initiation of coverage euro manganese incorporated specialty … · 2019. 2. 6. · canaccord...

Euro Manganese IncorporatedSpecialty Minerals and Metals

Canaccord Genuity is the global capital markets group of Canaccord Genuity Group Inc. (CF : TSX)The recommendations and opinions expressed in this research report accurately reflect the research analyst's personal, independent and objective views about any and allthe companies and securities that are the subject of this report discussed herein.

6 February 2019

SPECULATIVE BUYPRICE TARGET A$1.10Price (5-Feb)Ticker

A$0.28EMN-ASX; EMN-TSX

52-Week Range (A$): 0.16 - 0.33Market Cap (A$M): 48.7Shares Out. (M) : 170.7Enterprise Value (A$M): 38.3NAV /Shr (5%) (A$): 2.30Net Cash (A$M): 10.4P/NAV (x) (A$): 0.27Major Shareholders: Terra Capital (9.1%)

Tribeca Investment Partners (5%)

FYE Sep 2018A 2019E 2020E 2021EEBITDA (C$M) (6.4) (8.9) (9.2) (5.1)Net Income (C$M) (14.2) (8.8) (9.1) (5.1)

0.34

0.32

0.3

0.28

0.26

0.24

0.22

0.2

0.18

0.16

No

v-1

8

De

c-1

8

Jan

-19

Feb

-19

EMN

Source: FactSet

Priced as of close of business 5 February 2019

Canaccord Genuity (Australia) Limited has received a fee asthe Lead Manager to the Euro Manganese Inc Initial PublicOffer in September 2018.

Larry Hill | Analyst | Canaccord Genuity (Australia) Ltd. | [email protected] | +61.2.9263.2745Eric Zaunscherb, CFA | Analyst | Canaccord Genuity Corp. (Canada) | [email protected] | 1.416.869.7299

Initiation of Coverage

Czech mate! - Positioning the Manganese pieceStrategic asset under the radar: EMN's primary asset is the 100% owned ChvaleticeManganese (Mn) Project (CMP) in the Czech Republic. The project has excellentinfrastructure access, low cost base (taxes, transport, power) and is within the epicentreof a burgeoning European lithium ion battery (Li-B) manufacturing hub. As Europe'sonly sizeable Mn deposit, the CMP is a strategic asset with the potential to serve thecommitments 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 increasinglyscrutinised by potential offtake customers, we view the CMP as demonstrating thecredentials 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 tobe 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 operationproducing ~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 ofNickel-Manganese-Cobalt cathode materials for Lithium-ion batteries (Li-B).Low site operating costs (US$2,500/tMn) combined with high purity price premia (LTpricing 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 ChineseEngineering major CINF to deliver a turn key EPCC package for the CMP. This EPCCpackage is intended to be an alliance model that in our view will reduce cost and timingrisks, 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 fourthmost shipped ore globally (60mtpa) product markets are clearly demarcated betweentraditional ferroalloys (90% of ore demand) and specialty products (10% of ore demand).Speciality chemicals consumers are less price sensitive, with the ability to achieverequisite purity fundamental in product acceptance. This is increasingly apparent in theLi-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 costmetals (Co, Ni) while also pursuing higher performance will in our opinion, heightenpurity standards of Mn inputs.We understand that only Mn produced as HPEMM (+99.9% Mn) can effectively respondto forecast cathode demand (CGe 5x growth by 2025). With substantial technicalchallenges for incumbent Chinese EMM (i.e Selenium use), we view EMN as wellpositioned to enter the market in 2022 at a time of material product deficit.Valuation and RecommendationOur A$1.10/sh. price target is based on a NAV/share approach, applying a multiple of0.4x to our project NPV12% of C$523m to account for development, permitting andfinance 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, weinitiate coverage with a SPECULATIVE BUY rating.

For important information, please see the Important Disclosures beginning on page 43 of this document.

2

Figure 1: EMN Financial Summary

FINANCIAL SUMMARYEuro Manganese EMN:ASX EMN:TSXAnalyst : Larry Hill

Date: 4/02/2019

Year End: September

Market Information Company Description

Share Price A$ 0.30 C$ 0.27

Market Capitalisation A$m 51.2 C$m 46.1

12 Month Hi A$ 0.33 C$ 0.44

12 Month Lo A$ 0.16 C$ 0.15

Issued Capital m 170.7

Options m 21.2 Profit & Loss (C$m) 2018a 2019e 2020e 2021e 2022e 2023e

Future Equity Raised m 35.1 Revenue 0.0 0.0 0.0 0.0 0.0 200.7

Future Diluted m 227.0 Operating Costs -2.6 0.0 0.0 0.0 0.0 -89.7

Valuation C$m Equity Mutiple A$m A$/share Corporate & O'heads -1.9 -7.9 -8.2 -4.1 -8.3 -8.3

Chvaletice NPV @ 12% 523.6 100% 0.4x 221.4 0.98 Exploration (Expensed) -1.9 -1.0 -1.0 -1.0 -1.0 -1.0

Investments - - - EBITDA -6.4 -8.9 -9.2 -5.1 -9.3 101.6

Corporate (6.3) (6.6) (0.03) Dep'n 0.0 0.0 0.0 0.0 0.0 9.5

Cash and equivalents 10.4 10.9 0.05 Net Interest -0.1 0.1 0.1 0.0 -8.8 -12.7

Future Equity Raised 10.0 10.6 0.05 Other 0.0 0.0 0.0 0.0 0.0 1.0

ITM Options 3.1 3.3 0.01 Tax 0.0 0.0 0.0 0.0 0.0 15.1

TOTAL Net Asset Valuation 537.7 239.5 1.04 NPAT (reported) -14.2 -8.8 -9.1 -5.1 -18.1 64.3

Price/NAV 0.29x Abnormals 0.0 0.0 0.0 0.0 0.0 0.0

Target Price 1.10 NPAT -14.2 -8.8 -9.1 -5.1 -18.1 64.3

Assumptions 2018a 2019e 2020e 2021e 2022e 2023e EBITDA Margin nm nm nm nm nm 51%

EMM (99.7%) (US$/t) 2,323 2,315 2,260 2,238 2,353 2,482 EV/EBITDA nm nm nm nm nm 2.4x

HPEMM (US$/t) 5,963 4,617 4,617 4,617 4,617 4,617 EPS -$0.01 -$0.01 -$0.01 $0.00 -$0.01 $0.05

HPMSM (32% Mn) (US$/t) 3,320 2,666 2,666 2,666 2,666 2,666 EPS Growth nm nm nm nm nm nm

PER -28.7x -24.7x -30.5x -81.2x -22.9x 6.5x

Sensitivity Dividend Per Share $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Dividend Yield 0% 0% 0% 0% 0% 0%

Cash Flow (C$m) 2018a 2019e 2020e 2021e 2022e 2023e

Cash Receipts 0.0 0.0 0.0 0.0 0.0 190.7

Cash paid - suppliers/labour -6.5 -7.9 -8.2 -4.1 -8.3 -98.0

Tax Paid 0.0 0.0 0.0 0.0 0.0 -15.1

Net Interest 0.0 0.1 0.1 0.0 -8.8 -12.7

+/- Working cap change 1.5 0.0 0.0 0.0 0.0 55.0

Operating Cash Flow -5.0 -7.8 -8.1 -4.1 -17.1 119.8

Exploration and Evaluation 0.0 -2.0 -2.0 -2.0 -2.0 -2.0

Capex 0.0 -1.4 -15.1 -166.5 -143.9 -144.3

Other -0.4 0.0 0.0 0.0 0.0 0.0

Investing Cash Flow -0.4 -3.4 -17.1 -168.5 -145.9 -146.3

Debt Drawdown (repayment) 0.0 0.0 20.2 0.0 200.4 0.0

Share Capital 12.9 10.0 40.0 141.2 0.0 0.0

Dividends 0.0 0.0 0.0 0.0 0.0 0.0

Financing Expenses 0.0 0.0 0.0 0.0 0.0 0.0

Financing Cash Flow 12.9 10.0 60.2 141.2 200.4 0.0

Opening Cash 2.9 10.4 9.2 44.1 12.7 50.2

Increase / (Decrease) in cash 7.5 -1.2 35.0 -31.4 37.5 -26.5

Production Metrics 2018a 2019e 2020e 2021e 2022e 2023e FX Impact 0.0 0.0 0.0 0.0 0.0 0.0

Chvaletice Closing Cash 10.3 9.2 44.1 12.7 50.2 23.8

HPEMM 0 0 0 0 0 25,828

HPMSM as Mn 0 0 0 0 0 8,351 Op. Cashflow/Share -$0.04 -$0.04 -$0.02 -$0.01 -$0.05 $0.35

HPMSM 0 0 0 0 0 25,689 P/CF -6.9x -7.9x -12.8x -25.4x -6.1x 0.9x

EV/FCF nm nm nm nm nm -9.3x

C1 Costs (US$/t) 0 0 0 0 0 2,316 FCF Yield -11% -22% -49% -337% -318% -52%

All in Cost (US$/t) 0 0 0 0 0 2,765

Balance Sheet (C$m) 2018a 2019e 2020e 2021e 2022e 2023e

Production Profile Cash + S/Term Deposits 10.4 9.2 44.1 12.7 50.2 23.8

Other current assets 0.3 0.0 0.1 0.1 0.2 40.2

Current Assets 10.7 9.2 44.2 12.8 50.4 63.9

Property, Plant & Equip. 0.4 1.7 16.9 183.3 327.2 462.0

Exploration & Develop. 1.2 2.2 3.2 4.2 5.2 6.2

Other Non-current Assets 0.0 1.1 13.2 146.4 261.5 369.3

Payables 0.9 0.0 0.0 0.0 0.1 20.1

Short Term Debt 0.0 0.0 0.0 0.0 0.0 60.0

Long Term Debt 0.0 0.0 20.2 20.1 220.6 160.5

Other Liabilities 0.8 2.6 14.7 148.0 263.2 436.1

Net Assets 10.5 11.7 42.5 178.6 160.5 224.7

Shareholders Funds 20.0 30.0 70.0 211.1 211.1 211.1

Reserves 1.5 1.5 1.5 1.5 1.5 1.5

Retained Earnings -11.0 -19.8 -28.9 -34.0 -52.1 12.1

Total Equity 10.5 11.7 42.5 178.6 160.5 224.7

Reserves & Resources Mt Mn% Sol. Mn% Mn (kt) Sol. Mn (kt) Debt/Equity 0% 0% 48% 11% 137% 71%

Resources (100%) Net Debt/EBITDA 2.1x 1.2x 3.0x -1.8x -10.0x 1.6x

Measured 26.50 7.32% 5.86% 1,940 1,553 Net Interest Cover nm nm -45.8x -12.9x -0.9x 7.1x

Indicated 0.46 7.85% 6.05% 36.42 28 ROE -135% -76% -21% -3% -11% 29%

Total 26.96 7.33% 5.86% 1,976 1,581 ROIC -500% -173% -27% -2% -3% 7%

Book Value/share $0.09 $0.06 $0.12 $0.52 $0.46 $0.65

Source: Factset, Company reports & Canaccord Genuity estimates

Euro Manganese (ASX:EMN) is a mineral exploration company incorporated in Canada and 100% ow ns the

Chvaletice manganese project in the Czech Republic. A Preliminary Economic Assessment (PEA) w as released in

Jan'19 highlighting the potential for ~50ktpa of production over a 20 year mine life of High Purity electrolytic

Manganese Metal (HP EMM) that is expected to command pricing premia from potential customers in the lithium ion

battery sector.

SPEC BUYA$1.10

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

-30% -20% -10% 0% 10% 20% 30%

HPEMM Price HPMSM Price Processing Cost (US$/t) Exchange Rate ((C$:US$)

0

500

1,000

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3,500

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30,000

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2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e 2031e 2032e 2033e 2034e

Pri

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ISC

(U

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/t)

Mn

Pro

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cti

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(tp

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HPEMM HPMSM as Mn All in Sustaining Cost Onsite costs (C1)

Euro Manganese IncorporatedInitiation of Coverage

Speculative Buy Target Price A$1.10 | 6 February 2019 Specialty Minerals and Metals 2

3

Investment Highlights

Figure 2: The Li-ion battery (Li-B) market is expected to grow ~5x over the

next 7 years. The electric vehicle industry is expected to be the principal

segment of demand – predominately requiring NMC (Nickel-Manganese

(Mn) -Cobalt) ternary cathode formulations.

