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Date : 19/04/2022

Euro Manganese Inc



Market Cap : $163.28 Million


52 Week Range : $0.375 - $0.840

Share Price : $0.395

We expect EMN to play an important role in the supply of high-purity manganese as Europe is increasingly interested in diversifying its raw material sourcing. A “buy” for us.

Company Analysis

Euro Manganese (ASX: EMN) is a battery materials company whose principal focus is advancing the development of the Chvaletice Manganese Project, in which it holds 100% interest. The proposed Project entails reprocessing a significant manganese deposit hosted in tailings from a decommissioned mine in the Czech Republic. Euro Manganese is on the way to becoming a leading, competitive, and environmentally superior primary producer of ultra-high-purity manganese products in the heart of Europe, serving the lithium-ion battery industry and other high-technology applications.

Euro Manganese is headquartered in Vancouver, Canada. In addition to the ASX, the Company’s shares are traded in the U.S. on the OTCQX platform as EUMNF and the Frankfurt Stock Exchange as EO6. The Company’s shares are listed on the Canadian TSX-Venture Exchange as well under the EMN trading symbol.

The Company’s activities in the Czech Republic are conducted through its wholly-owned subsidiary, Mangan Chvaletice SRO, which holds a 100% interest in the Chvaletice Manganese Project.

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Source: Tradingview

The Chvaletice Manganese Project in the heart of Europe at a strategic location

The Chvaletice Manganese Project is located in the Czech Republic, within the townships of Chvaletice and Trnavka, in the Labe River valley, approximately 90 kilometres to the east of the country’s capital, Prague. The Project site is adjacent to established infrastructure, including an 820-megawatt coal-fired power station that supplies the Czech Republic’s national grid, a major railway line, a highway and a natural gas line. The surrounding region is industrialised, with skilled labour available from local markets. The Chvaletice Manganese Project resource is contained in flotation tailings piles placed on flat terrain immediately below the flotation mill site, adjacent to the former Chvaletice open pit mine. The tailings, consisting of three separate piles ranging from 12 to 28 meters in thickness, cover a cumulative surface area of approximately one square kilometre. The tailings were deposited from historical milling operations for the recovery of pyrite used to produce sulfuric acid.

Furthermore, the Company has significantly advanced the Chvaletice Manganese Project since 2015.

We believe that the Project’s environmentally-friendly tailings reprocessing to produce ultra-high-purity manganese products could enable EMN to become Europe’s only primary producer of this critical resource of the future. Moreover, the Chvaletice Manganese Project is expected to result in the environmental remediation of a polluted former mine site, bringing it into full compliance with modern Czech and European Union environmental standards and regulations.

Source: EMN

The Chvaletice Manganese Project is targeting the production of ultra-high-purity electrolytic manganese metal (HPEMM) with specifications exceeding 99.9% Mn and ultra-high-purity manganese sulphate monohydrate (HPMSM) with a minimum manganese content of 32.34%, both of which exceed typical industry standards. These products will be selenium, fluorine and chromium-free and are designed to contain very low levels of impurities.

HPEMM and HPMSM are critical components of Li-ion batteries, and few sources of manganese are suitable for the sustainable and economical production of high-purity manganese products.

Demand for high-purity manganese products is growing rapidly. This is fueled largely by the emergence of Li-ion and electric vehicle markets (EV). The Company has entered into five technical and commercial collaboration memorandums of understanding (MOU) with consumers of high-purity manganese products, intended to result in the supply chain qualification of the Project’s products. The MOU will eventually materialise into offtakes of high-purity manganese products from the Project. Euro Manganese is also in active discussions and negotiations with several parties, including battery, chemical and automobile manufacturers, with the intent to enter into additional MOUs.

