighten purity standards of Mn inputs.

    We understand that only Mn produced as HPEMM (+99.9% Mn) can effectively respond to forecast cathode demand (CGe 5x growth by 2025). With substantial technical challenges for incumbent Chinese EMM (i.e Selenium use), we view EMN as well positioned to enter the market in 2022 at a time of material product deficit.

    Valuation and Recommendation Our A$1.10/sh. price target is based on a NAV/share approach, applying a multiple of 0.4x to our project NPV12% of C$523m to account for development, permitting and finance risk. We have diluted our NAV for assumed new equity (C$10m at A$0.30/sh) over H2’19 to progress works. With an implied upside of +300% to our target price, we initiate coverage with a SPECULATIVE BUY rating.
 
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