Figure 3: High purity Mn (~50ktpa) is a distinct sub sector of the

overall ~20Mtpa Mn market. Only sulphate (HPMSM) or electrolytic

metal (HPEMM) can provide the requisite purity for battery cathode

material. EMM’s flowsheet is expected to produce both.

Source: Company Reports, Canaccord Genuity estimates Source: CMP GROUP (as referenced to Cairn ERA) 2019

Figure 4: Mn is <2% of input cost in NMC, however Mn purity will need

to be elevated to preserve safety/output as nickel content increases. Figure 5: The overall high purity Mn market is mature (~$2B in revenue,

2018) with Li-B offering a key growth segment (~17% CAGR to 2025).

Source: Company Reports, Canaccord Genuity estimates Source: Company Reports, Canaccord Genuity estimates

Figure 6: From 2022 EMN transitions towards HPMSM production to

capture improved margins and market growth. Figure 7: Strategically located with no fewer than nine battery

factories and twelve EV factories under construction in Europe.

Source: Company Reports, Canaccord Genuity estimates Source: Company Presentation

0

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2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e

Ins

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Ni-2018 Ni-2025 Co-2018 Co-2025 Li-2018 Li-2025 Mn-2018 Mn-2025

Mark

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ue) Non Battery Battery



4

Table of Contents

Investment Highlights ................................................................................................. 3

Table of Contents ....................................................................................................... 4

Company Overview ..................................................................................................... 5

Corporate and Finance ............................................................................................... 7

Capital Structure ............................................................................................................. 7

Major shareholders ......................................................................................................... 7

Balance sheet & cash flow ............................................................................................. 7

Project Funding ............................................................................................................... 8

Valuation .................................................................................................................... 9

Manganese Market Snapshot .................................................................................. 11

Peer Comparisons .................................................................................................... 13

Chvaletice Manganese Project ................................................................................. 15

Location & Access ......................................................................................................... 15

Project History ............................................................................................................... 16

Geology .......................................................................................................................... 17

Project Development ................................................................................................ 20

Environmental and Permitting ...................................................................................... 20

Processing description .................................................................................................. 20

Trade off between HPEMM vs HPMSM ........................................................................ 23

Operating and Capital Costs ......................................................................................... 24

Production profile .......................................................................................................... 25

Sales and Marketing ..................................................................................................... 26

Project Timeline ............................................................................................................. 27

Appendix – Board and Management ........................................................................ 28

Appendix - Investment Risks .................................................................................... 29

Appendix - Manganese Market Overview ................................................................. 30

Supply ............................................................................................................................ 30

Demand ......................................................................................................................... 30

Appendix - EMM Market Overview ............................................................................ 33

Conventional EMM ........................................................................................................ 33

High Purity EMM ............................................................................................................ 34

Conversion of HPEMM to HPMSM................................................................................ 35

Manganese in the Lithium Ion Battery Market ............................................................ 36

Product Pricing .............................................................................................................. 39

Appendix - Investment in Czech Republic ................................................................ 41



5

Company Overview

Euro Manganese (ASX:EMN) is a mineral exploration and development company

incorporated in Canada. The core business of the company is the evaluation and

development of the 100% owned Chvaletice Manganese Project (CMP) located

~90km from Prague in the Czech Republic. EMN are proposing to re-process

historic manganese bearing tailings waste that will not result in any new mining

impacts or significant waste generation.

EMN recently completed a Preliminary Economic Assessment (PEA) which

demonstrates the investment merits of the production of high purity manganese

products, namely Electrolytic Manganese Metal (EMM) and Manganese Sulphate

Monohydrate (MSM) from Chvaletice. Both products are a critical, high value

feedstock to the burgeoning lithium ion battery (Li-B) materials sector. A Feasibility

Study (FS) is due on the CMP in early 2020.

EMN was incorporated in November 2014 and negotiated an earn-in option

agreement with Mangan Chvaletice s.r.o. (Mangan), the owner of the mining rights

for the CMP. In May 2016, EMN acquired a 100% interest in Mangan for a total

net consideration of C$1.2m.

In October 2018 EMN was listed simultaneously in Canada (TSX:EMN) and

Australia (ASX:EMN) as CHESS Depositary Interests with 170.7m shares on issue

implying a market capitalisation of ~A$42m.

Overall, we view EMN possess the diverse technical, commercial and regulatory

expertise to sustain a progressive work program and bring the CMP into

production. The inherent “first mover” advantage that EMN has along with CMP’s

location bodes well for a product with a strong demand outlook.

Figure 8: Company milestones

Source: Company Reports



6

Asset Summary - Chvaletice Manganese Project (CMP)

The CMP is in the western area of the Pardubice region of the Czech Republic,

approximately 90km east of Prague, on the southern shore of the Labe (Elbe)

River. The project considers reprocessing fine-grained tailings material for

production of high purity, selenium-free, >99.9% electrolytic manganese metal

(EMM) and/or high purity manganese sulphate monohydrate (HPMSM).

Previous mining activities (which produced the existing manganese-rich tailings)

was focused on the extraction of pyrite to produce sulfuric acid. Importantly,

manganese was not attempted to be recovered in the initial processing stage and

we view this as a unique opportunity compared to other process recovery

scenarios where the mineralisation could not be initially recovered due to difficult

mineralogy/metallurgy.

The project is 100% owned by EMN and with a resource of 27Mt grading 7.33%

Mn, which makes it the largest known manganese deposit in Europe (a 100% net

importing region). The PEA demonstrates a potential production rate of ~50ktpa

high purity Manganese production underpinning a 25-year mine life.

As a waste reclamation project mine life extension (through exploration) are

limited however this is clearly offset by the low surface disturbance and land

remediation benefits of the project.

The project is located within an emerging province of battery, cell, chemicals and

raw material production to serve Europe’s renowned automotive companies,

which have all made commitments to the electrification of a number of fleet

vehicles.

The CMP as an environmentally superior (i.e., waste reclamation, Selenium Free)

process and ultra-high purity product should offer EMN strategic benefits as it

progresses commercial discussions with potential customers.

Figure 9: Chvaletice is located ~90km west of Prague on the Elbe River Figure 10: Oblique view of site looking south: Three rehabilitated

tailings damns (foreground) and power station (background)

Source: Google Maps Source: Company Reports

Project Catalysts

Environmental Impact Assessment receipt – H2’19

Receipt and validation of product from potential offtake customers – CY19

Results from bulk sample pilot plant program – H2’19

Feasibility study results – H1’20



7

Corporate and Finance

Capital Structure

EMN currently has 170.7m ordinary shares on issue, 12.5m options and 8.7m

warrants. The options and warrants are exercisable at varying prices and dates

between June 2019 and October 2028 as detailed in Figure 11.

Figure 11: EMN Issued Capital


Major shareholders

EMN’s substantial shareholders include Terra Capital (~9%) and Tribeca (~5%)

with institutional ownership ~22%. Board and management hold ~20% (excluding

outstanding options and warrants) of shares with the balance (~57%) being retail

shareholders.

Balance sheet & cash flow

EMN reported a cash balance of ~C$10.0m at the end of Nov’18 and currently

holds no debt. The company’s most recent capital raising event was in Oct’18,

where its raised ~C$7.6m net of costs via an IPO when it dual listed on the ASX

and TSX. The IPO consisted of

25m shares listed on the ASX for A$0.26/sh, raising A$6.5m.

10m shares listed on the TSX for C$0.25/sh, raising C$2.5m.

In Feb’18 (prior to the dual listing), EMN completed a private placement by issuing

a total of 37.75m common shares at a price of C$0.20/sh, generating a gross

cash proceed of C$7.6m.

Over 2019 we expect EMN to spend ~C$10m on key project development

activities. These include building and commissioning a large-scale

hydrometallurgical demonstration plant and progressing a definitive feasibility

study (DFS due H1’20).

We have assumed that pre-construction expenditure of ~C$20m can be funded

through current reserves and an equity raising of ~C$10m over H2’19.

Within our cash flow projections, we have conservatively excluded taxation

benefits (i.e., booking losses, accelerated depreciation) nor government grants

(development funding) that may exist in the project.

Price Expiry

Issued Shares m 170.71 $0.23 -

Options 1 m 1.63 $0.08 16/05/2026

Options 2 m 0.20 $0.10 14/06/2026

Options 3 m 1.58 $0.10 6/04/2027

Options 4 m 3.40 $0.11 22/09/2027

Options 5 m 0.70 $0.11 14/12/2027

Options 6 m 3.23 $0.20 21/02/2028

Options 7 m 0.50 $0.20 20/03/2028

Options 8 m 1.30 $0.25 15/08/2028

Warrants 1 m 2.04 $0.11 16/06/2019

Warrants 2 m 0.29 $0.11 30/06/2019

Warrants 3 m 0.42 $0.11 31/07/2019

Warrants 4 m 0.17 $0.11 18/08/2019

Warrants 5 m 2.86 $0.30 18/02/2021

Warrants 6 m 2.90 $0.38 1/10/2021

Total Options/Warrants m 21.21 0.19

Fully Diluted m 191.919



8

As presented in Figure 12 below we estimate the CMP could generate site level

EBITDA of ~US$200m generating post tax flows of ~US$750m over the first eight

years of the project. Based on estimated capital costs as outlined in the PEA, we

estimate a payback period of ~4 years.

Our current cash flow modelling also incorporates a nominal 50:50 debt to equity

funding scenario of the ~US$400m in project capital expenditure from 2020. This

is expected to be achieved through the possible options as outlined below.

Figure 12: EMN projected cash flows (note FY year SepQ end)

Source: Canaccord Genuity estimates

Project Funding

Post the delivery of the PFS (expected early 2020), EMN will confirm total project

capital costs which we have assumed to be US$250m (direct) + US$150m

(indirect) based upon PEA estimates. Upon reaching a final investment decision

(FID) EMN will be able to consider various project level funding. These elements

could include:

Project sell down: Based on initial discussions with end users EMN may

leverage the strategic features (location, environmental credentials

(waste recycling aspects) of the Chvaletice project to allocate a portion of

product offtake as part of a project sell down. We view that EMN will limit

this to an appropriate level (i.e., <30%) to maintain project control with

valuation expected to materially increase as development activities

further de-risk the project towards FID.

Project debt: We expect that EMN will be able to establish firm

“bankable” product offtake lending into FID which will satisfy the ability to

access conventional project debt finance. We expect first draw down to

occur as construction commences over 2021.

Engineering package: EMN have used CINF Engineering Co. Ltd (a

division of State-owned Aluminum Company of China) for process

flowsheet development work for the PEA. We note that EMN and CINF

signed an MoU in H1’18 based on the delivery by CINF of a turn-key,

lump-sum engineering, procurement, construction and commissioning

(EPCC) package for the CMP with completion and performance

guarantees. This EPCC package is intended to be an alliance model that

we view will reduce cost and timing risks, as well as providing EMN will

more certainty on project financing.

-400

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9

European Union grants: We note the recent approval by the European

Union of a 36 million euro grant to South Korean corporation LG Chem

(051910:KRX|Not Rated) to assist with funding the first phase of its

lithium ion battery plant near Wroclaw, Poland, located ~225km from

CMP, with an initial capacity for the cell production of 100,000 electric

vehicles per annum.

This is part of the European Battery Alliance formed in October 2017 to

look to increase regional vertical integration in the manufacture of lithium

ion batteries and the development of a battery raw materials chain within

Europe. At least €23B has been made available under the initiative with

more than 250 companies and research centres part of the Alliance.

Valuation

Our project valuation is based on our assumed development/production scenario

at the CMP, comprising a 25-year 1.1mtpa operation producing ~50ktpa of high

purity Mn products at a refinery located adjacent to the waste reclamation area.

Given the finite resource inventory, we consider Mine life extension unlikely.

Our model assumptions as indicated in Figures 13 and 14 below are based upon

capital and operating cost estimates given in the Jan’19 Preliminary Economic

Assessment. We have taken a more conservative approach to some of these input

parameters as detailed in the capital and operating section of this report.

Our Valuation assumes that the CMP upon establishing a 50ktpa HPEMM

operation by 2022 will be augmented by 33ktpa HPMSM production circuit by

2025.

Based on our market analysis (Product Pricing) we have assumed an average

product price of US$4,617/t for HPEMM and US$2,666/t (32% Mn) for HPMSM.

