2023 ANNUAL REPORT
ARBN 627 968 567
Crystallization Module of the Chvaletice Manganese Project Demonstration Plant
TSXV: EMN | ASX: EMN | OTCQX: EUMNF | WWW.MN25.CA
CORPORATE DIRECTORY
Board of Directors
Management
John Webster
Matthew P. James
David B. Dreisinger
Gregory P. Martyr
Hanna E. Schweitz
Thomas M. Stepien
Matthew P. James
Martina Blahova
Andrea Zaradic
Fausto Taddei
Jan Votava
James Fraser
Non-Executive Chairman
Director, President & Chief Executive Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
President and Chief Executive Officer
Chief Financial Officer
Vice President Operations
VP Corp. Development and Corp. Secretary
Managing Director, Mangan Chvaletice s.r.o.
Vice President Commercial
Incorporation Details
Business Corporations Act (British
Columbia)
Registered Office
Head Office
Website
e-mail
Share Registry
Legal Counsel
Suite 1700 - 666 Burrard Street,
Vancouver, British Columbia
V6C 2X8 Canada
#709 - 700 West Pender Street,
Vancouver, British Columbia,
V6C 1G8 Canada
www.mn25.ca
info@mn25.ca
Tel: + 1 604 681 1010
Australia:
Computershare Investor Services Pty
Limited
Level 4, 60 Carrington Street
Sydney NSW 2000, Australia
Canada:
Computershare Investor Services Inc.
510 Burrard Street, 3rd Floor
Vancouver, British Columbia V6C 3B9
Canada
Australia:
MinterEllison
Level 40, Governor Macquarie Tower
1 Farrer Place
Sydney NSW 2000
Australia
Canada:
Stikeman Elliott LLP
Suite 1700 - 666 Burrard Street,
Vancouver, British Columbia
V6C 2X8
Canada
Auditors
PricewaterhouseCoopers LLP
250 Howe Street, Suite 1400,
Vancouver, British Columbia
V6C 3S7
Canada
CONTENTS PAGE
I.
LETTER TO SHAREHOLDERS
II. CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2023,
INCLUDING:
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
INDEPENDENT AUDITORS’ REPORT
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
III. MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2023
IV. MINING TENEMENTS AND MINERAL RESOURCE / RESERVE STATEMENT
V. OTHER ASX ANNUAL REPORT INFORMATION
Manganese metal flake from the Chvaletice Demonstration
Plant
Signing the EPCM contract with Wood Australia
1 | P a g e
LETTER TO SHAREHOLDERS
13 December 2023
Dear Fellow Shareholders,
We achieved a number of significant milestones in 2023 that advanced our flagship Chvaletice Manganese Project
(the "Project"). While the team continued to deliver against plans, the global macro environment, particularly rising
interest rates, has had a negative impact on equity markets, drastically reducing capital inflows into small-caps. Our
share price has suffered as a result. The demand for EVs ("Electric Vehicles") is still growing rapidly, although at a
lower rate than forecast. Sales have been impacted by a cooling off of demand combined with battery availability
due to supply chain issues. This has seen key battery metal price corrections for lithium, nickel, and cobalt, and
continuing softening for high-purity manganese. Our share price has been impacted in-line with our peer battery
metal equities. It is a reminder that the energy transition is just that: a transition to new markets, with new
challenges, but also new opportunities. Euro Manganese remains very well-positioned to benefit from the energy
transition.
Continuing to deliver on key project milestones
We began 2023 with the submission of the Environmental and Social Impact Assessment ("ESIA") to the Czech
Ministry of Environment. We received approval from 13 of the 14 authorities for the relevant studies. However, we
were required to address comments related to cumulative noise abatement in the local area. We submitted the
revised ESIA in the Fall and now expect a positive decision in early 2024. Approval of the ESIA will enable us to submit
the Land Planning Permit, followed by the Construction Permit.
Another key milestone was reached by the team with the production of on-spec high-purity electrolytic manganese
metal ("HPEMM") and high-purity manganese sulphate monohydrate ("HPMSM") from our Demonstration Plant.
These de-risking events for our process flowsheet occurred in April and November, respectively. The team gained
valuable insights from operation of the Demonstration Plant, which are leading to engineering and operational
process improvements.
We awarded the Engineering, Procurement, and Construction Management ("EPCM") contract for the development
of the Chvaletice Commercial Plant to Wood Australia in June. This followed a rigorous selection process and was
based on cost of services as well as a proposed project schedule, technical and engineering capability, EU ("European
Union") experience and overall execution strategy. The contract is structured in two phases, with an approval stage
gate between each phase. Phase 1 is Front End Engineering Design ("FEED") and includes an initial gap analysis
followed by FEED. An approval stage gate following the gap analysis has been completed. EPCM Phase 2 includes
detailed design, procurement, construction, and commissioning, and commences after a final investment decision
by the Board.
Further key project milestones achieved during the year included completion of land rezoning required for the
Chvaletice project and finalizing a Lease Agreement with CEZ that provides land access to approximately 60% of the
Proven + Probable Manganese Reserves in the historic Chvaletice tailings area. The Lease Agreement is based on a
royalty on gross sales from the Project and, together with previously announced land access agreements, secures
access to approximately 85% of the total Reserves of the Project. Negotiations with respect to the acquisition of the
balance of the surface rights with the remaining landowner are progressing.