The Company’s wholly-owned subsidiary, Mangan Chvaletice s.r.o. (Mangan) holds two licenses covering mineral exploration rights for the Chvaletice Manganese Project, which are valid until the 31st of May 2026. Mangan also holds a Preliminary Mining Permit, referred to by the Czech Ministry of Environment as the Prior Consent for establishing a Mining Lease District, valid until the 31st of May 2026. The Preliminary Mining Permit represents one of the key steps towards final permitting for the Chvaletice Manganese Project, covers the areas included in the Licenses, and secures Mangan’s exploration rights for the entire deposit. Mangan has received consent to conduct exploration activities and access the site from the landowners whose surface properties underlie the tailings. The Company is currently negotiating the acquisition of the remaining surface rights, leases, rights of way, or other arrangements in additional areas where it intends to develop its operations, site facilities and infrastructure. Mangan has signed an option agreement giving it the right to acquire 100% of a company that owns a 19.94-hectare parcel of land intended to be the site of Mangan’s ultra-high purity processing plant. The Company also agreed to acquire rights to several additional strategic parcels of land, completing its land assembly for the proposed Chvaletice commercial plant. The land for the proposed processing plant is already zoned for industrial use, and the Company has initiated the rezoning process for the tailings land. Both adjoining municipalities have voted unanimously to proceed with the required land-use plan change after an intensive community consultation which has been ongoing for several years with positive feedback and has continued to receive valuable resident project planning and design input.

The Chvaletice Manganese Project

In 2019, Euro Manganese appointed Tetra Tech Canada to develop the feasibility study and oversee consultants. The Company also appointed BGRIMM Technology Group as the lead process plant engineer, working closely with Tetra Tech. Together, these firms are conducting the excavation design, process plant design, tailings and residue storage facility design for the Project. Tetra Tech is compiling the necessary feasibility study inputs. Work on the basic design is progressing rapidly. The Company is currently implementing the rail siding system required for the main commercial plant’s construction, commissioning, and operations.

The feasibility study is approximately 82% complete and on budget, with verification and testing work completed and good progress being made on the engineering studies. EMN is also preparing a reagent supply chain strategy plan for the Project, along with an assessment of power supply options within the Czech Republic and the surrounding EU countries, emphasising options to acquire long-term zero-carbon and renewable energy.

Euro Manganese is targeting completion of its feasibility study in the first half of calendar 2022. The Company has engaged consulting firms Minviro Ltd. and RCS Global Group to conduct a joint Life Cycle Assessment of the Chvaletice Manganese Project as part of the Company’s commitment to environmental excellence and transparency. EMN is currently preparing the Final Environmental and Social Impact Assessment and the permit application.

We expect Euro Manganese to complete its Final Environmental and Social Impact Assessment documentation, which will be submitted to the Czech Ministry of the Environment in the first half of calendar 2022, potentially enabling final environmental permitting for the Project in early 2023.

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Source: EMN

EMN exhibits good commercial and demonstration plant progress

We are pleased to see that several prospective customers have expressed interest in procuring high-purity manganese products from the Chvaletice Manganese Project. These prospective customers also test and qualify the proposed Chvaletice demonstration plant products.

The Chvaletice demonstration plant is intended to replicate the entire process flowsheet to produce the equivalent of 100 kilogrammes per day of HPMSM, will also enable process optimisation and testing for final product development and serve as a testing and training facility for future operators. The demonstration plant will operate for up to three years and will also be available to test potential additional feedstock for the commercial plant. The Company signed a fixed-price, turnkey contract to supply and commission the technology and equipment package for the demonstration plant, including performance guarantees, commissioning services, and an operator training programme. The equipment procurement and fabrication of the demonstration plant are complete and cold testing of the demonstration plant is underway. The equipment is undergoing a detailed inspection before Its delivery at the site in the Czech Republic. The inspection is expected to be completed before the end of the first quarter of CY22, followed by commissioning and production in the third quarter of calendar 2022.

Today, about 55% of the demonstration plant’s planned first-year production has been allocated to several customers for testing and qualification. These clients are:

  • A prominent global player in the lithium-ion battery supply chain for use in NMC cathodes,
  • a company focused on large scale lithium-ion battery manufacturing,
  • a global chemicals and specialty materials company specialising in metal hydride for hybrid automobile anodes,
  • and JFE Corporation, a leading Japanese steel producer.