While we highlight that this is above our current understanding of ‘spot’ pricing

(~US$3,200/t for HPEMM and US$1,300/t (32% Mn) for HPMSM), it is a

conservative price based on forward projects (see Figure 18).

Figure 13: Key assumptions -Physicals/pricing Figure 14: Key assumptions – Costs


Given the early stage of development of the CMP (PEA level accuracy) along with

the financing and permitting stages to progress through we have applied a 0.4x

Multiple on our CMP valuation to capture project and financing risks (see here).

Our net asset valuation per share is based on a diluted share basis of 240m

shares to account for short term funding of C$10m (assumed during H2’19 at

C$0.30/share) to complete work ahead of concluding project feasibilities studies

Parameter Unit Value

Project Life Years 25

Resource Mt 26.5

Resource grade % Mn 7.33

Plant feed rate mtpa 1.1

Magnetic Separation recovery % tMn 88

Acid leach recovery %t Mn 75

Overall Mn recovery %t Mn 59

LoM avg HPEMM produced ktpa 48.1

LoM avg HPEMM:HPMSM ktpa (MnEq.) 33.4

LoM avg HPMSM produced ktpa (MSM) 102.1

HPEMM price received US$/lb 4617

HPMSM price received US$/lb 2666


Site +Tailings area capital US$m 42

Infastructure capital US$m 21

Process plant capital US$m 167

HPMSM plant capital US$m 25

Direct costs US$m 255

Indirect capital costs US$m 149

All in Capital Costs US$m 404

LoM sustaining capital US$m 25

Operating costs -C1 US$/t 2552

All-in Operating costs -C3 US$/t 3067

LoM avg FX rate CAD:USD 0.75

AUD:USD 0.71

CZK:USD 0.045



10

over 2019 (when and what price?). The current share price implies a potential

return of +250%.

Figure 15: Net Asset Valuation


Figure 16: Valuation Sensitivity


NET ASSET VALUATION

DISCOUNT RATE 12% Shares (m) 170.710

Future Equity Raised (m) 33.956

NAV Shares (m) 204.665

Options (m) 21.21

Diluted (m) 225.874

C$m Multiple EQUITY A$m A$/share

Chvaletice 524.11 0.4x 100% 220.73 $0.977

Investments 0.00 1.0x 0.00 $0.000

Corporate -6.24 1.0x -6.57 $0.029

Cash and equivalents 10.36 1.0x 10.91 $0.048

Future Equity Raised 10.00 1.0x 10.53 $0.047

ITM Options 2.83 1.0x 2.98 $0.013

TOTAL 313.45 0.00 1.06

0.00 $1.10

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

-30% -20% -10% 0% 10% 20% 30%

HPEMM Price HPMSM Price

Processing Cost (US$/t) Exchange Rate ((C$:US$)



11

Manganese Market Snapshot

Below we provide a key summary of our assessment of the manganese speciality

metals market that is provided in the Appendix section here.

Manganese (Mn) is the fourth most used metal globally in terms of volume

(60mpta of ore) sourced predominately from oxide deposits in South Africa and

Australia. While higher in concentration (30-50% Mn) than carbonate deposits

(10-30% Mn), impurities can impact downstream processing and the quality or

purity of end products

The product markets for manganese are classified as either traditional or

speciality, and feature having completely different pricing characteristics.

Traditional markets closely correlate to the steel industry with product substitution

risk while for specialty markets product purity, supply traceability, and increasingly

production method, are the key determining factors in price negotiations.

Figure 17: Manganese Market – Blue denotes ore supply, black intermediate products, grey product demand, orange process steps. Red section

denotes EMN are targeting direct production of HPEMM and HPMSM to supply the high growth LiB batteries market (green). The CMP is expected

to have direct exposure to the Li-B market, bypassing the influence of traditional market supply steps.

Source: International Manganese Institute, CMP GROUP, 2017 actual Figures, Canaccord Genuity Estimates

As shown in Figure 17, traditional segments such as Ferroalloys account for over

90% of demand with the speciality segment further classified as conventional or

high purity products. It is high purity electrolytic manganese metal (HPEMM)

market that EMN is intending on entering.

The EMM market (~1.6mtpa) is a mature market for use in smelting processes

with a reference price for a conventional (99.7% Mn) flake product. Production is

dominated by China through the use of Selenium (a known carcinogen),

presenting undesirable impurities for high level applications (such a lithium ion

battery cathode).



12

A discrete group of EMM producers have developed flowsheets to produce EMM

at a high purity (i.e., 99.9% Mn) without the use of Selenium. This provides the

necessary purity that can be subsequently used in the manufacture of lithium ion

battery cathode powder known as high purity manganese sulphate monohydrate

(HPMSM).

As per Figure 2 we expect that the lithium ion battery sector will grow x5 over the

next seven years. The dominate battery cathode formulation is anticipated to be

Nickel-Manganese-Cobalt (NMC). As Manganese only represents 2% of current

cathode material costs, we expect that required tolerances will be higher to offset

potential cost out strategies by cathode manufacturers such as thrifting (i.e. less

cobalt) or product specification (lower feedstock purity standards).

Industry estimates are for a material deficit to occur in the supply of HPMSM over

the long term, with emergent supply either through the direct leaching of ores or

the requirement to go through the EMM route, quite often requiring costly

calcining of the more abundant oxide ore.

This potential market deficit presents an opportunity for prices in the HPEMM and

HPMSM markets to appreciate further, however for our modelling purposes we

have used the midpoint price forecasts of US$4,617/t (for HPEMM) and

US$8,331/t (for HPMSM provided by market consultants as shown in Figure 18.

Figure 18: Specialty Manganese Metal Pricing Forecast

Source: CMP GROUP

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2018 2020 2023 2025 2028 2030 2033 2035 2038 2040

US

$/t

HPEMM (99.9% Mn) EMM (99.7% Mn) HPMSM (100% Mn)



13

Peer Comparisons

EMN presents as one of the only manganese companies that has direct exposure

to the growth market of EMM. We provide a list of various other manganese

companies listed on the ASX and TSX in Figure 19 with the key distinction being

target product markets as shown in Figure 17. To our knowledge, EMN is the only

listed company with a carbonate manganese deposit and that is specifically

targeting the specialty chemicals sector with a verifiable flowsheet.

Figure 19: Listed Manganese Companies

Source: Company Reports, Canaccord Genuity estimates. Factset (priced at close of trade 04/02/2019

As there are no directly comparable projects/companies, we have compared EMN

with selected other developers of battery materials in our coverage.

Figure 20: CGAu Battery Developers Coverage

Source: Company Reports, Canaccord Genuity estimates. Factset (priced at opening trade 04/02/2019)

Element 25

Pure

Minerals

Manganese

X Energy

American

Manganese

Inc

Gulf

Manganese

Corp

Euro

Manganese

Inc OM Holdings

Jupiter

Mines

Market Data

Ticker E25-AU PM1-AU MN-CA AMY-CA GMC-AU EMN-AU OMH-AU JMS-AU

Reporting Currency AUD AUD CAD AUD AUD CAD USD USD

Price $0.17 $0.02 $0.12 $0.15 $0.01 $0.31 $1.33 $0.25

Basic O/S (M) 84 314 56 199 3511 171 739 1959

Market Capitalisation (M) $13 $5 $7 $25 $35 $53 $972 $470

Enterprise Value $5 $3 $5 $24 $31 $44 $1,438 $394

Project Data

Name Butcher bird Battery Hub Battery Hill Artillery Peak Kupang Chvaletice OM Saraw ak Tshipi

Type Oxide Oxide Oxide Recycling LiB's Smelter Carbonate Oxide Oxide

Country Australia Australia Canada USA Indonesia Czech Republic Malaysia South Africa

Resource (yes/no) yes No yes NA Yes Yes yes

Resource size (Mt) 180.8 65.00 NA 27.00 30.00 1852

Resource grade (%Mn) 11% 14% 12% NA 12% 24% 37%

Proposed Product (s) MSM, EMM HPMS, EMD,

EMM

EMD Reformed

NMC cathode

FeMn HPEMM

HPMSM

Mn Ore, Ferro

Alloy

Mn Ore

Stage Completed Scoping Prelim leach w ork Zero Pilot scale Construction PEA complete Producing Producing

Proposed flow sheet Leach EW Leach NA conceptual Smelt of FeMn Se free leach Smelt of FeMn

Sample Purity NA NA NA 99.90%

Capex (US$m) Not Disclosed NA $400

Initial Production Date current Q1'19 2022 current

Initial Production (ktpa Mn) 17 TBA 145ktpa FeMN 50 200kt FeMn+300kt MnAl1496

Company

Euro

Manganese

Kidman

Resources

Piedmont

Lithium

Lithium

Power

CleanTeq

Holdings

eCobalt

Solution

Inc

First Cobalt

Corp

Market Data

Ticker EMN-ASX KDR-AU PLL-AU LPI-AU CLQ-AU ECS-CA FCC-CA

Rating SPEC BUY SPEC BUY SPEC BUY SPEC BUY SPEC BUY SPEC BUY SPEC BUY

Trading Currency A$ A$ A$ A$ A$ C$ C$

Price Target ($/share) 1.10 2.10 0.3 0.55 1.15 0.9 0.7

Price 0.31 1.25 0.1 0.24 0.41 0.47 0.17

Market Cap. (A$m) 53 506 67 63 306 75.2 57.7

Enterptise Value (A$m) 43 502 57 47 883 61 53

Project Data

Project Chvaletice Mt Holland Piedmont Maricunga Sunrise Idaho Idaho

Ow nership 100% 50% 100% 100% 100% 100% 100%

Completed Stage PEA PFS Scoping DFS FEED FS Maiden resource

Final Product HPEMM/MSM LiOH LiOH Li2CO3 Ni/Co Sulphate Co Sulphate Co Sulphate

First Production 2022 2021 2021 2024 2022 2020 2024

P/NAV 0.28x 0.60x 0.33x 0.44x 0.36x 0.52x 0.24x

NAV (5%) 3.08 2.78 0.56 1.74 2.81 114.48 217.93

Discount Rate 12% 10% 10% 10% 10% 8% 15%

Total All in Capex (A$m) 561 1186 690 777 1979 132 73

Unrisked Project NPV (A$m) 552 3361 655 443 1720 309 585

Avg Revenue (A$m) 448 831 458 321 1133 70 74



14

While we highlight that each of these projects and markets are at different stages

of development, we view that EMN currently offers the largest implied return (i.e.,

P/NAV of 0.28x vs peers average of 0.49x).

EMN’s CMP project provides an attractive payback period (4.5 years) correlating

to a comparatively low capital intensity.

Figure 21: Proforma EV: capex ratio for CG battery developers Figure 22: EBITDA margins vs payback vs capex intensity

(capex/annual revenue) for CGAu battery material developers

Source: *Includes CLQ (US$500m secured debt). Company Reports, Canaccord Genuity estimates Source: Company Reports, Canaccord Genuity estimates

EMN

KDR

PLL LPI

CLQ ECS

FCC

0.00x

0.10x

0.20x

0.30x

0.40x

0.50x

0.60x

0.70x

0.80x

0.00x 0.10x 0.20x 0.30x 0.40x 0.50x 0.60x 0.70x

Pro

form

a E

V : C

apex R

atio

P/NAV

EMN KDR

PLL

LPICLQ

ECS

FCC

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0 2 4 6 8 10

Avg E

BIT

DA

marg

in (

%)

payback period (years)



15

Chvaletice Manganese Project

Location & Access

The Chvaletice Manganese project (CMP) is in the western area of the Pardubice

region of the Czech Republic. The project is located adjacent to the townships of

Chvaletice and Trnavka, an industrialised area with skilled labour expected to be

sourced locally.

The site can currently be accessed by a short gravel road off a sealed highway

(Highway #322) which is along the southern border of the project. Highway #322

provides access to Kolin, which allows access to Highway #12 which connects

Kolin to Prague.

Figure 23: Project location map

Figure 24: CMP claim area noting power station located to the South

East (bottom right) and proposed plant site (bottom left)

Source: Company Presentation


A rail line is located immediately to the south of the project which acts as the main

transportation line from Prague to the Eastern towns/cities of the Czech Republic.

The train line was used to transport minerals from historic mining and is currently

used to deliver coal to an adjacent power station. The coal fired 820-megawatt

power station is still operational and supplies the Czech Republic’s national grid.