2 | P a g e
Focusing on securing offtake
The team started 2023 by signing a non-binding term sheet for the sale of HPMSM from Chvaletice with Verkor, a
French low-carbon battery maker. Term-sheet discussions with large and small players are progressing and volumes
under discussion now exceed the annual production capacity of the Chvaletice plant. We are targeting 80% of
Chvaletice production capacity under offtake to support project finance debt. Several larger potential customers
indicate likelihood for higher tonnages as battery chemistries evolve. Our view is that manganese-rich chemistries
will result in a higher demand for our products.
Poised to benefit from regulatory and governmental support
The Chvaletice Project stands to benefit from two key advancements this year. First, the European Commission’s
proposed Critical Raw Materials Act ("CRMA"), announced in March, included high-purity manganese as a strategic
raw material. It also established the concept of Strategic Projects, whereby projects selected would qualify for
priority permitting status and support for access to funding and facilitation of offtake agreements. We believe that
the Chvaletice Project meets the criteria for recognition as a Strategic Project and intend to submit an application as
soon as the process opens.
Second, the Chvaletice Project was selected for support under the inter-governmental Minerals Security Partnership
("MSP"), a collection of 13 countries and the European Union, that aims to catalyze public and private sector
investment to build diverse, secure, and responsible critical mineral supply chains globally. Projects are to receive
support by leveraging the collective financial and diplomatic resources of the MSP’s 14 partners and private sector
financiers partnering with the MSP. Sponsorship by the EU and Canada, and selection as a strategic project indicates
high-level inter-governmental support from the MSP Partners for the Chvaletice Project. The Project’s nomination
was also supported by the Czech Republic.
Significant non-dilutive funding package facilitates path to final investment decision
In late November, we signed definitive agreements with Orion Resource Partners for US$100 million in non-dilutive
financing to advance the Chvaletice Project. The funding package is split into two US$50 million components: a
US$50 million Convertible Loan Facility and a US$50 million Royalty Financing.
The 36-month secured Convertible Loan Facility bears interest at 12% p.a. and is structured in two tranches: US$20
million, which was received upon closing, and an additional US$30 million to be received upon meeting key technical
and commercial milestones. The US$50 million Royalty Financing can be drawn following a final investment decision
by the Board. All aspects of the funding package were structured to meet Project finance bankability requirements
and will sit alongside, and reduce, the project finance debt and equity required for the full Project financing.
In connection with the funding package, Orion have an offtake option of between 20-22.5% of the Project’s high-
purity manganese total production, for a term of 10 years from first delivery and matching the commercial terms of
the Company’s sales. Such right is exercisable until the Company signs 60% of the total Project offtake.
Potential growth horizon: advancing Bécancour to supply the North American market
In late 2022, we began exploring an opportunity to develop a high-purity manganese facility in Canada. The Company
has an option agreement on a 15-hectare land parcel within the Port of Bécancour in Quebec.
In August, we released the highlights of a positive scoping study for a Bécancour Dissolution Plant. The scoping study
delivered strong preliminary project economics, with a post-tax Net Present Value ("NPV") of C$190 million using an
8% discount rate, a post-tax Internal Rate of Return ("IRR") of 26%, and a payback period of approximately 4 years.
The Team has selected WSP Canada to complete a feasibility study for the Bécancour Dissolution Plant, which is
subject to financing and will further define project design, costs, economics, and customer offtake opportunities.
At the same time, the team announced it had signed a Memorandum of Understanding ("MoU") with the Manganese
Metal Company ("MMC") for the supply of HPEMM. This provides feedstock optionality for the Bécancour facility,
allowing it to be fed with HPEMM from MMC and/or with HPEMM from the Chvaletice Project.
3 | P a g e
I am proud of the team for their engagement with the Waban-Aki and for signing a Cooperation Agreement that
outlines how both parties intend to communicate openly and work together for the mutually acceptable
development of the Bécancour Project, especially during its evaluation and planning.
Managing the balance sheet for project development
The net proceeds from the US$20 million first tranche of the Orion convertible loan facility is expected to be
sufficient funding to complete Project permitting, Demonstration Plant commissioning, and acquisition of the
remaining land parcels required for the Project. Additionally, we expect to be able to initiate the FEED phase of the
EPCM contract and certain site preparation works as well as fund general and administration expenses for more than
12 months. Funding of our North American strategy is expected to be provided by our current cash and cash
equivalents, future equity raises, and funding by strategic industry investors and government programs.
Looking forward
We remain focused on delivering on our near-term and 2024 goals, which are:
Chvaletice Project, Czech Republic
•
Full commissioning and operating the Demonstration Plant to allow the production of multi-tonne high-
purity manganese product samples for prospective customers' supply chain qualification;
Continuing negotiations with potential customers to enter offtake contracts, as well as with strategic and
financial partners and government agencies;
Completing the acquisition of, or access to, the remaining land surface rights for the Project;
Initiating the remaining work of Phase 1 (FEED) of the EPCM contract with Wood;
Securing an optimum financing structure for the Project, which is dependent upon the above milestones
being achieved; and
Initiating the project finance debt process.
•
•
•
•
•
Bécancour Facility, Quebec, Canada
•
Progressing the feasibility study for the Bécancour Dissolution Plant, subject to financing, for the potential
production of high-purity manganese products in Canada for the North American EV market.
I would like to express my gratitude for the team’s efforts over the past year and for the ongoing support of our
shareholders, particularly in these tough markets, as well as the support of national and local governments,
community members, partners, suppliers, and prospective customers. We look forward to a positive, healthy, and
productive 2024.
Yours faithfully,
(Signed) “John Webster”
Non-Executive Chairman
4 | P a g e
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2023
Financial Statements
Management's Responsibility for Financial ………………………………………………………………………………………….
Independent Auditor's Report .…………………………………………………………………………………………………………...