From these testing and qualification with its potential clients, Euro Manganese intends to work toward establishing long-term commercial offtake arrangements for the supply of its high-purity manganese products. The Company holds active discussions and negotiations with additional consumers of high-purity manganese products, including battery, chemical and automobile manufacturers, in Asia, Europe and North America. EMN expects to allocate the remainder of the demonstration plant’s initial year of production in the near term. Following discussions with prospective customers, the Company restarted its pilot plant to deliver product samples in advance of the production from the demonstration plant. We are convinced that it is a wise move for the Company. This will allow prospective customers to continue and initiate their supply chain qualification of Euro Manganese’s products in advance of larger samples.

Land acquisition: EMN to sign the EPCS Option Agreement on August 13, 2023

Through its subsidiary, Mangan, Euro Manganese has entered into an option agreement dated the 13th of August 2018 to acquire 100% of the equity of EP Chvaletice s.r.o. (EPCS), a small Czech steel fabrication company that owns a 19.94-hectare parcel of land. This land is located immediately south of the highway and rail line that bound the Chvaletice tailings deposit. It is also adjacent to the Chvaletice power plant and a 1.7-hectare parcel. It is also near a rail siding previously acquired by the Company. This strategic land parcel encompasses the intended site of its proposed processing plant. The land is zoned for industrial use and contains numerous buildings leased to short-term tenants, including offices, warehousing, and other industrial structures. The land also contains two rail spurs and is served by gas, water and power. Euro Manganese will have the right to acquire EPCS by making payments aggregating $8.2 million payable in four cash instalments, the first and second of which were paid on the 17th of October 2018, and on the 13th of August last year, in the amount of $815,000 and $819,576, respectively. We expect EMN to complete the acquisition of EPCS by making two additional instalments aggregating approximately $6.48 million. The next instalment of circa $2.43 million is due within 60 days of the Final Environmental and Social Impact Assessment approval for the Chvaletice Manganese Project, but no later than the 13th of August 2022. The last instalment of $4 million is due upon receipt of all development permits for the Chvaletice Manganese Project, but no later than five years after signing the EPCS Option Agreement on the 13th of August 2023.

Source: EMN

Company Updates

FY22 onward Outlook: EMN is closer to entering the European Union Battery Market

Euro Manganese continues to progress with its goal of supplying the European Union’s battery market with high-grade manganese products. The Company has now received support from local councils to develop the Chvaletice Manganese Project near the village of Trnavka in the Czech Republic. The Chvaletice Manganese Project is designed to reprocess manganese deposits in the tailings of a decommissioned mine. This Project is not another typical mining project; it is a waste recycling initiative seeking to clean up the contaminated site and use the recovered manganese as a raw material for electric vehicle battery cathodes and a few other technical applications.

EMN aims to build a long-term collaboration with the local authorities and ensure that the Project fits seamlessly into the region’s environmental, social, and economic fabric. Furthermore, the Company continues to move its discussions forward with the remaining landowners related to land access agreements for the Chvaletice Project area. To date, Euro Manganese has received consent from all necessary landowners to conduct exploration activities and access the site. The Company has also secured and agreed to acquire all the land required for its intended high-purity manganese processing plant site.

We believe Euro Manganese is shaping up to be well placed to become the leading high-purity, environmentally superior manganese for the European EV battery market. Moreover, Euro Manganese is right on time, given electric vehicle Gigafactories are beginning to spring up across the European continent. Elon Musk attended the opening of Tesla’s new Gigafactory in Berlin, Germany, just a few days ago, where he reiterated the need for more focus on the battery mineral supply chain and touted manganese as an important component of future Tesla battery cathodes.

We have also heard about the automaker VW expressing its commitment to using manganese in its battery chemistries for key EV market segments. Considering how hot the European market for these materials is set to become, we are convinced that Euro Manganese would have no shortage of offtake partners as it moves towards commercial production, targeted for 2026.