EMN have proposed to locate the processing plant at a parcel of land adjacent to

the existing Chvaletice power station upon completion of an acquisition

agreement with local company EP Chvaletice s.r.o. (EPCS) The option agreement

for ~20 hectares of industrial zoned land (see Figure 24) is expected to close

pending final approval of the environmental impact assessment and vendor

payments of ~ C$7m. These payments are based on the following instalments.

C$0.9m initially in October 2018.

~C$2.5m within sixty days of the environmental impact statement.

~$C4.9m due upon receipt of all project development permits and no

later than October 2023.



16

Project History

1800’s Manganese and iron minerals first recorded near the present-day

village of Chvaletice.

Early 1900’s Sporadic localized mining of the Chvaletice orebody took place.

1930’s Ore processing commenced for the recovery of manganese from

Chvaletice mostly through surface mining. Ore was railed to steel

mills in Czechoslovakia and Germany.

1951-75 The focus of mining operations changed to extraction of pyrite

which was used to produce sulfuric acid. Manganese ore was

deemed uneconomic (grading ~13% Mn) at the time, with tailings

from these operations forming the current resource.

1975-83 In 1975 pyrite mining ceased and the mining lease was cancelled

in 1981 after 32Mt of ore had been extracted and ~28Mt of

tailings had been stored in three cells.

After mine closure the plant site was used to construct an

850MW power plant given the abundant proximity to

infrastructure (rail, port, utilities) the location possesses.

Rehabilitation was completed for three tailings dams which

included topsoil and planting of trees.

Late 1980’s A Czechoslovakian state-owned battery producer (Bateria Slany)

undertook studies to determine the feasibility of producing

manganese dioxide for dry cell batteries.

1989 Development was halted following a political change that caused

the end of communism in Czechoslovakia.

Sep 2014 Mineral rights granted to Mangan.

2014-2016 EMN conducted preliminary auger drilling and backhoe pit

sampling to assess the qualitative aspects of the tailings and to

conduct exploratory metallurgical tests.

May 2016 EMN acquired 100% of Mangan, studies and test work

commenced.

2017 Extensive Sonic drilling campaign completed to evaluate

quantitative and qualitative features of the tailings to allow a

mineral resource estimate.

Apr 2018 EMN completed a 43-101 technical report outlining the JORC

Code compliant mineral resource estimation for the Chvaletice

Manganese project.

Geology

The historic open pit is located approximately 1km to the south of the tailings

deposit and was predominately mined for pyrite over the years. Fly ash and other

waste products from the power station have been used to backfill the open pit.

The existing exposed bedrock is Proterozoic in age and is comprised of deformed

granitic crystalline and overlain meta-sedimentary rocks of the Bohemian Massif.

The local geology of the region is shown in Figure 25.



17

Figure 25: Local Geology surrounding the Chvaletice Manganese Project

Source: Company Reports, Canaccord Genuity estimates

In-situ manganese deposits are usually sediment volcanic or karst (Barium)

hosted. The mineralisation in the tailings at Chvaletice differs as it is manmade

from pyrite shale, best described as compacted soil with a low clay content.

Tails deposition commenced in 1950 with local soil compacted as in initial

foundation. Historical reports suggest dam raises were constructed in an

upstream direction using dried and compacted tails, produced though the use of

decantation towers that resulted in sedimentation of three zones of grain size in

the tailings cells. These comprise an inner zone of silt material, central zone of

sandy laminae and an outer zone of fine-grained sand. Ground water within

marine clays and siltstones immediately underlies the Chvaletice tailings dam that

are contained in unlined cells.

Due to waste cells being proximal to the Labe River and overlaying a local aquifer

EMN have monitored ground water for growth for contamination from historic

mining particularly the leaching of heavy metals from past mining.

Mineral Resources

EMN announced an updated Mineral Resource estimate for the project in Dec’18,

with total Measured (98%) and Indicated resources of 27 Mt at 7.33% Mn (5.86 %

soluble Mn). Resources have been defined in accordance with JORC Code

requirements and a break-even grade of 3.20% total Mn has been estimated. Due

to the high level of confidence in the resource (98% measured) and homogeneity,

conversion to Ore Reserves is expected to be high.



18

Figure 26: CMP Resource Estimate from December 2018


The current resource is based on eighty holes (~1,500m of sonic drilling) that

were conducted over 2018 to supplement eighty holes (~1680m) over 2017 as

indicated in Figure 27. Spacing of ~75m between samples was used for

measured resource estimates.

The recent drilling program build upon prior resource definition activities including

hand augur drilling and test pits (seven in total to a depth of 3-4 metres) for

particle size and mineralogical assessment.

Figure 27: 3D representation of CMP resource


Mineralogy

Quantitative Mineral Analysis has indicated that the main manganese bearing

mineral is Rhodochrosite (Mn2+CO3) with small amounts of Spessartine

Mn23+Al2(SiO4)3 with these compounds comprising up to 30% of the mineral

assemblage.

Importantly manganese at the CMP is mostly hosted (~80%) in carbonate

compounds as distinct from the major sedimentary deposits found in South Africa

which typically contain mixed manganese oxides, silicates and carbonates (and to

a lesser extent pyrolusite (MnO2)). The chemical form and grade of manganese

present in the manganese minerals has important implications on the soluble

manganese grade as well as the acid consumption of gangue materials.

The carbonates are expected to be readily leachable by sulphuric acid while the

manganese-silicates and oxides are refractory to the leach treatment since

Cell ClassVolume

(m3)

Tonnes

(kt)

Bulk Density

(t/m3)

Total Mn

(%)

Soluble

Mn (%)Total Mn (t)

Soluble

Mn (t)

Measured 6,577,000 10,029 1.53 7.95 6.49 797,306 650,882

Indicated 160,000 236 1.47 8.35 6.67 19,706 15,741

Measured 7,990,000 12,201 1.53 6.79 5.42 828,448 661,294

Indicated 123,000 189 1.55 7.22 5.30 13,646 10,017

Measured 2,942,000 4,265 1.45 7.35 5.63 313,478 240,120

Indicated 27,000 39 1.45 7.90 5.89 3,081 2,297

Sub Total Measured 17,509,000 26,495 1.51 7.32 5.86 1,939,434 1,552,607

Sub Total Indicated 310,000 464 1.50 7.85 6.05 36,424 28,072

Total 17,819,000 26,960 1.51 7.33 5.86 1,975,958 1,580,747

T1

T3

T2



19

spessartine silicates (i.e., Mn²⁺₃Al₂(SiO₄)₃.) can’t be reduced for leaching. The

ratio of acid soluble manganese is expected to be ~81%.

Gangue is mostly in the form quartz (SiO2) at around 30% with pyrite (FeS2) less

than 10% with most iron leaching occurs from iron carbonate minerals such as

siderite (FeCO3). In addition, clay content within silicates is low (~2%) highlighting

favourable rheology and soil competency to assist materials handling once the

deposit is excavated.

Particle size and recovery characteristics

Particle size and in-situ moisture will be dependent on the deposition point with

coarser particle size assayed in cell 3. The master blend used for sizing by assay

returned an average particle size (PP80) 0f ~106µm at an in-situ moisture content

of 18%.

Manganese grade across various sub size fractions is consistent as indicated

below in Figure 29 for a coarse composite sample. Importantly manganese

carbonates are most predominate in the ultra-fine fraction (P80 of 20µm) with

~70% occurring as liberated and middling grains highlighting the potential to

directly leach plant feed without the need for comminution.

Test work from both bulk sampling campaigns (Phase 2 in Nov’15 and Phase 3 in

Dec’15) indicated that the proportion of middling and liberated Mn-carbonate

minerals increases (to 90%) as size fractions decrease to below 20µm. This

provides key validation that in-situ manganese is readily leachable and not

residual as a result of previous recovery attempts as could be suspected for a

tailings re-processing operation.

Figure 28: Grade – Tonnage graph for Chvaletice tails Figure 29: Particle size and metal distribution of Sample 10

Source: Company Reports Source: Company Reports, Canaccord Genuity estimates

Project Development

Environmental and Permitting

EMN’s 100% owned subsidiary, Mangan, holds two exploration licences which

covers the mineral exploration rights for the CMP. The exploration licences expire

on May 31, 2023 and permits EMM to conduct drilling on the slopes on the

permitter of the tailings piles.

In Apr’18, Mangan were issued a Preliminary Mining Permit by the Ministry of

Environment, this will form one of the prerequisites for the Mining Lease District

(final mining permit). The permit covers all the land encompassed by the

exploration licence and expires in Apr’23 (if a final mining permit is not granted).

0

2

4

6

8

10

12

14

16

18

<0.02 0.02 0.03 0.04 0.05 0.05 0.08 0.10 0.13 0.15 0.30

Mas

s fra

cti

on

(%

)

particle top size (mm)

Mass (%) Distribution (%)



20

The Preliminary Mining Permit forms one of the prerequisites for the application

for establishing a Mining Lease District. The Mining Lease District and

applications for permits relating to the construction of infrastructure required for

the project are required before construction and mining activities can commence.

An Environmental Impact Assessment (EIA) will need to be completed as part of

the Mining Lease District - this was only able to be commenced once the

Preliminary Mining Permit was granted (Apr’18).

Since 2016, EMN has been conducting baseline studies at the CMP to collate

fauna, flora and hydrological/groundwater data. This is part of the company’s

environmental assessment application which is due for filing in early 2019 with

the Czech Ministry of Environment. Upon review a period of public consultation will

commence.

The vicinity of the CMP has been impacted by past mining and related heavy

industrial activities since mining ended in 1975. Czech law exempts land owners

and developers from impacts prior to 1989, when communism ended in then

Czechoslovakia. Hence EMN are indemnified from historical environmental

liabilities and site clean-up responsibilities.

Ore extraction and remediation

The three waste cells containing the 28Mt of resources have been capped and

stabilised with crushed granite aggregate to form a top soil of ~1.3m depth. The

final cell did not reach full capacity with ~0.2m of overburden material capping.

Cell #3 is to be extracted initially with a surge pile providing seven days feed.

Extraction is expected to take place using standard load and haul with excavation

of benches at ~5m height to control ore blending before being fed to a central

hopper for subsequent transfer to the ore treatment plant. In-situ moisture of 15%

is likely to result in plant feed being screened (removal of tramp metal/over size)

before scrubbing and pulping for piping to the process plant ~2km from the waste

cells.

Non-magnetic tails (~600ktpa) along with washed leach residue (~300ktpa) will

be combined with gypsum to be compacted on a lined residue storage facility.

Upon filling cover will be placed to ensure reclamation meets environmental

performance criteria.

Processing description

EMN propose recovering manganese either as an HPEMM or HPMSM product

using conventional processing steps such as magnetic separation, atmospheric

tank leaching, filtration, electrowinning and purification. As manganese is mostly

hosted in carbonate minerals, costly calcining (ore roasting) is not required to

liberate manganese for extraction within the proposed flowsheet.

Leading into the Preliminary Economic Assessment (PEA) EMN engaged CINF

Engineering Co Ltd. (part of major Chinese industrial group Chinalco) to assist with

flowsheet development and vendor equipment specification. Changsha Research

Institute (CRIMM – a division of China Minmetals) with experience in the design

and operation of EMM and MSMs plant were used for metallurgical test work

(magnetic separation and leaching) programs on a ~15t bulk sample over 2017-

2018.

Given the fixed amount of manganese contained within the resource (~2Mt) EMN

have based its design criteria at Chvaletice on a 25-year mine life, implying a

1.1Mtpa feed rate for an overall plant recovery of 59% tMn . A simplified version

of the process flowsheet is shown in Figure 30 below.



21

Figure 30: Simplified processing flowsheet


Pre-concentration

As part of mineralogy assessment, EMN have identified that it is possible to use

wet high intensity magnetic separation (WHIMS) to reject non-magnetic gangue

minerals such as silica and alumina across various size fractions. Magnetic

separation test work has highlighted that ~86% of total manganese can be

recovered into a concentrate containing ~15% Mn from a ~6% Mn feed. This

provides the potential for more than 58% of feed to be rejected, which reduces

over plant capital cost. Further test work is underway to increase concentrate

grades.

Overall EMN expect that preconcentration will reduce plant feed to the leaching

circuit to ~450ktpa from a 1.1Mtpa dry plant feed.

Leaching

Total soluble manganese is expected to be ~80% of the resource with EMN

conducting test work across a range of sulphuric acid dosage (pH from 1.5 to 5).