Consolidated Statements of Financial Position …..………………………………………………………………..…….……….
Consolidated Statements of Loss and Comprehensive Loss ……………………………………………………………..….
Consolidated Statements of Changes in Shareholders' Equity ………..……………………………………………..…...
Consolidated Statements of Cash Flows ………….…………………………………………………………………………………..
Notes to the Consolidated Financial Statements
Note 1 – Nature of Operations and Liquidity Risk ……………………………………………..…………….………………….
Note 2 – Basis of Presentation ………………………………………………..……………………………………………………………
Note 3 – Significant Accounting Policies, Estimates and Judgments …………………………………………………..…
Note 4 – Exploration and Evaluation Assets ……………..………………………………………………………………………….
Note 5 – Property, Plant and Equipment ……………………………………………………………………………………………..
Note 6 – EPCS Option and Other Assets ……………………………………….………………………………………………………
Note 7 – Government Grant ………………………………………………………………………………………..………………………
Note 8 – Equity ……………….………………………………………………………….…………………………………………..…………..
Note 9 – Related Party Transactions ………………….……………………….…………..………………………………………..…
Note 10 –Fair Value Measurement of Financial Instruments……………..…………………………………………………
Note 11 – Financial Risk Management ………………………….……………………………………………………………………..
Note 12 – Segmented Information………………………………………………………..……………………………………………..
Note 13 – Commitments ……………………………………………………………………………………………………………………..
Note 14 – Supplemental Cash Flow Information ………………………………………………………..………………………..
Note 15 – Management of Capital ……………………………………………………………………………………………………….
Note 16 – Income Taxes .……………………………………………………………………………………………………………………..
Note 17 – Events after the Reporting Period .………………………………………………………………………………………
6
7
12
13
14
15
16
16
17
24
25
26
28
28
31
31
32
33
33
34
34
35
36
5 | P a g e
Management’s Responsibility for Financial Reporting
The accompanying consolidated financial statements of Euro Manganese Inc. (the "Company") were prepared by
management in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board. Management acknowledges responsibility for the preparation and presentation of the
consolidated financial statements, including responsibility for significant accounting judgments and estimates and
the choice of accounting principles and methods that are appropriate to the Company’s circumstances. The
significant accounting policies of the Company are summarized in Note 3 to these consolidated financial statements.
Management has established processes that are in place to provide management with sufficient knowledge to
support its opinion that it has exercised reasonable diligence such that (i) the consolidated financial statements do
not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is
necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of
and for the periods presented by the consolidated financial statements and (ii) the consolidated financial statements
fairly present in all material respects the financial condition, the results of operations and cash flows of the Company,
as of the date and for the period presented by the consolidated financial statements.
The Board of Directors is responsible for reviewing and approving the consolidated financial statements together
with other financial information of the Company and for ensuring that management fulfills its financial reporting
responsibilities.
Management recognizes its responsibility for conducting the Company’s affairs in compliance with established
financial standards, applicable laws and regulations, and for maintaining proper standards of conduct for its
activities.
13 December 2023
(Signed) “Matthew P. James”
(Signed) “Martina Blahova”
President and Chief Executive Officer
Chief Financial Officer
6 | P a g e
Independent auditor’s report
To the Shareholders of Euro Manganese Inc.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of Euro Manganese Inc. and its subsidiary (together, the Company) as at
September 30, 2023 and 2022, and its financial performance and its cash flows for the years then ended
in accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (IFRS).
What we have audited
The Company’s consolidated financial statements comprise:
the consolidated statements of financial position as at September 30, 2023 and 2022;
the consolidated statements of loss and comprehensive loss for the years then ended;
the consolidated statements of changes in shareholders’ equity for the years then ended;
the consolidated statements of cash flows for the years then ended; and
the notes to the consolidated financial statements, which include significant accounting policies and
other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities
in accordance with these requirements.
PricewaterhouseCoopers LLP
PricewaterhouseCoopers Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7
T: +1 604 806 7000, F: +1 604 806 7806, ca_vancouver_main_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
7 | P a g e Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended September 30, 2023. These matters
were addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Assessment of impairment indicators of
exploration and evaluation assets
Our approach to addressing the matter included the
following procedures, among others:
Refer to note 3 – Significant accounting policies,
estimates and judgments and note 4 – Exploration
and evaluation assets, to the consolidated financial
statements.
Evaluated the reasonableness of
management’s assessment of indicators of
impairment related to exploration and
evaluation assets, which included the following:
– Obtained evidence to support (i) the right to
explore the area and (ii) property licence
expiration dates by reference to
government registries.
– Read Board of Directors’ minutes and
obtained budget approvals to evidence
continued and planned substantive
expenditure on further exploration for and
evaluation of mineral resources in the
specific area.
– Assessed whether sufficient data exists to
support that extracting the resources will
not be technically feasible or commercially
viable and facts and circumstances
suggest that the carrying amount of
exploration and evaluation assets exceeds
the recoverable amount, based on
evidence obtained in other areas of the
audit.
The carrying value of exploration and evaluation
assets amounted to $6.8 million as at
September 30, 2023. At each reporting period,
management assesses exploration and evaluation
assets to determine whether there are any
indicators of impairment. In making the
assessment, management is required to make
judgments as to whether impairment indicators
exist when assessing the following factors: the
period during which the entity has the right to
explore in the specific area has expired during the
year or will expire in the near future, substantive
expenditure on further exploration for and
evaluation of mineral resources in the specific area
is neither budgeted nor planned, sufficient data
exists to support that extracting the resources will
not be technically feasible or commercially viable
and facts and circumstances suggest that the
carrying amount exceeds the recoverable amount.