Industry Analysis

High-performance NMC Li-ion batteries are increasingly used in electric vehicles (EVs) and other energy storage applications. In 2020, this battery chemistry accounted for nearly half of all Li-ion batteries produced. The manufacturing processes and formulations for Li-ion batteries require reliable, high-purity sources of manganese and other battery raw materials to ensure that the batteries meet increasingly demanding performance, safety, and durability standards. The high-purity manganese materials for the precursor cathode materials of NMC batteries can be supplied in HPEMM and HPMSM. Demand for high purity manganese is growing rapidly worldwide, driven by the growth of electric vehicle sales and the Li-ion battery industry. In the past two years, many major electric vehicle manufacturers, such as Tesla and Volkswagen, made public commitments to manganese-based batteries for their mass-market vehicles, causing a major upward revision of the HPM demand projection forecasts, as illustrated in the graph below. However, only certain manganese ores can feasibly and sustainably be used for the battery industry’s specialty, high-end products. A critical factor is the availability of good quality ore in the right location. Rare carbonate ores are preferred to produce high-purity manganese, although oxides can be used after roasting or chemical treatment using current commercial processes, resulting in a higher cost of reagents and energy, which can also cause environmental issues.

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Source: EMN

According to the International Manganese Institute, China produced only 4.2% of the 2021 global output of manganese ore whilst retaining its dominant position as a supplier of high-purity manganese products. It is worth noting that more than 91% of the HPMSM suitable for the battery industry are from China. Although, China relies heavily on imported ore, mainly from South Africa, Australia, Gabon and Ghana. Only about 2.5% of HPMSM suitable for the battery industry is produced in Europe.

We expect EMN to play an important role in the supply of high-purity manganese as Europe is increasingly interested in diversifying its raw material sourcing. Furthermore, Europe wishes to promote the creation of independent, local supply chains.

Europe is rapidly becoming a major hub in the global electric car and battery industries, with battery cell Gigafactories in operation. Also, local supply chains are being built in Europe. According to announcements from the battery makers, by 2030, Europe should have 56 battery Gigafactories, with more than 1,458 GWh of production capacity installed, which corresponds to 30% of the global capacity, second after China.

In addition to the highest product purity possible, European consumers of HPM expect the products they use to be traceable, have “green credentials”, and are locally sourced. At least twelve of the Gigafactories that consume manganese inputs will be located between 200 kilometres and 500 kilometres of the Chvaletice Manganese Project.

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Source: EMN

Investment Thesis

EMN achieved good progress and delivered small samples of high-purity manganese products from the pilot plant allowing prospective customers to initiate their supply chain qualification.

In a nutshell, Euro Manganese has achieved these key milestones in a relatively short period:

  • production and delivery of small samples of high-purity manganese products from the pilot plant to allow prospective customers to continue and initiate their supply chain qualification;
  • EMN is taking delivery of, permitting, installing, commissioning and operating the demonstration plant to allow the Company to produce bulk, multi-tonne finished product samples for prospective customers’ supply chain qualification;
  • completion of the feasibility study and associated engineering activities;
  • completion of the Project’s environmental impact assessment process;
  • continuing discussions and negotiations with potential customers, as well as strategic and financial partners and government agencies, including those related to funding the development of the Chvaletice Manganese Project; and
  • completion of a few land rights acquisitions.

The completion of the Chvaletice demonstration plant and the planned commissioning have experienced some recent delays due to COVID-19 restrictions and supply chain interruptions in China. Despite these issues, EMN managed to complete the demonstration plant and expects to start production at the beginning of the third quarter of calendar 2022. The feasibility study and the final environmental and social impact assessment are expected to be completed in the second quarter of this year. This could enable the Project’s final environmental permitting early in calendar 2023.

As Euro Manganese moves through the feasibility and pre-development stages, the Company is evaluating potential value-enhancing opportunities for the Chvaletice Manganese Project to reduce costs and technical risks. These may include optimising building sizing and layout, equipment selection, solid-liquid separation methods, on-site reagent production, and minimising energy and water consumption. The Company is also evaluating the possibility of producing additional high-purity manganese products. Once permitted and offtake agreements have been entered into with the Company’s potential customers, certain land access rights have been acquired, along with the completion of a bankable feasibility study demonstrating both the economic and technical viability of the Project. EMN intends to secure project financing to commence construction of the full-scale commercial Chvaletice process plant and its infrastructure.