CRIMM have optimised this test work to indicate the presented feed distribution

(P80 of 32µm) at a pH of ~1.5 produces ~75% (ranging from 72% to 83%) Mn

extraction over a six-hour residence time.

Acid consumption is expected to be moderate at 420kg/t with test work

suggesting moderate temperature control (to ~90°) is required to drive leach

kinetics. Leach pulp (density of ~50%) will be filtered and dry stacked within the

waste cell footprint to ensure site remediation is compliant with low

environmental footprint objectives of the project.

Purification: Post leaching, the pregnant solution is purified with reagents (lime

etc) to precipitate out iron and phosphorus along with other base and heavy

metals. A high purity leach solution optimises subsequent electrowinning current

without the use of selenium through electrolyte purification. A high degree of

intellectual property is contained in this process since CMP ore was first tested in

2016 that we view distinguishes EMN from any potential peers.

Leach residue is selectively washed and neutralised to ensure environmental

standards are met for waste emplacement.



22

Figure 31: Key Pilot Plant results for CMP


Electrowinning: Integral Processing step

Electrowinning of acidified leach solutions (electrolyte to produce manganese as

EMM) is a well-established process borrowing techniques used in larger markets

such as copper cathode production. The process applies a tightly controlled

electric current within a cell to deposit metal on a cathode as shown in Figure 32.

The rate of ultra-high purity EMM that is deposited on the cathode is a dependant

on the metal atomic weight (55g/mol) and electrochemical potential (Eo of -

1.185V) of manganese along with the current (ampere) and duration of the

electricity provided to the cell. Through pilot scale test work EMN have considered

design aspects such as cell dimensions, concentrations of manganese and

ammonium sulphate in the solutions, current density, pH of the electrolyte, cell

solution temperature, composition and treatment of anodes and cathodes along

with the electrolyte flow rate to the cells.

Two critical design parameters that EMN have been able to de-risk through test

work in our view place it at a distinct advantage over existing EMM producers.

Firstly, pilot scale test work highlights that consistent product purity >99.9%

Mn can be produced with moderate power consumption of 6,200-6,400kWh/t

of product (compared to +7,000kWh cited for Chinese EMM production).

Current efficiency of 68.7% has been determined and combined with

favourable power costs in country (~US$0.07/kWh) should assist with

providing a competitive cost base at around ~US$2,500/t (see Figure 35)

Secondly, EMN have been able to produce HP EMM without requiring

selenium dioxide that is deployed by others to improve crystal structure and

mitigate impurities that impact current efficiency. Instead, low concentration

sulphur gas along with other passivating/smoothing reagents (not chromium)

are used that maintain product purity. This distinguishes the EMM product

from a purity and environmental perspective which is likely to result in the

product commanding a substantial price premium from product offtakes.



23

Figure 32: Electrowinning cell design Figure 33: HPEMM flake from electrowinning Figure 34: HPEMM flake is dissolved (pink

liquor) and evaporated (white powder)

Source: Makhanbetov et al, Metallurgy of Non Ferrous Metals 2015 Source: Company Reports, Source: Company Reports,

Manganese Sulphate production

Within its PEA work EMN have assessed producing Ultra High Purity Manganese

Sulphate Monohydrate (HP MSM) through either;

Direct acid leaching of magnetic concentrate without electrowinning.

From 99.9% HPEMM (Se and Cr Free Electrowinning as proposed).

From 99.7% EMM (Se and Cr containing as per current Chinese process).

Test work has suggested low impurities from HPEMM are required to successfully

produce HPMSM with early indications that it exceeds customer specifications.

The conversion process to HPMSM is well established with indications being that

HPEMM flake is milled and dissolved within a dilute, high-quality sulphuric acid. A

dual stage (crystallisation and purification) process is required with the

crystallisation step (see Figure 30) controlled within a tight operating range to

classify product as ‘high purity’ (to maintain crystal shape, melting point and

reactivity).

As we highlighted in Figure 3, the current demand for HPMSM is expected to grow

by 3x to around ~100ktpa by 2025 – as such, we view that any decision to

expand into MSM production will need to consider market demand, as well as key

project drivers described below.

Trade-off between HPEMM vs HPMSM

The decision to produce HP MSM will ultimately be determined by product

marketing efforts running parallel to project development to establish offtake

terms (quantity, pricing and duration) that in turn will substantiate and support the

scale of HPMSM production.

In its PEA, EMN indicated that a HPMSM circuit can be added to the existing plant

for US$25m to provide 33ktpa HPEMM (~100ktpa HPMSM) production capacity.

We expect this to occur once steady state is reached over 2023 with the CMP

transiting to full HPMSM production from 2025 in line with forecast market

demand as per Figure 3.

The attractive capital intensity of producing HPMSM is due to the low technical

complexity of the process which entails size reduction, re-leaching, and

crystallisation

In determining the cost vs benefit of HPMSM production, we highlight the

improved operating margin of 56% over the LoM vs 40% for only HPEMM



24

production. These are based on our long-term price projections of US$4,617/t for

HPEMM and US$2,666/t for HPMSM. At current spot pricing (~US$3,200/t for

HPEMM and US$1,300/t (32% Mn) for HPMSM this operating margin declines to

20% and 23% for HPEMM and HPMSM however this price is not reflective for

>99.9% Mn purity that EMM have demonstrated achieving.

Figure 35: CMP operating cost margin expansion with HPMSM production Figure 36: Evaporating Crystalliser

Source: Company Reports, Canaccord Genuity estimates Source: University of Chemistry and Technology, Prague

Operating and Capital Costs

We have used the preliminary economic study (PEA) released in Jan’19 as the

basis for our cost estimates. We note that the PEA has been performed to a

feasibility (+/-15%) level of accuracy on certain aspects of the project by

consultant Engineer Tetra Tech Canada with Bilfinger Tebodin localising costs to

Czech standards and estimates.

Figure 37: Capital Costs

Figure 38: Operating Costs



Direct capital costs are mostly (65%) within the process plant to construct the

equipment described within the flowsheet section above. Mining (no pre-strip) and

tailings (minimal land disturbance) are only minor costs. Infrastructure costs are

comparatively low given the excellent location of the project relative to pre-existing

utilities.


Site +Tailings area capital US$m 42

Infastructure capital US$m 21

Process plant capital US$m 167

HPMSM plant capital US$m 25

Direct costs US$m 255

Indirect capital costs US$m 149

All in Capital Costs US$m 404

LoM sustaining capital US$m 25

Parameter US$/t Mn

Extraction and Stacking 174

Mag Sep + Leach + EW 1747

MSM Plant 334

General + Administration 113

Contingency 180

Onsite costs (C1) 2547

Freight + Insurance + Selling 334

Royalty - Govt 96

Royalty - NSR 85

Offsite costs 515

EMN All-in Opex 3062

Sustaining capital 21

Corporate and Overheads 23

In mine Exploration 19

All in Sustaining Cost 3125



25

Indirect costs represent ~40% of direct costs and in our view present the best

opportunity to reduce overall funding requirements. We expect that as feasibility

work is concluded EMM will look at various EPC packages as part of project

delivery.

Operating costs (as presented in Figure 37) are mostly associated with the

hydrometallurgy plant. As flowsheet designs are finalised within the feasibility

study, we expect EMN will look at opportunities such as heat recovery, reagent

recycling and equipment selection (i.e. E/W arrangement and filters) to reduce

operating costs. EMN may also scope up installing a plant to generate sulphuric

acid.

Royalties and Taxes

An NSR agreement with total aggregate amount of 1.2% is held by the original

shareholders of Mangan, which was granted as part of the purchase transaction

by EMN for 100% ownership of Mangan.

The income taxes and fee regime imposed by the Government of Czech Republic

on mineral resource projects is not a clearly defined one fit system. The royalty to

the Czech government per tonne manganese produced is 2,308 Kč. (~US$100/t)

while corporate income tax is levied at 19%

Production profile

We anticipate first production from the Chvaletice project in DecQ’22 (Q1’FY23)

with the development timeline expected to consist of an 18-month construction

phase upon a final investment decision being reached.

The process circuit is expected to be ramped up progressively over 12 months

with the HPMSM circuit being progressively brought online from years 1-4 in

20%/33%/50%/66% as per EMN’s market expectations.

In our view, the main risks to production ramp up are not meeting the required

product spec, low recoveries or a material change to unit operating costs. We

have highlighted these in our project risks section and through applying a 12%

discount rate on our project NPV.

Figure 39: CGe CMP Production Profile


0

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HPEMM HPMSM as Mn All in Sustaining Cost Onsite costs (C1)



26

Sales and Marketing

EMN have commenced strategic and offtake discussions with several of the

world’s leading consumers, buyers and traders of EMM and other manganese

products used in traditional and cathode applications. We expect that the

Chvaletice project will garner interest of the European lithium-ion battery

participants some of which are listed in Figure 40 below.

The potential of the CMP as a long- life project, compliant with stringent EU

standards and verifiable materials location is aligned to the procurement

strategies of many regional customers. We consider this to add a meaningful

strategic advantage to the project.

Figure 40: Major Li-ion Battery and Precursor Plants in Europe

Source: CMP GROUP



27

Project Timeline

Based on the positive outcomes of the PEA, EMN is expected to progress through

to PFS stage assessment of the CMP. We expect this study will to look to optimise

key project parameters such as mine planning, process flow sheet design, and

capital/operating cost estimates.

In addition, EMN plans to undertake further extensional/infill/exploration drilling

in 2019, which has the potential to lead to project life extensions through

increases in Resources/Reserves.

The major activity over 2019 is the construction and development of an onsite

pilot plant to develop operating process, train staff and scale up key units of

equipment. The pilot plant is expected to cost around C$2m to run and is

expected to run over H2’19 to generate large samples of finished product for

customer testing and qualification

In our view, the major risks to the development timelines include permitting and

approvals, financing delays, and securing offtake arrangements.

Figure 41: Project timetable


Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Feasibility Study

EIA for Mining License Application

Build/commission/run pilot plant

Product offtake progress

Detailed Engineering

FID and Project Financing

Construction

Start up/commission CMP

2022202120202019



28

Appendix – Board and Management

Roman Shklanka – Chairman & co-founder

Roman Shklanka is a geologist with roles including Chairman, Director and co-founder

of Sutton Resources, Canico Resource Corp, Polaris Materials, International Barytex,

Kobex Resources, Delta Gold and Pacific Imperial Mines. He was previously VP

Exploration with Placer Dome and was inducted into the Canadian Mining Hall of

Fame in 2009.

Marco Romero – President & CEO

Marco Romero has over 30 years of experience in the resource sector in leadership

roles across, exploration, mine planning and operations, permitting and finance. He

co-founded several Canadian companies, including Eldorado Gold, Polaris Materials,

Delta Gold, and Euro Manganese.

David Dreisinger – Director

Dr. David Dreisinger is a world leading expert on hydrometallurgy as well as Professor

and Chairholder of the Industrial Research Chair in Hydrometallurgy at the University

of British Columbia. He has published over 300 papers and is co-inventor of 21 U.S.

patents for work in hydrometallurgical research. His previous experience includes

director positions at PolyMet Mining, Search Minerals, LeadFX and officer positions

with Camrova Resources, Clifton Star Resources and South American Silver.

Gregory Martyr – Director

Greg Martyr became a director of the company in March 2018 with over 30 years’

experience in resources investment banking and corporate finance. From 2011 to

2016, Mr. Martyr was a Managing Director with Standard Chartered Bank, ultimately

as Global Head of Advisory, Mining and Metals. From 1994 to 2003, he was employed

in several executive roles by Normandy Mining Ltd., including President, Americas.

Harvey McLeod – Director

Harvey McLeod is a chairman of the ICOLD subcommittee on tailings dams and active

in the Canadian Dam Association. He is currently Vice President, Strategic Marketing

for Klohn Crippen Berger. He is a Fellow of the Engineering Institute of Canada.

Jan Votava – Director and Managing Director Mangan Chvaletice sro

Jan Votava is a highly skilled and respected Czech engineer and executive leader who

holds a doctorate in mechanical engineering. He was formally Technical Director for

Central Europe, Executive Chairman and Managing Director for the Czech Republic for

LafargeHolcim, the world’s largest construction materials company. Key roles included

oversight of the construction of a €250 million cement plant in Hungary using Chinese

technology, equipment, engineering and construction companies. He is now

responsible for leading EMN’s activities in the Czech Republic.