Management has determined that there were no
impairment indicators present for the exploration
and evaluation assets and as such, no impairment
test was performed as at September 30, 2023.
We considered this a key audit matter due to (i) the
significance of the exploration and evaluation
assets balance and (ii) the judgments made by
8 | P a g e management in its assessment of indicators of
impairment related to exploration and evaluation
assets, which have resulted in a high degree of
subjectivity in performing procedures related to
these judgments applied by management.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis and the information, other than the consolidated financial statements and our
auditor’s report thereon, included in the annual report.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
9 | P a g e report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
10 | P a g e matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Leonard Wadsworth.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Vancouver, British Columbia
December 13, 2023
11 | P a g e Consolidated Statements of Financial Position
Euro Manganese Inc.
(Expressed in Canadian dollars)
Note
September 30, 2023
September 30, 2022
$
$
ASSETS
Current assets
Cash and cash equivalents
Prepaid expenses
Accounts receivable
Non-current assets
Exploration and evaluation assets
Property, plant and equipment
Other assets
Option
Total assets
LIABILITIES
Current liabilities
Accounts payable
Due to related parties
Liability for land deposits
Lease liability
Non-current liabilities
Lease liability
Total liabilities
EQUITY
Share capital
Equity reserve
Deficit
Total shareholders' equity
7,649,711
523,014
370,964
8,543,689
6,773,544
8,385,293
2,034,147
4,215,881
29,952,554
2,641,155
38,914
—
172,417
2,852,486
—
2,852,486
21,560,561
447,215
186,267
22,194,043
6,773,544
5,951,249
1,041,134
3,935,804
39,895,774
1,778,308
409,466
77,636
174,780
2,440,190
165,611
2,605,801
78,733,328
9,023,890
(60,657,150)
27,100,068
78,298,364
7,640,628
(48,649,019)
37,289,973
4
5
6
6
9
6
8
Total liabilities and shareholders' equity
29,952,554
39,895,774
Events after the Reporting Period (Note 17)
Approved on behalf of the Board of Directors on December 13, 2023.
"Matthew James"
Matthew P. James, Director
"John Webster"
John Webster, Director
The accompanying notes are an integral part of these consolidated financial statements.
12 | P a g e
Consolidated Statements of Loss and Comprehensive Loss
Euro Manganese Inc.
(Expressed in Canadian dollars)
Note
Year ended September 30,
8
7
8
Chvaletice Project evaluation expenses
Engineering
Remuneration
Share-based compensation
Travel
Legal and professional fees
Market studies
Supplies and rentals
Geological
Metallurgical
Other evaluation expenses
Engineering
Legal and professional fees
Travel
Other income
Other expenses
Remuneration
Share-based compensation
Total remuneration
Legal and professional fees
Investor relations
Product sales and marketing
Travel
Filing and compliance fees
Office, general and administrative
Insurance
Conferences
Depreciation
Accretion expense
Interest income
Foreign exchange
Loss and comprehensive loss for the year
Weighted average number of common shares
outstanding - basic and diluted
Basic and diluted loss per common share
2023
$
2,477,686
1,215,320
166,728
120,760
418,767
107,290
690,479
—
—
5,197,030
169,801
237,154
22,747
(48,005)
381,697
2,973,228
1,443,848
4,417,076
1,114,122
263,903
87,289
293,983
301,023
243,773
231,673
196,022
261,173
25,157
(635,066)
(370,724)
6,429,404
12,008,131
2022
$
2,518,262
1,584,963
488,518
102,628
405,365
221,465
245,029
57,173
47,939
5,671,342
122,919
291,209
56,538
(14,897)
455,769
2,493,515
2,252,709
4,746,224
808,931
372,239
23,273
293,132
371,145
157,294
245,226
118,966
191,129
25,963
(170,676)
147,416
7,330,262
13,457,373
402,342,620
392,682,285
$0.03
$0.03
The accompanying notes are an integral part of these consolidated financial statements.
13 | P a g e
Consolidated Statements of Changes in Shareholders' Equity
Euro Manganese Inc.
(Expressed in Canadian dollars)
Attributable to equity shareholders of the Company
Share Capital
Share Capital
Equity Reserves
Deficit
Shareholders'
Equity (Deficit)
Balance at September 30, 2021
Shares issued in private placement, net of expenses
Shares issued as a finder's fee
Shares issued to settle deferred share consideration
Deferred share consideration
Note
#
377,483,415
$
67,498,015
17,800,000
8,244,257
534,000
478,027
—
—
278,012
—
Shares issued as partial consideration for royalty buy-back
4,820,109
2,278,080
Share-based compensation
Loss and comprehensive loss for the year
Balance at September 30, 2022
Options exercised
Shares issued to settle deferred share consideration
8
8
Share-based compensation
Loss and comprehensive loss for the year
Balance at September 30, 2023
—
—
—
—
401,115,551
78,298,364
7,640,628
(48,649,019)
1,316,599
237,077
—
—
354,358
80,606
—
—
(146,708)
(80,606)
1,610,576
—
—
—
—
(12,008,131)
402,669,227
78,733,328
9,023,890
(60,657,150)
$
5,096,807
$
(35,191,646)
—
—
(278,012)
80,606
—
2,741,227
—
—
—
—
—
—
—
(13,457,373)
The accompanying notes are an integral part of these consolidated financial statements.
$
37,403,176
8,244,257
—
—
80,606
2,278,080
2,741,227
(13,457,373)
37,289,973
207,650
—
1,610,576
(12,008,131)
27,100,068
14 | P a g e
Consolidated Statements of Cash Flows
Euro Manganese Inc.
