The Dawn of EV, page-1393

Grabbed some today, think there is plenty of value here. I will add as management continues to de-risk the project and there is less unknowns.

The company has successfully commissioned Stage 1 of the project, with two maiden shipments sold in the Sept Q 2021. I'd expect the A$20m in additional expansion capital to achieve a 1Mtpa production rate by 2023, to be self-funded. The Reserve underpins a 13-year life at these rates, although the ultimate mine life is expected to be longer given the Reserve represents just 20% of the Resource base. Now the asset is in production, management focus is on execution of production expansion as well as defining the pathway to high purity manganese sulphate production for use in the battery sector.

The geology of Butcherbird is simple. The deposit occurs as a wide ore body close to surface, with a high proportion of low cost free dig mining and a strip ratio of 0.36:1. Concentrate production is both simple and low cost, with Stage 1 capex of A$20m and only a further A$20m required to expand production to 1Mtpa of manganese concentrate. This asset will generate over A$200m in revenue at ~40% EBITDA margins. The mining lease is intersected by the Great Northern Highway, which has sealed access all the way to Port Hedland, where E25 ships concentrate to its customers under existing offtake agreements.

Manganese is the fourth most used metal globally, with the majority of mined material used to strengthen steel. Australian ore production has declined over the last two years, while South Africa, the largest global producer, has remained steady. Our review of manganese markets leads us to conclude that large scale mines in tier one jurisdictions are in production decline and Butcherbird manganese is likely to be in strong demand over the medium to long term, especially as battery demand grows materially.

Definitely plenty of risks here whether management can cut the costs for the project but a P/E of 10 and the manganese making $5mill per quarter would still move us up to $1.3 share price. Risking what I can lose here given how "catching the knife" this buy in looks.