Thomas Glück - Vice President, Project Development

Thomas Glück has a 35-year track record of successful development and operation of

production facilities in the mining and chemicals processing industries. For 23 years

he undertook various development, management and leadership roles for Manganese

Metal Company, a subsidiary of BHP Billiton, the world’s leading producer of high

purity, selenium-free EMM.

.



29

Appendix - Investment Risks

Risks to our valuation include:

Financing risks

Our analysis suggests that EMN will require additional capital to fund the development

costs for the Chvaletice Manganese project. As a pre-cashflow company, EMN is

reliant on equity/debt/external capital to fund capital commitments, and there is no

guarantee that accessing these markets will be achieved without dilution to

shareholders.

Furthermore, accurate estimates of capital costs for the project remain subject to

completion of pre-feasibility and feasibility studies, which may see capital

requirements exceed our model assumptions. There is no guarantee that studies will

result in a positive investment decision for the project.

Operational risks

Once in production, the company will be subject to risks such as plant/equipment

breakdowns, metallurgical (meeting design recoveries within a complex flowsheet),

materials handling and other technical issues. An increase in operating costs could

reduce the profitability and free cash generation from the operating assets and

negatively impact valuation. Further, the product purity may differ from initial test work

interpretations which can also materially impact product acceptance by customers

and therefore earnings from forecast production.

Exploration risks

Exploration is subject to a number of risks and can require a high rate of capital

expenditure. Risks can also be associated with exploration techniques and lack of

accuracy in interpretation of geochemical, geophysical, drilling and other data. Our

model assumptions include a significant amount of Indicated, Inferred and assumed

resources, which may or may not ultimately be proven to be economic and converted

into Reserves.

Market risks

EMN is involved in the development of a high purity product into a sector that is

projected to have rapid growth. Given that EMM’s level of proposed production is

close to the current global supply, market discovery will form a large part of sustaining

the potential earnings of the CMP.

Commodity price and currency fluctuation

The company as a near term manganese producer is exposed to commodity price and

currency fluctuations, often driven by macro-economic forces including inflationary

pressure, interest rates and supply and demand of commodities. These factors are

external and could reduce the profitability, costing and prospective outlook for the

business.

Sovereign risk

The Czech Republic is a fiscally stable jurisdiction but has a small and tightly

regulated mining sector. The CMP as a waste reclamation project offers a

development aligned to current regulation with in country permitting and approvals

risks highlighted in our Investment in Czech Republic section here.



30

Appendix - Manganese Market Overview

Supply

Manganese (Mn) is the twelfth most abundant element in the earth's crust and

the fourth most used metal in terms of tonnage after iron, aluminium and copper.

While Mn is contained in various geological settings, the two main minerals of

economic value are principally oxide, carbonate and silicate compounds, namely

pyrolusite (MnO2) and rhodochrosite (MnCO3).

Pyrolusite deposits are usually hosted in haematite (iron-oxide) provinces such as

the Northern Cape of South Africa, with oxide ore bodies accounting for 85% of

the world’s identifiable resources and ~30% of production of global ore production

as indicated in Figure 42 and 43. These deposits are typically a higher

concentrate (30-50% Mn) than carbonate deposits (10-30% Mn); however, the

mineralogical complexity and presence of certain impurities can impact

downstream process alternatives, production costs and the purity of end products.

Figure 42: Global Reserves of Manganese ore - 2017 estimates Figure 43: Global Production of Manganese ore - 2017 estimates

Source: USGS Source: USGS

Manganese ore is the predominant seaborne market of ~60 mtpa (contained Mn)

globally which is classified according to grade as high (46% Mn), mid (~38% Mn)

and low grade (~30% Mn) along with iron content (% Fe) as indicated in Figure 44.

Market price is influenced by smelter treatment costs, ore availability and

prevailing end-product demand. Throughout the supply chain from ore through to

99.7% manganese metal and alloys, there is no organised market with price

estimation published through price discovery between traders, end users and

producers.

Demand

The product markets for manganese are classified as either traditional or

speciality segments having completely different characteristics, with manganese

content being the only connection. For instance, the traditional markets behave

like a metal market, closely correlated to the steel industry. This results in

substitution of ferro-alloys with other alternative products for price sensitive

The specialty markets are for pure metals and compounds of high purity with

consumers less price sensitive than the basic metals market. In these markets,

product purity, supply traceability and increasingly extraction method are the key

determining factors in product placement.

Australia

Brazil

China

Gabon

South Africa

Ukraine

Other

Australia

Brazil

China

Gabon

South Africa

Ukraine

Other



31

Figure 44: Manganese Market – Blue denotes ore supply, black intermediate products, grey product demand, orange process steps. Red section

denotes EMN are targeting direct production of HPEMM and HPMSM to supply the high growth LiB batteries market (green). The CMP is expected

to have direct exposure to the Li-B market, bypassing the influence of traditional market supply steps.

Source: International Manganese Institute, CMP GROUP, 2017 actual Figures

Traditional segment: ~93% of demand

From the 60Mtpa (~22Mtpa Mn containing) global manganese ore market,

feedstock for ferro alloys dominates overall demand (90%) with a tonne of steel

typically containing 0.5% to 1.0% manganese. This increases towards 10% for

some specialty metals. Demand is broadly categorised across the below products:

Silicon Manganese (SiMn) – This category accounts for ~60% of overall

ferroalloy demand. The main use is in foundry and welding and chemical

compounds (~15% Si, 68% Mn) used to enhance strength and function.

High Carbon Ferro manganese (HC FeMn) – This category accounts for

manganese demand of ~4mtpa and is used in speciality steels.

Refined Ferro manganese – (Ref FeMn) – Demand of ~1mtpa

Slag Manganese – Slag from the smelting of Manganese generates

~3mpta of product for use in the cement industry mostly as a binder.

Figure 45: Manganese processing for ferroalloys

Source: CMP GROUP



32

Speciality segment: 7% of demand

From the 22Mtpa Mn containing manganese ore market, approximately 7% is

converted to speciality products, albeit at a higher processing cost than standard

smelting. The speciality segment of ~1.7mtpa contained Mn is either classified as

‘conventional’ (~99.7% Mn) or ‘high’ (99.9%) purity.

Electrolytic Manganese metal (EMM): 1.6mpta of demand as described below.

Production is dominated by China with ~97% market share, produced using a

conventional electrochemical process to obtain conventional purity of 99.7% Mn.

A very small subsector (~50ktpa) and the focus of EMN’s work is HPEMM

produced through Selenium Free electrowinning which is the main distinguishing

impurity. Product is usually in a flake form as depicted in Figure 33.

As depicted in Figure 44 the majority of EMM production is directed into

conventional smelting markets (85% towards ladle metallurgy steel) and

aluminium alloys. Electronic demand through cathode powders used in

rechargeable (lithium-ion) batteries is expected to consume ~120ktpa of Mn.

Electrolytic Manganese Dioxide (EMD): 400ktpa of Mn is expected to be produced

through electrochemical processes shown in Figure 46 below. This is the

incumbent market for primary batteries (non-rechargeable batteries such as AA

type) and earlier stage rechargable batteries (Lithium Manganese Oxide) and is

only expected to provide benign growth in comparison to rechargeable batteries.

Chemical Powders: This incorporates Manganese Sulphate Monohydrate (MSM) of

which 17% is produced as a high purity product for a market of ~170ktpa of Mn.

Production is either through the leaching (with sulphuric acid) and precipitation of

HPEMM flake or carbonate ores as described more extensively below.

Figure 46: Manganese processing for chemical and pure metal use

Source: CMP GROUP



33

Appendix - EMM Market Overview

Conventional EMM

EMM production was ~1.6mt over 2018 with the majority (97%) produced in

China through the electrolysis of a manganese-rich solution obtained from a

calcined manganese ore. There are two primary forms of electrolytic manganese;

Electrolytic Manganese Metal (EMM) and Electrolytic Manganese Dioxide (EMD).

EMM production in China is mostly consumed in the steel industry where

manganese substitutes provide a lower cost alternative to nickel in producing

200-series stainless steel. In addition, Chinese EMM is exported to European and

Asian markets as a specialty steel and aluminium product. Electronic and

chemicals account for only about 2% of overall EMM consumption, of which EMD

forms a nominal amount for dry cell cathodes.

Of the 1.6Mtpa of EMM production in China, almost all (~98%) is produced

exclusively through the addition of selenium dioxide and chromium as catalysts to

improve energy efficiency within the electrowinning step. This is achieved through

modifying the crystal structure of the plated metal. Since power is a large

operating cost driver, optimising this process is a key consideration to producers

despite the highly hazardous (carcinogenic) effects of using Selenium. Selenium

also introduces impurities (up to 1200ppm) which results in this production route

not being able to achieve HPEMM specification.

Eramet SA is the only other producer of conventional EMM outside of China to our

knowledge, with a ~20ktpa capacity EMM plant in Gabon.

Figure 47: Cost structure of conventional EMM in China

Source: CRU, IMnI

In addition, declining domestic manganese carbonate ore grades in China, much

tighter environmental regulations, and increasing labour/energy costs are

expected to impact the cost of EMM production longer term. Over 2018, Ningxia

Tianyuan Manganese Industry (TMI) (~30% global supply) reduced output by 50%

to curb loss making production as a result of failed project financing. Product

specification is typically 99.7% Mn as a flake with the price presented in Figure 49

for a domestic China product. US and European imports are usually subject to

tariffs, increasing market price ~ 15% on Chinese domestic pricing.

A manganese compound used in mature markets is Electrolytic Manganese

Dioxide (EMD) produced through roasting/leaching of pyrolusite (oxide) ore. EMD’s

main application is in disposable alkaline batteries along with some minor use in

elementary Lithium Manganese Oxide (LMO) formulation. EMD is not suitable for

52%

29%

8%

5%4%

2%

Ore

Power

Suphuric Acid

Reagents

Labour

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34

use in higher performing cathode (i.e. NMC) and hence does not present as a

substitute to high-purity EMM or MSM products. The market for EMD is quite

mature (~400ktpa) and as such demand growth is expected to be negligible.

Figure 48: EMM represents ~10% of the market of Mn end products Figure 49: +99.7% EMM flake domestic China pricing

Source: Company Reports, Canaccord Genuity estimates Source: Shanghai Metals Market

High purity EMM

A further sub-sector of the EMM market exists that is known as 99.9% selenium

free high purity EMM (HPEMM) for high specification products in the alloying and

chemical markets. We understand that only three companies in the world produce

selenium free manganese metal: Manganese Metal Company (MMC) in South

Africa and CITIC Dameng and Luxi County in China. Production capacity was

around 30ktpa (MMC) and 15kpta (CITIC) in 2017.

Figure 50: Conceptual flowsheet for selenium free EMM production

Source: Manganese Metal Company

Most HPEMM is used to produce carbon and speciality steel along with flat rolled

sheet aluminium with our understanding that ~50% of production is directed

towards NMC (Nickel-Manganese-Cobalt) cathode powder manufacture. Given the

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35

strong demand outlook for this market segment, we expect an increased

proportion of HPEMM will be converted to sulphate product as indicated in Figure

51 below. Aluminium (34%) and steel (21%) alloys are expected to comprise the

balance of demand segments.

A key distinction of HPEMM over conventional EMM is in pricing with a significant

premium provided to producers reflective of reduced impurities (from 30 to

<10ppm) and the more environmentally friendly process (selenium free). While

premia are often negotiated, we understand that this can be over 50% on the

prevailing conventional 99.7% EMM price depending on quantities required. For

our modelling purposes we have used the price provided in EMN’s PEA of

US$4,617/t (~50% premia on long term forecast pricing), which we view as

conservative noting the importance placed on product purity for use in high end

applications such as Nickel-Manganese-Cobalt (NMC) cathode powders and

potential lack of alternative suppliers.

Conversion of HPEMM to HPMSM

The requirement for Ultra High Purity Manganese (HPMSM) in NMC formulations

results in the processing of HPEMM through a conversion process as indicated in

Figure 51 below. Key technical specifications include particle size and purity

levels (low iron or magnetic elements). Within the crystallisation step, high quality

sulphuric acid is also required, with the crystallisation step controlled within a

tight operating range to classify product as high purity.

Figure 51: HPMSM production process

Source: CMP GROUP

HPMSM can also be produced through leaching manganese containing carbonate

or oxide ores. While oxide ore is more readily available (85% of global resources)

and higher grade (40% Mn vs ~15% Mn), it needs to be calcined first, which incurs

energy cost and yet does not satisfactorily remove contained impurities. The

inherent variability of ore feedstock makes it a necessity to use HPEMM to

produce MSM for high purity markets.