(Expressed in Canadian dollars)
(
Operating activities
Net loss for the year
Less non-cash transactions:
Share-based compensation
Depreciation
Lease liability accretion
Non-cash foreign exchange (gain) loss
Interest income
Changes in non-cash working capital items:
Accounts payable
Accounts receivable
Prepaid expenses
Due to related parties
Cash used in operating activities
Changes in non-cash working capital items:
Financing activities
Common shares issued for cash
Share issue costs paid
Share subscriptions received
Exercise of stock options
Lease principal and interest payments
Cash generated from financing activities
Investing activities
Property and equipment acquisition
Proceeds from sale of equipment
Payment for royalty buy back
Option, deposit for land and land acquisition
Interest received
Cash used in investing activities
Note
Year ended September 30,
2023
$
2022
$
(12,008,131)
(13,457,373)
1,610,576
261,173
25,157
(313,231)
(635,066)
(11,059,522)
650,724
10,952
(75,801)
(370,552)
2,741,227
191,129
25,963
16,329
(170,676)
(10,653,401)
722,056
(6,933)
(82,321)
360,665
(10,844,199)
(9,659,934)
—
—
—
207,650
(210,171)
(2,521)
8,499,500
(255,243)
80,606
—
(195,594)
8,129,269
(2,467,219)
(2,981,984)
1,464
—
(1,070,649)
439,121
(3,097,283)
—
(2,340,965)
(2,916,916)
170,676
(8,069,189)
8
8
8
8
5
5
4
Effect of exchange rate change on cash and cash equivalents
33,153
(58,167)
Decrease in Cash
Cash and cash equivalents - beginning of year
Cash and cash equivalents - end of year
Supplemental cash flow information (Note 14)
The accompanying notes are an integral part of these consolidated financial statements.
(13,910,850)
(9,658,021)
21,560,561
7,649,711
31,218,582
21,560,561
15 | P a g e
Notes to Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
1. Nature of Operations and Liquidity Risk
The principal business and current focus of Euro Manganese Inc. (the "Company" or "EMN") is the development of the
Chvaletice Manganese Project (the "Project"), in which the Company has a 100% ownership interest. The Project involves
the re-processing of a readily leachable manganese deposit hosted in the tailings of a decommissioned mine in the Czech
Republic. The Company has also started to progress an opportunity to develop a project to produce high-purity manganese
products in Canada for the North American market. The Company's goal is to produce high-purity manganese products in
an economically, socially and environmentally-sound manner, principally for use in lithium-ion batteries.
EMN was incorporated under the British Columbia Business Corporations Act on November 24, 2014. The Company’s
corporate offices are located at 700 West Pender Street, Suite 709, Vancouver, B.C., Canada, and its registered offices are
located at 666 Burrard Street, Suite 1700, Vancouver, B.C., Canada. The Company’s common shares are traded on the TSX
Venture Exchange ("TSX-V") and on the OTC Best Market ("OTCQX") under the symbols "EMN.V" and "EUMNF",
respectively. CHESS Depositary Interests ("CDIs", with each CDI representing one common share) are traded on the Australia
Securities Exchange ("ASX") under the symbol "EMN.AX".
There is no assurance that the evaluation and acquisition activities executed or planned by the Company for the Chvaletice
Manganese Project will result in the development of a profitable commercial operation. The Company is expected to
operate at a loss while the Company is developing the Chvaletice Manganese Project.
These consolidated financial statements have been prepared on a going concern basis in accordance with International
Financial Reporting Standards, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. The Company’s ability to continue as a going concern beyond the next 12 months will be dependent
upon its ability to obtain additional financing for its general operating expenses and the development of its projects.
Although the Company has been successful in the past in obtaining financing (Note 17(b)), there is no assurance that the
Company will be able to obtain adequate financing in the future or that such financing will be on terms favorable to the
Company.
2. Basis of Preparation
2.1 Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board ("IFRS"). The accounting policies presented in Note 3 were
consistently applied to all periods presented.
These consolidated financial statements were prepared by management and approved by the Board of Directors of the
Company (the “Board”) on December 13, 2022.
2.2 Basis of measurement
These consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow
information. In addition, these consolidated financial statements have been prepared on the historical cost basis.
16 | P a g e
Notes to Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
2. Basis of Preparation (continued)
2.3 Basis of consolidation
These consolidated financial statements incorporate the accounts of the Company and the entity controlled by the
Company. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. The consolidated financial statements
include the accounts of the Company's subsidiaries from the date of control commences until the date that control ceases.
The financial statements of its wholly-owned subsidiary, Mangan Chvaletice s.r.o. ("Mangan"), are included in the
consolidated financial statements for both periods presented. All significant intercompany transactions and balances have
been eliminated.
3. Significant Accounting Policies, Estimates and Judgments
3.1 Foreign currency translation
The consolidated financial statements are presented in Canadian dollars, which is the functional currency of the Company
and its subsidiary.
Transactions in foreign currencies are initially recorded in the Company’s functional currency at the exchange rate at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional
currency rate of exchange prevailing at the end of each reporting period. Non-monetary items that are measured in terms
of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-
monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when fair
value is determined. All gains and losses on translation of these foreign currency transactions are included in profit or loss.
3.2 Exploration and evaluation costs
Exploration and evaluation costs include costs to acquire the rights to explore, geological studies, exploratory drilling and
sampling, royalty buy back costs, and directly attributable management costs.