We believe that Euro Manganese has the capacity for project financing. Hence, the Company is likely to compare advantageously to most projects given its safe jurisdiction, quality of potential offtake agreements, environmental benefits, and strategic position within the European battery supply chain. The Project’s debt capacity would be influenced by:

  • the bankability of its offtake agreements and any available price downside protection;
  • Government, Export Development Agency and European Union credit guarantees of debt;
  • Sponsorship by customers through advances, prepayments on offtake agreements, equity, and debt contribution;

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Note: EMN is reporting in CAD

Furthermore, Euro Manganese is well-capitalised with a low amount of debt. EMN debts have been consistently kept below 15% of the capital structure mix for the last three years. The Company appears to be also disciplined in managing its cash burn rate, and we expect the Expense/Cash ratio to be capped under 40% for the next three years from FY22 to FY24.

Working capital remains steady at a comfortable levels despite Covid-19 impacts

EMN’s Project evaluation costs for the three months ended December 31, 2021, and 2020 were about $1,4 million and $483,386, respectively. The cost increases were caused by COVID-19 in 2020 on the level of work conducted with advancing the feasibility study and the planning, permitting and studies related to the demonstration plant. The delay in securing financing and COVID-19 restrictions prevented the Company from advancing the Project significantly in the comparative period, during which work on the Project was restarted. During the period, EMN continued to progress on the Project’s feasibility study, the Final environmental and social impact assessment, and the planning and permitting work of the Chvaletice demonstration plant.

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Note: EMN is reporting in CAD

As of the end of CY21, Euro Manganese held cash of approximately $29.1 million. The Company has its cash held with reputable financial institutions and is invested in highly liquid short-term investments with maturities of less than three months. The funds are not exposed to significant liquidity risk, and there are no restrictions on the ability of the Company to use these funds to meet its obligations.

Working capital decreased by $2.8 million during the three months ended December 31, 2021, to $23.3 million from $26.1 million on September 30, 2021. The decrease in cash of $2.1 million during the three months ended December 31, 2021, is a result of cash used in operating and investing activities of $1.9 million and $0.1 million, respectively. The use of cash in investing activities represents the amounts paid for the demonstration plant and certain land-related payments.

Technical Analysis

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Since last month, EMN has gained 10% and is now traded for 43.5 cents per share. Euro Manganese shares appear to consolidate in the 38.5 – 50 cents range after losing 60% from its all-time high reached mid-January last year. 2021 was an impressive year for Euro Manganese; hence, the Company’s shares ran up from their August 2021 lows at 6 cents to almost one dollar achieving a double-digit bagger in just a few months.

Key price levels

Since the end of February 2022, EMN seems to find solid ground after a bearish year. Potential levels to watch are the following:

  • The 38.5 cents and 40 cents support levels
  • The 50 cents key resistance level

Volume and momentum

Volume decreased over the last 200-day with the 20-day volume average down by -31.4%. The price action remains bullish in the near term, evolving between 38.5 cents and 50 cents per share.

Trade consideration

  • Market participants might be interested in entering at key support levels: 40 cents and 38.5 cents.
  • Primary target price above 60 cents per share
  • Secondary target price at 90 cents per share
  • Consider reducing exposure below 35 cents
  • It is recommended to exit the trade below 30 cents


Euro Manganese is a unique mining company with a different approach through a waste recycling initiative seeking to clean up a contaminated site and use its recovered manganese as a raw material for electric vehicle battery cathodes and a few other technicalities applications. We also think EMN is right on time, given that electric vehicle Gigafactories are beginning to spring up across the European continent.

We expect EMN to play an important role in the supply of high-purity manganese as Europe is increasingly interested in diversifying its raw material sourcing. We recommend a “Buy”.


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