Global production of MSM is estimated at around 500ktpa (~170ktpa contained

Mn), with less than 20% classified as HPMSM. Production again is dominated by

China (~85%) with the only producer of HPMSM externally being US-

headquartered Prince International Corporation (“Prince”), with plants in Mexico

and Belgium. Prince, along with Japanese-based Nippon Denko, claim to be able

to supply ~15% of the HPMSM market, and it is these companies that provide the

most direct competition to EMN. It is our understanding that EMN’s production

cost base of around US$3,000/t is very competitive against Prince and Nippon

Denko, even though these companies directly leach Gabonese mixed

carbonate/oxide ore instead of through HPEMM feedstock.

While there has been commentary around existing Chinese EMM plants to be

refitted for HPMSM production, we view this as being challenged by the ability to



36

secure carbonate (rhodochrosite) ore and the suitability of conventional EMM

plants rather than HPEMM for this to occur.

EMN’s Chvaletice project offers the unique ability to manufacture HPEMM and

quickly upgrade to HPMSM production. Within the flowsheet description section of

the report we have highlighted the cost/benefit of HPMSM production as market

discovery occurs.

Pricing for HPMSM is through offtake negotiations with reference to the prevailing

conventional EMM price, purity and other technical specifications. Industry

research suggests HPMSM was priced at US$3,860/t (~80% premium to

conventional EMM price; see Figure 49) in 2018. Premia will also vary by region,

with 40-125% noted across Japan to Europe and dependant on end use in the

cathode market. We have used an assumed price of US$8,330/t for HPMSM for

our forecast purposes, as shown in our pricing section.

Manganese in the Lithium Ion Battery Market

Demand

We understand that the current demand for manganese in the form of high purity

MSM is ~35ktpa of contained manganese, as indicated in Figure 55. We

understand that all of this is produced through dissolution of EMM fragments

(rather than direct ore leach), with around 10ktpa being sourced from selenium

free producers (~30% of supply).

We expect the Li-ion market that uses Mn will increase 5x from ~150 GWh of

annual production capacity in 2018 to 700 GWh in 2030, as indicated in Figure 2.

The strongest demand segments within the Li-ion market are those within electric

vehicle and grid storage applications. Superior performance owing to specific

energy, stability and range is likely to place tertiary cathode chemistry using a

combination of Nickel:Manganese:Cobalt as the preferred chemistry. We expect

growth in this cathode segment to increase ~8x from 60GWh of installed energy

capacity in 2016 to ~500Wh in 2025 as indicated in Figure 53.

Figure 52: Li-B demand by sector Figure 53: Li-B demand - 6x forecast growth in NMC cathode to 2025



Manganese in the form of HP MSM is only a minor raw material cost within the

cathode and represents <2% of costs within ternary NMC constituents. Hence it is

expected that manganese will remain a low cost, reliable source of metal sulphate

as part of the cathode formulation. Depending on battery chemistry (i.e., NMC

proportions) and the size of the pack and electric vehicle, manganese between 6

0

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37

to 50 kg is required per vehicle. For an average battery pack (~55kWh) price of

~US$10,000, manganese represents only around US$200 of raw material costs.

We expect the overall demand for manganese (contained Mn) within the battery

segment to increase to ~140ktpa by 2025, with the likelihood that EMM

producers will assess upgrading facilities for direct production of MSM to better

capture operating margin in response to growing customer demand.

Figure 54: Percentage of raw material costs as Manganese Figure 55: Manganese demand from the Li-B sector


Key sensitivities to our demand forecast (Figure 55) are the migration towards

higher nickel content NMC formulations that will proportionally reduce the

required manganese unit demand as per Figure 54. While this is not being driven

by raw material costs with regards to manganese, there is an inherent theoretical

benefit from migrating towards higher nickel content to increase battery capacity.

For instance, a 20% increase in content from NMC 622 to 811 can increase

capacity from 160 to 200 mAh/g.

Ternary cathode composition (as per Figure 57) is likely to migrate towards

NMC811 in time; however, we highlight key technical limitations associated with

maintaining cathode structural stability (Ni4+ reactivity) which results in a trade-off

between capacity and cycle life of the battery.

As manganese only represents 2% of current cathode material costs, we expect

that required tolerances will be higher to offset potential cost out strategies by

cathode manufacturers such as thrifting (i.e. less cobalt) or product specification

(lower feedstock purity standards).

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80.0

90.0

LMO NMC (111) NMC (433) NMC (532) NMC (622) NMC (811)

Ra

w M

ate

ria

l C

os

t (U

S$

/kW

h)

0

20000

40000

60000

80000

100000

120000

140000

160000

2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025eM

n D

em

an

d (

tpa

)LMO NMC (111) NMC (622) NMC (811)



38

Figure 56: Unit manganese demand Figure 57: Ternary phase diagram - Nickel Manganese Cobalt –

batteries are looking to head bottom right – safety must be considered.

Source: Company Reports, Cairn Energy Source: Julien et al, Materials 2016

In terms of the growth opportunity for EMM within the Li-B market, we expect the

share of EMM to be consumed within battery cathode formulations to increase

from 7% in 2018 to 11% in 2025 owing to the large mature demand base that

exists for EMM within the alloy market.

Figure 58: 2018 forecast market share of battery materials Figure 59: 2025 forecast market share of battery materials


Supply

One of the fundamental questions that will confront global Li-B manufacturers

moving forward is upstream integration and the strategic sourcing of raw material

requirements. Since product purity is the key consideration to meet important

performance criteria (safety, output, etc.) HPEMM will in our view be the initial

feedstock for all manganese products.

Participants in the Li-B supply chain (Figure 60) will look to source HPEMM either

directly (from producers like EMN) or as a derived HPMSM product. HPEMM will

then have to be converted to HPMSM for precursor production. It is expected that

in time the fragmented nature of the supply chain is likely to streamline as

downstream participants procure raw materials to improve margins once cathode

formulations are established.

Moreover, we expect in time that given the relatively low capital intensity (i.e.,

US$25m for 35ktpa (contained Mn) MSM capacity) to convert HPEMM to HPMSM

0

0.2

0.4

0.6

0.8

1

1.2

LMO NMC-111 NMC-622 NMC-811

Un

it M

n r

eq

uir

ed

(k

g/k

Wh

)

3%

54%

64%7%

34% 8%

0

5

10

15

20

25

30

Nickel Cobalt Lithium EMM Graphite HPA

Ma

rke

t s

ize

(U

S$

B re

ven

ue

)

Non battery Battery

10%

71% 82%

11% 50% 16%

0

10

20

30

40

50

60

70

Nickel Cobalt Lithium EMM Graphite HPA

Ma

rke

t s

ize

(U

S$

B re

ven

ue

)

Non battery Battery



https://www.google.com.au/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=2ahUKEwi18Mrgq-TfAhWBurwKHeZFBPsQjRx6BAgBEAU&url=https://www.researchgate.net/figure/Phase-diagram-of-the-ternary-system-between-LNO-LCO-and-LMO-with-some-representative_fig3_311526068&psig=AOvVaw1wVpHyoVl4RJSqIoEQtYhT&ust=1547248413884266

39

and forecast pricing premia (CGe US$8,311/t HPMSM vs US$4,617/t HPEMM) it

is likely that producers of HP Mn products will look to internalise conversion

margins and supply HPMSM direct to precursor customers as shown in Figure 60.

As presented by external forecasts to 2040 in Figure 61 it is expected that as the

sector matures, battery chemistry formulations are settled, and supply chains are

potentially collapsed to offer more certainty of supply that a switch to more direct

procurement of HPMSM will occur. While the implied growth rate (~x20) over the

next 20 years may seem quite aggressive, this would only increase specialty

segment demand from 9% to 12% by 2040 assuming a 1% CAGR in traditional

markets.

While it is conceivable that China will continue to dominate as a supplier of MSM,

upgrading of existing plant for high purity production may prove challenging due to

the poor-quality ore (calcined oxide) resulting in high purification costs. As is

critical for battery materials, production qualification can be onerous and not

tolerant to large degrees of variability in specification.

We expect any emergent EMM producers such as EMN will look to install a MSM

circuit (currently 66% of production) to provide maximum flexibility to produce

ultimately what downstream customers demand.

Figure 60: EMM entry to the Li-B supply chain Figure 61: Forecast manganese demand from Li-B segment

Source: Company Reports, Canaccord Genuity estimates Source: Cairn Energy Research republished in CMP GROUP report

Product pricing

The price for manganese ore and products has been relatively stable (Figure 62)

with demand being steady owing to the superior properties and comparatively low

feedstock price that manganese provides as an alloying compound for steel,

copper and aluminium product. As mentioned previously, this offers only minor

correlation to the speciality chemicals market, which is negotiated through offtake

terms.

The maturity of the conventional EMM (99.7%) market lends itself to a reference

price, which has averaged US$2,300/t over the past year as shown in Figure 63.



40

Figure 62: Manganese ore price for various grades Figure 63: Conventional EMM (99.7% Mn) price

Source: Shanghai Metals Market Source: Shanghai Metals Market

Industry estimates are for a material deficit to occur in the supply of HPMSM over

the long term, with emergent supply either through the direct leaching ores or the

requirement to go through the EMM route, quite often requiring costly calcining of

the more abundant oxide ore.

This potential market deficit presents an opportunity for prices in the HPEMM and

HPMSM markets to appreciate further; however, we have used the midpoint price

guidance of US$4,617/t (for HPEMM) and US$8,331/t (for HPMSM) for our

modelling purposes.

Figure 64: Manganese specialty market pricing

Source: CMP GROUP

6.00

6.50

7.00

7.50

8.00

8.50

9.00

9.50

10.00

10.50

11.00

01/18 03/18 05/18 07/18 09/18 11/18

US

$/d

mtu

Mn (46%) Mn Ore (Mn38%, Fe5%)

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2018 2020 2023 2025 2028 2030 2033 2035 2038 2040

US

$/t

HPEMM (99.9% Mn) EMM (99.7% Mn) HPMSM (100% Mn)



41

Appendix - Investment in Czech Republic

The mining industry in the Czech Republic

Mining activities are mostly restricted to coal production for power generation

within both domestic and EU markets. Coal-fired power generation accounts for

around 60% of the country's total electricity output. It is forecast that Czech coal

output will reach 53.4 million tons in 2018.

Mineral exploration has been mostly focused on the Diamo underground Uranium

project and the Cinovec Lithium Project owned by European Metals (ASX:EMH |

Not rated), and expenditure has increased significantly over the last three years. A

notable recent project development has been the 1.8Moz Mokrsko Gold project

which has been held up by a national decree in 1999 banning gold production

due to potential environmental impacts.

Since 1989 the only new mining operations in the country to come into production

are for industrial minerals (cement, lime). EMN are highly engaged with local

stakeholders across all aspects of the permitting process.

New raw materials policy

In June 2017, the Czech federal government approved and updated the former

state raw materials policy from 1999. The most important step is the shift towards

modern high-tech raw materials (i.e., manganese, lithium, cobalt). This has been

driven by the European Integrated Strategy Raw Materials Initiative which is used

in electronics and other modern industries. In addition EMN have indicated that

Chvaletice is widely accepted as an initiative to “reuse industrial waste“, a key,

officially-declared Czech “foreign direct investment target sector”.

Permitting/approvals process

According to the 2017 “Doing Business 2018” report commissioned by the World

Bank the Czech Republic ranks 30 overall out of 190 surveyed countries as

measured across ten key business indicators. This is in comparison to

neighbouring countries Poland (27), Germany (20), Italy (46) and Hungary (48).

The individual indicators are presented in Figure 65 below with the most relevant

relating to dealing with construction permits, in our view.

Figure 65: Key indicators for doing business in the Czech Republic

Source: World Bank report

The World Bank report provided a case study in which various elements of the

permitting process for constructing an industrial facility were outlined. As

indicated in Figure 66, the duration of the permitting process averaged 247 days

entailing 21 procedures. This is against an OECD average of 155 days and 13

procedures with the lengthiest delays associated with;



42

Procedure 5 - Obtain consent of the project from the Environmental

Department of the Municipality – 30 days.

Procedure 8 - Obtain zoning permit – 60 days. Valid for 2 years. Statutory

period to complete is 60 days.