Exploration and evaluation expenditures with the exception of acquisition costs, are charged to profit or loss in the period
in which they are incurred. Acquisition costs are capitalized to exploration and evaluation assets and classified as non-
current. Costs related to the acquisition of mineral properties are capitalized on a property-by-property basis until such a
time as the property is placed in production, sold, abandoned or determined to be impaired.
Once it is probable that future economic benefits will flow to the Company, exploration and evaluation assets attributable
to that area of interest are first tested for impairment and then reclassified to mining property and development assets
within property, plant and equipment. The following criteria are used to assess the economic recoverability and probability
of future economic benefits:
(i) Viability: a Proven and/or Probable Mineral Reserve has been established that demonstrates a positive financial
return; and
(ii) Authorizations: necessary permits, access to critical resources and environmental programs exist or are reasonably
obtainable
Proceeds from the sale of properties or projects, or cash proceeds received from option payments, are recorded as a
reduction of the cost of the related mineral interest.
17 | P a g e
Notes to Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
3. Significant Accounting Policies, Estimates and Judgments (continued)
3.3 Impairment of non-financial assets
At each financial position reporting date, the carrying amounts of the Company’s non-current non-financial assets are
reviewed to determine whether there is any indication that those assets are impaired. If any indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment. The recoverable amount
is the higher of fair value less costs of disposal and the value in use. Fair value is determined as the amount that would be
obtained from the sale of the asset in an arms-length transaction between knowledgeable and willing parties. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
the prevailing market assessment of the time-value of money and the risks specific to the asset. Future cash flows are based
on forecast estimates of production, product prices, and operating, capital, and reclamation costs.
Assumptions underlying future cash flow estimates are subject to risks and uncertainties. Any differences between
assumptions used and actual market conditions and the Company’s performance, could have a material effect on the
Company’s financial position and results of operations.
Impairment is normally assessed at the level of cash generating units, which are identified as the smallest identifiable group
of assets that generates cash inflows that are largely independent of the cash inflows from other assets.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount and the impairment loss is recognized in the statement of comprehensive loss for the
period.
When an impairment loss reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable
amount, provided such revised estimate does not exceed the carrying value of the asset less depreciation that would have
been recorded had the asset not been impaired. A reversal of an impairment loss is recognized immediately in the statement
of comprehensive loss.
3.4 Property, Plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost
includes expenditures that are directly attributable to the acquisition of the asset. Assets in the course of construction are
capitalized as construction in progress. On completion, the cost of construction is transferred to the appropriate category
of property, plant and equipment and depreciation commences when the asset is available for its intended use. The carrying
amount of a replaced asset is derecognized when replaced. Information technology hardware and software, and equipment
and furniture are amortized on a straight-line basis over three years. Land is not depreciated.
The Company allocates the amount initially recognized in respect of an item of property, plant and equipment to its
significant parts and separately depreciates each such part. Residual values, method of amortization, and useful lives of the
assets are reviewed annually and adjusted if appropriate. Gains and losses on disposals of property, plant and equipment
are determined by comparing the proceeds with the carrying amount of the asset and are included as part of other gains
and losses in the statement of comprehensive loss.
Amounts received from selling items produced while preparing the asset for its intended use are not deducted from the
cost of property, plant and equipment. Instead, amounts received are recognized as sales proceeds and the related cost is
recognized in the statement of profit or loss
18 | P a g e
Notes to Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
3. Significant Accounting Policies, Estimates and Judgments (continued)
3.5 Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held with financial institutions and other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and
subject to an insignificant risk of change in value.
3.6 Share and warrant based compensation
Where equity-settled share-based payments are granted to employees, the fair value of the payments is measured using
the Black-Scholes or other option pricing models, at the date of grant, and expensed over the vesting period using the graded
vesting method. Performance vesting conditions are taken into account by adjusting the number of equity instruments
expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is
based on the number of equity instruments that eventually vest. Charges for options that are forfeited before vesting are
reversed from equity reserves (Note 8(b)).
Where equity-settled share-based payments are granted to non-employees, they are measured at the fair value of the goods
or services received. However, if the value of goods or services received in exchange for the share-based payments cannot
be reliably estimated, they are measured using the Black-Scholes option pricing model.
All equity-settled share-based payments are reflected in equity reserves, until exercised. Upon exercise, shares are issued
and the amount reflected in equity reserves is credited to share capital, together with any consideration received.
3.7 Income taxes
Income tax comprises current and deferred tax. Income tax is recognized in the statement of comprehensive loss except to
the extent that it relates to items recognized directly in equity, in which case the income tax is also recognized directly in
equity.
Current tax is the expected tax payable or recoverable on the taxable income for the period, using tax rates enacted or
substantially enacted at the end of the reporting period.
In general, deferred tax is recognized in respect of temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined on a non-
discounted basis using tax rates and laws that have been enacted or substantially enacted at the statement of financial
position date and are expected to apply when the deferred tax asset or liability is settled. Deferred tax assets are recognized
only to the extent where it is probable that the future taxable profits or capital gains of the relevant entity or group of
entities in a particular jurisdiction will be available, against which the assets can be utilized. Deferred tax assets and liabilities,
where recognized, are presented as non-current.
19 | P a g e
Notes to Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
3. Significant Accounting Policies, Estimates and Judgments (continued)
3.8 Financial instruments
The Company’s financial instruments consist of cash, receivables, accounts payable, due to related parties and liabilities
for land deposits.
i)
Classification
Classification of financial instruments is determined at initial recognition.
