Euro Manganese Inc (EUMNF) Q3 2024 Earnings Call Highlights: Strategic Advances Amid Market ...
Cash Position: Started the quarter with $20.1 million; ended with $13.2 million.
Operating Expenditures: $5.3 million spent on operating activities, including Phase 1 of front-end engineering design work and permitting.
Interest Expense: $0.8 million on convertible note loan.
Land Deposits: $0.2 million spent on land deposits.
Demonstration Plant Commissioning: $0.6 million spent on commissioning.
Funding Sources: Next USD30 million tranche from Orion convertible loan facility anticipated.
Product Qualification: High purity manganese sulfate samples provided to potential customers.
Offtake Discussions: 30 parties discussing over 65,000 tonnes of high-purity manganese sulfate per annum.
Advanced Negotiations: Eight parties in advanced stages, with over 75,000 tonnes of interest per annum.
Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Euro Manganese Inc (EUMNF) successfully completed the commissioning of its demonstration plant in the Czech Republic, producing high-purity manganese sulfate.
The company has identified several prospective funding sources through national and EU grant and incentive programs, including the EU Critical Raw Materials Act Strategic Project application.
Euro Manganese Inc (EUMNF) has received confirmation from independent labs that its products meet target specifications for high purity manganese sulfate monohydrate.
The company is engaged in advanced negotiations with eight parties for offtake agreements, indicating strong interest in its high purity manganese products.
Euro Manganese Inc (EUMNF) is positioned to become the sole European integrated producer of high purity manganese in the battery value chain, benefiting from the EU's Critical Raw Materials Act.
Negative Points
The market for electric vehicles (EVs) is experiencing slower growth, impacting demand forecasts and affecting end market demand for Euro Manganese Inc (EUMNF)'s products.
Some potential customers are undergoing strategic reviews, delaying the progression of term sheet discussions and offtake agreements.
The company is facing pressure from a difficult share market, impacting its share price.
There is a delay in converting the Verkor agreement into a binding offtake due to the need for standardized contracts and market conditions.
Euro Manganese Inc (EUMNF) may face challenges in securing the additional $30 million from Orion if offtake agreements are not finalized in time.
Q & A Highlights
Q: When will the Verkor agreement be converted into a binding offtake, and what's delaying other offtakes? A: The Verkor agreement is being standardized, and there is no rush to convert it into an offtake as it is not immediately required for banking support. The market softening has delayed some of the other offtake discussions, but announcements are expected imminently. In Europe, some potential customers are moving to a modular stage, affecting commitments, while strategic reviews are causing delays for others. The US market, however, is active due to clear regulations under the IRA.
Q: Why would you not sign an agreement with Verkor sooner? A: The need to turn the term sheet into a firm offtake contract is dictated by the timing of banking agreements, which are expected to start in earnest next year. We need to ensure timelines are accurate for delivery, and the feed process will provide more accuracy around the schedule.
Q: How many tons of samples have been shipped to potential offtake partners to date? A: Approximately 10 customers have received samples, ranging from a few kilos to about 10 kilos. Inquiries for larger volumes are increasing, and we have the material available from the demonstration plant to meet these needs as customers progress through their qualification steps.
Q: If you can't secure an offtake in time to secure the additional $30 million from Orion, what other options are available for working capital and funding? A: We are exploring all available options and continuously monitoring our cost expenditures. We are adjusting our development plans to take advantage of different financing options as they become available.
Q: When do you anticipate signing a strategic partner for the project? A: Negotiations with strategic partners, including OEMs and financial partners, are ongoing. The market slowdown has affected the pace of these discussions, but they remain active.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.