Procedure 14- Obtain a building permit - 37 days.

Figure 66: Construction permit timeline example within the Czech Republic

Source: World Bank report

Key economic statistics

Company tax rate of 19%, which is average for the region (Hungary 9%), Germany

(30%), EU average (22%).

GDP of US$35k pa.

Unemployment currently ~4% having halved over the last five years.

Government debt at 49% of GDP.



Appendix: Important Disclosures

Analyst CertificationEach authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) therecommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent andobjective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoringanalyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to thespecific recommendations or views expressed by the authoring analyst in the research.Analysts employed outside the US are not registered as research analysts with FINRA. These analysts may not be associated persons ofCanaccord Genuity LLC and therefore may not be subject to the FINRA Rule 2241 and NYSE Rule 472 restrictions on communicationswith a subject company, public appearances and trading securities held by a research analyst account.Sector CoverageIndividuals identified as “Sector Coverage” cover a subject company’s industry in the identified jurisdiction, but are not authoringanalysts of the report.

Investment RecommendationDate and time of first dissemination: February 05, 2019, 09:13 ETDate and time of production: February 05, 2019, 09:13 ETTarget Price / Valuation Methodology:Euro Manganese Incorporated - EMNOur 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 accountfor development, permitting and finance risk. We have diluted our NAV for assumed new equity (C$10m at A$0.30/sh) over H2’19 toprogress works.

Distribution of Ratings:Global Stock Ratings (as of 02/05/19)Rating Coverage Universe IB Clients

# % %Buy 560 62.64% 47.32%Hold 201 22.48% 29.85%Sell 12 1.34% 25.00%Speculative Buy 121 13.53% 69.42%

894* 100.0%*Total includes stocks that are Under Review

Canaccord Genuity Ratings SystemBUY: The stock is expected to generate risk-adjusted returns of over 10% during the next 12 months.

HOLD: The stock is expected to generate risk-adjusted returns of 0-10% during the next 12 months.

SELL: The stock is expected to generate negative risk-adjusted returns during the next 12 months.

NOT RATED: Canaccord Genuity does not provide research coverage of the relevant issuer.“Risk-adjusted return” refers to the expected return in relation to the amount of risk associated with the designated investment or therelevant issuer.Risk QualifierSPECULATIVE: Stocks bear significantly higher risk that typically cannot be valued by normal fundamental criteria. Investments in thestock may result in material loss.

12-Month Recommendation History (as of date same as the Global Stock Ratings table)A list of all the recommendations on any issuer under coverage that was disseminated during the preceding 12-month periodmay be obtained at the following website (provided as a hyperlink if this report is being read electronically) http://disclosures-mar.canaccordgenuity.com/EN/Pages/default.aspx

Required Company-Specific Disclosures (as of date of this publication)



http://disclosures-mar.canaccordgenuity.com/EN/Pages/default.aspx

http://disclosures-mar.canaccordgenuity.com/EN/Pages/default.aspx

Euro Manganese Incorporated currently is, or in the past 12 months was, a client of Canaccord Genuity or its affiliated companies.During this period, Canaccord Genuity or its affiliated companies provided investment banking services to Euro Manganese Incorporated.In the past 12 months, Canaccord Genuity or its affiliated companies have received compensation for Investment Banking services fromEuro Manganese Incorporated .In the past 12 months, Canaccord Genuity or any of its affiliated companies have been lead manager, co-lead manager or co-managerof a public offering of securities of Euro Manganese Incorporated or any publicly disclosed offer of securities of Euro ManganeseIncorporated or in any related derivatives.Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Investment Bankingservices from Euro Manganese Incorporated in the next three months.An analyst has visited the material operations of Euro Manganese Incorporated. No payment was received for the related travel costs.

Euro Manganese Incorporated Rating History as of 02/04/2019AUD0.35

AUD0.30

AUD0.25

AUD0.20

AUD0.15Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 Jan 18 Apr 18 Jul 18 Jan 19

Closing Price Price Target

Buy (B); Speculative Buy (SB); Sell (S); Hold (H); Suspended (SU); Under Review (UR); Restricted (RE); Not Rated (NR)

Past performanceIn line with Article 44(4)(b), MiFID II Delegated Regulation, we disclose price performance for the preceding five years or the whole periodfor which the financial instrument has been offered or investment service provided where less than five years. Please note price historyrefers to actual past performance, and that past performance is not a reliable indicator of future price and/or performance.

Online DisclosuresUp-to-date disclosures may be obtained at the following website (provided as a hyperlink if this report is being read electronically)http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx; or by sending a request to Canaccord Genuity Corp. Research, Attn:Disclosures, P.O. Box 10337 Pacific Centre, 2200-609 Granville Street, Vancouver, BC, Canada V7Y 1H2; or by sending a requestby email to [email protected]. The reader may also obtain a copy of Canaccord Genuity’s policies and procedures regarding thedissemination of research by following the steps outlined above.General DisclaimersSee “Required Company-Specific Disclosures” above for any of the following disclosures required as to companies referred to in thisreport: manager or co-manager roles; 1% or other ownership; compensation for certain services; types of client relationships; researchanalyst conflicts; managed/co-managed public offerings in prior periods; directorships; market making in equity securities and relatedderivatives. For reports identified above as compendium reports, the foregoing required company-specific disclosures can be found ina hyperlink located in the section labeled, “Compendium Reports.” “Canaccord Genuity” is the business name used by certain whollyowned subsidiaries of Canaccord Genuity Group Inc., including Canaccord Genuity LLC, Canaccord Genuity Limited, Canaccord GenuityCorp., and Canaccord Genuity (Australia) Limited, an affiliated company that is 50%-owned by Canaccord Genuity Group Inc.The authoring analysts who are responsible for the preparation of this research are employed by Canaccord Genuity Corp. a Canadianbroker-dealer with principal offices located in Vancouver, Calgary, Toronto, Montreal, or Canaccord Genuity LLC, a US broker-dealerwith principal offices located in New York, Boston, San Francisco and Houston, or Canaccord Genuity Limited., a UK broker-dealer withprincipal offices located in London (UK) and Dublin (Ireland), or Canaccord Genuity (Australia) Limited, an Australian broker-dealer withprincipal offices located in Sydney and Melbourne.The authoring analysts who are responsible for the preparation of this research have received (or will receive) compensation based upon(among other factors) the Investment Banking revenues and general profits of Canaccord Genuity. However, such authoring analystshave not received, and will not receive, compensation that is directly based upon or linked to one or more specific Investment Bankingactivities, or to recommendations contained in the research.Some regulators require that a firm must establish, implement and make available a policy for managing conflicts of interest arising asa result of publication or distribution of research. This research has been prepared in accordance with Canaccord Genuity’s policy onmanaging conflicts of interest, and information barriers or firewalls have been used where appropriate. Canaccord Genuity’s policy isavailable upon request.



http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx

The information contained in this research has been compiled by Canaccord Genuity from sources believed to be reliable, but (with theexception of the information about Canaccord Genuity) no representation or warranty, express or implied, is made by Canaccord Genuity,its affiliated companies or any other person as to its fairness, accuracy, completeness or correctness. Canaccord Genuity has notindependently verified the facts, assumptions, and estimates contained herein. All estimates, opinions and other information containedin this research constitute Canaccord Genuity’s judgement as of the date of this research, are subject to change without notice and areprovided in good faith but without legal responsibility or liability.From time to time, Canaccord Genuity salespeople, traders, and other professionals provide oral or written market commentary ortrading strategies to our clients and our principal trading desk that reflect opinions that are contrary to the opinions expressed in thisresearch. Canaccord Genuity’s affiliates, principal trading desk, and investing businesses also from time to time make investmentdecisions that are inconsistent with the recommendations or views expressed in this research.This research is provided for information purposes only and does not constitute an offer or solicitation to buy or sell any designatedinvestments discussed herein in any jurisdiction where such offer or solicitation would be prohibited. As a result, the designatedinvestments discussed in this research may not be eligible for sale in some jurisdictions. This research is not, and under nocircumstances should be construed as, a solicitation to act as a securities broker or dealer in any jurisdiction by any person or companythat is not legally permitted to carry on the business of a securities broker or dealer in that jurisdiction. This material is prepared forgeneral circulation to clients and does not have regard to the investment objectives, financial situation or particular needs of anyparticular person. Investors should obtain advice based on their own individual circumstances before making an investment decision.To the fullest extent permitted by law, none of Canaccord Genuity, its affiliated companies or any other person accepts any liabilitywhatsoever for any direct or consequential loss arising from or relating to any use of the information contained in this research.Research Distribution PolicyCanaccord Genuity research is posted on the Canaccord Genuity Research Portal and will be available simultaneously for access by allof Canaccord Genuity’s customers who are entitled to receive the firm's research. In addition research may be distributed by the firm’ssales and trading personnel via email, instant message or other electronic means. Customers entitled to receive research may alsoreceive it via third party vendors. 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Ashort-term trade idea may differ from the price targets and recommendations in our published research reports that reflect the researchanalyst's views of the longer-term (i.e. one-year or greater) prospects of the subject company, as a result of the differing time horizons,methodologies and/or other factors. It is possible, for example, that a subject company's common equity that is considered a long-term ‘Hold' or 'Sell' might present a short-term buying opportunity as a result of temporary selling pressure in the market or for otherreasons described in the research report; conversely, a subject company's stock rated a long-term 'Buy' or “Speculative Buy’ could beconsidered susceptible to a downward price correction, or other factors may exist that lead the research analyst to suggest a sale overthe short-term. 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Theseanalysts may not be associated persons of Canaccord Genuity LLC and therefore may not be subject to the FINRA Rule 2241 and NYSERule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analystaccount.For United Kingdom and European Residents:



This research is distributed in the United Kingdom and elsewhere Europe, as third party research by Canaccord Genuity Limited,which is authorized and regulated by the Financial Conduct Authority. This research is for distribution only to persons who are EligibleCounterparties or Professional Clients only and is exempt from the general restrictions in section 21 of the Financial Services andMarkets Act 2000 on the communication of invitations or inducements to engage in investment activity on the grounds that it is beingdistributed in the United Kingdom only to persons of a kind described in Article 19(5) (Investment Professionals) and 49(2) (High NetWorth companies, unincorporated associations etc) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005(as amended). It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. This material is not fordistribution in the United Kingdom or elsewhere in Europe to retail clients, as defined under the rules of the Financial Conduct Authority.For Jersey, Guernsey and Isle of Man Residents:This research is sent to you by Canaccord Genuity Wealth (International) Limited (CGWI) for information purposes and is not to beconstrued as a solicitation or an offer to purchase or sell investments or related financial instruments. This research has been producedby an affiliate of CGWI for circulation to its institutional clients and also CGWI. Its contents have been approved by CGWI and we areproviding it to you on the basis that we believe it to be of interest to you. This statement should be read in conjunction with your clientagreement, CGWI's current terms of business and the other disclosures and disclaimers contained within this research. If you are in anydoubt, you should consult your financial adviser.CGWI is licensed and regulated by the Guernsey Financial Services Commission, the Jersey Financial Services Commission and the Isleof Man Financial Supervision Commission. CGWI is registered in Guernsey and is a wholly owned subsidiary of Canaccord Genuity GroupInc.For Australian Residents:This research is distributed in Australia by Canaccord Genuity (Australia) Limited ABN 19 075 071 466 holder of AFS Licence No234666. To the extent that this research contains any advice, this is limited to general advice only. Recipients should take into accounttheir own personal circumstances before making an investment decision. Clients wishing to effect any transactions in any financialproducts discussed in the research should do so through a qualified representative of Canaccord Genuity (Australia) Limited. CanaccordGenuity Wealth Management is a division of Canaccord Genuity (Australia) Limited.For Hong Kong Residents:This research is distributed in Hong Kong by Canaccord Genuity (Hong Kong) Limited which is licensed by the Securities and FuturesCommission. This research is only intended for persons who fall within the definition of professional investor as defined in the Securitiesand Futures Ordinance. It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. Recipients ofthis report can contact Canaccord Genuity (Hong Kong) Limited. (Contact Tel: +852 3919 2561) in respect of any matters arising from, orin connection with, this research.Additional information is available on request.Copyright © Canaccord Genuity Corp. 2019 – Member IIROC/Canadian Investor Protection Fund

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initiation of coverage euro manganese incorporated specialty … · 2019. 2. 6. · canaccord...

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