A financial asset is classified as measured at: amortized cost, fair value through other comprehensive income
("FVOCI") or fair value through profit or loss ("FVTPL"). The classification of financial assets is generally based on
the business model in which a financial asset is managed and its contractual cash flow characteristics. The
derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never
separated. Instead, the hybrid financial instrument as a whole is assessed for classification. Payments made to
date to purchase the shares of E.P. Chvaletice s.r.o. ("EPCS") are classified as FVTPL (Note 6(a)). The Company's
cash and cash equivalents and accounts receivable are classified as measured at amortized cost.
A financial liability is measured at amortized cost, unless it is required to be measured at FVTPL such as instruments
held for trading or derivatives, or the Company opted to measure the liability as FVTPL. The Company's accounts
payable, due to related parties, and liabilities for land deposits are classified as measured at amortized cost.
ii) Measurement
Financial assets and liabilities at FVTPL - Financial assets and liabilities at FVTPL are initially recognized at fair value
and transaction costs are expensed in the consolidated statement of loss. Realized and unrealized gains and losses
arising from changes in the fair value of the financial assets or liabilities held at FVTPL are included in the
consolidated statement of loss in the period in which they arise. Where the Company has opted to designate a
financial liability at FVTPL, any changes associated with the Company's own credit risk will be recognized in other
comprehensive income ("OCI").
Financial assets at FVOCI - Investments in equity instruments at FVOCI are initially recognized at fair value plus
transaction costs. Subsequently, they are measured at fair value, with gains and losses arising from changes from
initial recognition recognized in OCI.
Financial assets and liabilities at amortized cost - Financial assets and liabilities at amortized cost are initially
recognized at fair value, and subsequently carried at amortized cost less any impairment.
iii)
Impairment of financial assets
An expected credit loss ("ECL") model applies to financial assets measured at amortized cost, contract assets and
debt investments at FVOCI, but not to investments in equity instruments.
The application of the simplified approach to measuring the ECL, uses a lifetime expected loss allowance for all
trade receivables. This has no impact on the carrying amounts of the Company's financial assets given the accounts
receivable are mostly taxes receivable and therefore outside of scope of IFRS 9 Financial instruments ("IFRS 9").
20 | P a g e
Notes to Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
3. Significant Accounting Policies, Estimates and Judgments (continued)
iv) Derecognition
Financial assets are derecognized when the investments mature or are sold, and substantially all the risks and
rewards of ownership have been transferred. A financial liability is derecognized when the obligation under the
liability is discharged, canceled or expired. Gains and losses on derecognition are recognized within finance income
and finance costs, respectively. Gains or losses on financial assets classified as FVOCI remain within accumulated
OCI.
v)
Fair value of financial instruments
The fair values of quoted investments are based on current prices. If the market for a financial asset is not active,
the Company establishes fair value by using valuation techniques. These include the use of recent arm’s length
transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and
option pricing models refined to reflect the financial asset’s specific circumstances.
3.9 Leases
At the inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To
assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
• The contract involves the use of an identified asset - this may be specified explicitly or implicitly and should be physically
distinct or represent substantially all the capacity of a physically distinct asset. If the supplier has a substantive
substitution right, then the asset is not identified;
• The Company has the right to obtain substantially all the economic benefits from use of the asset throughout the period
of use; and
• The Company has the right to direct the use of the asset. The Company has this right when it has the decision-making
rights that are most relevant to changing how and for what purpose the asset is used.
The Company recognizes a right-of-use (“ROU”) asset and a lease liability at the lease commencement date. The ROU asset
is initially measured based on the initial amount of the lease liability adjusted for any lease payments made at or before
the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The ROU assets are subsequently depreciated to the earlier of the end of the useful life of the ROU asset or the lease term
using the straight-line method as this most closely reflects the expected pattern of consumption of the future economic
benefits. The ROU asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of
the lease liability.
A lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date discounted by the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental
borrowing rate. The lease liability is subsequently measured at amortized cost using the effective interest method.
Lease payments included in the measurement of the lease liability comprise: fixed payments; variable lease payments that
depend on an index or a rate; amounts expected to be payable under any residual value guarantee, and the exercise price
under any purchase option that the Company would be reasonably certain to exercise; lease payments in any optional
renewal period if the Company is reasonably certain to exercise an extension option; and penalties for any early termination
of a lease unless the Company is reasonably certain not to terminate early.
21 | P a g e
Notes to Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
3. Significant Accounting Policies, Estimates and Judgments (continued)
The Company elected not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of twelve
months or less and leases of low-value assets. The lease payments associated with these leases are charged directly to the
statement of loss on a straight-line basis over the lease term.
3.10 Related party transactions
Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operating decisions. Parties are also considered to be related if they
are subject to common control. Related parties may be individuals or corporate entities. A transaction is a related party
transaction when there is a transfer of resources or obligations between related parties.
3.11 Loss per share
Basic loss per share is calculated using the weighted average number of common shares outstanding during the period.
Diluted loss per share is calculated giving effect to the potential dilution that would occur if securities or other contracts to
issue common shares were exercised or converted to common shares using the treasury stock method. If the Company
incurs a net loss in a fiscal period, basic and diluted loss per share are the same.
3.12 Asset Retirement Obligation
An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused
by the exploration, development and ongoing production of a mineral interest by or on behalf of the Company. Costs for
restoration of site disturbances are initially recognized and recorded as a provision based on estimated future cash flows
discounted at a risk-free rate. These asset retirement obligations are adjusted at each reporting period for changes to
factors including the expected amount of cash flows required to discharge the liability, the timing of such cash flows and
the discount rate.
The asset retirement obligation is also accreted to full value over time through periodic charges to profit or loss. The amount
of the asset retirement obligation initially recognized is capitalized as part of the related asset’s carrying value. The method
of depreciation follows that of the underlying asset. As at September 30, 2023 and 2022, the Company does not have any
asset retirement obligations.
3.13 Accounting for government grants and disclosure of government assistance
A forgivable loan is treated as a government grant when there is reasonable assurance that the entity will meet the terms
for forgiveness of the loan. The benefit of a government loan at a below-market rate of interest is treated as a government
grant which is recognized and measured in accordance with IFRS 9. The benefit of the below-market rate of interest is the
difference between the initial carrying value of the loan, discounted over the term of the loan using the incremental
borrowing rate for the Company, and the proceeds received.
3.14 Recent accounting pronouncements
Certain new standards, interpretations, amendments and improvements to existing IFRS were issued but not yet adopted
by the Company. The Company is currently assessing the impact of the following pronouncement on the consolidated
financial statements:
Amendments to IAS 12 Income Taxes ("IAS 12"): Deferred Tax related to Assets and Liabilities arising from a Single
Transaction clarifies the accounting for deferred tax on transactions such as leases and decommissioning obligations by
removing the initial recognition exemption for transactions in which equal amounts of deductible and taxable temporary
differences arise on initial recognition. The amendments are effective for annual periods beginning on or after January 1,
2023. The Company plans to adopt this amendment beginning October 1, 2023.
22 | P a g e
Notes to Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
3. Significant Accounting Policies, Estimates and Judgments (continued)
3.15 Critical Estimates and Judgments
The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates that
affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the
consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The
estimates and the underlying assumptions are based on the judgment of management, including historical experience and
other factors that management believes to be reasonable under the circumstances.
The estimates and underlying assumptions are reviewed on an ongoing basis. A revision to an accounting estimate is
recognized in the period in which the estimate is revised, if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both the current and future periods.
The following are critical judgments and estimates that management has made in the process of applying accounting
policies and that have the most significant effect on the amounts recognized in the financial statements:
a) Management is required to assess exploration and evaluation assets for impairment at each period end. The triggering
events are defined in IFRS 6 Exploration for and Evaluation of Mineral Resources ("IFRS 6"). In making the assessment,
management is required to make judgments as to whether impairment indicators exist when assessing the following
factors: the period during which the entity has the right to explore in the specific area has expired during the year or
will expire in the near future, substantive expenditure on further exploration for and evaluation of mineral resources
in the specific area is neither budgeted nor planned, sufficient data exists to support that extracting the resources will
not be technically feasible or commercially viable and facts and circumstances suggest that the carrying amount
exceeds the recoverable amount. The nature of exploration and evaluation activity is such that only a small proportion
of projects are ultimately successful, and some assets are likely to become impaired in future periods.
Management has determined that there were no triggering events present as defined in IFRS 6 for the exploration and
evaluation assets and as such, no impairment test was performed at September 30, 2023.
b)
The Company applied significant judgment in determining the fair value of the option payments made pursuant to an
option agreement with EPCS ("EPCS Option Agreement") and their classification as a financial instrument at FVTPL
(Note 6(a)).
23 | P a g e
Notes to Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
4. Exploration and Evaluation Assets
The Company holds two exploration licenses for the Chvaletice Manganese Project (the “Licenses”). The Company was also
issued a Preliminary Mining Permit by the Czech Ministry of Environment, referred to by the Ministry as the prior consent
of the establishment of the Mining Lease District (the "Preliminary Mining Permit"). The Preliminary Mining Permit covers
the areas included in the Licenses and secures the Company's rights for the entire deposit. The Preliminary Mining Permit
forms one of the prerequisites for the application for the establishment of the Mining Lease District and represents one of
the key steps towards final permitting for the project. The establishment of the Mining Lease District, the application for
the final Mining Permit, and applications for permits relating to the construction of infrastructure required for the project,
are required prior to operation at the Chvaletice Manganese Project. The Licenses and the Preliminary Mining Permit are
valid until May 31, 2026.
The acquisition of Mangan included the grant of a 1.2% net smelter royalty interest ("NSR"). On May 31, 2021, the Company
entered into royalty termination agreements with the original owners of Mangan to purchase and extinguish the NSR in
the Chvaletice Manganese Project for an aggregate consideration of USD4,500,000 ($5,424,458), payable in two
instalments: 20% in cash, amounting to USD900,000 ($1,085,698) which was paid May 31, 2021; and 80%, amounting to
USD3,600,000, on or before January 31, 2022, by a combination of cash and up to 50% in common shares. On January 31,
2022, the Company completed the royalty buy back by issuing 4,820,109 common shares at a price of $0.47262 per
common share valued at $2,278,080 (USD1,800,000) and paid USD1,800,000 ($2,340,965) in cash. In connection with the
royalty buy back transaction, the Company incurred $20,000 and $80,000 in transaction costs in the years ended September
30, 2021 and 2022, respectively.
The total carrying value of the Company’s exploration and evaluation assets of $6,773,544 includes the fair value of the
initial share consideration following the acquisition date of Mangan on May 13, 2016, as well as the discounted value of
the deferred share consideration, as determined by the Company on the acquisition date. The exploration and evaluation
assets will be tested for impairment and then reclassified to mineral property and development assets within property,
plant and equipment, once the Company has secured access to all required land parcels for the Chvaletice Manganese
Project, has obtained certain agreements with customers confirming the economic viability and secured all necessary
permits.
24 | P a g e
Notes to Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
5. Property, Plant and Equipment
September 30, 2023
Demonstration
plant under
construction
Equipment
Land
Lease assets
Total
$
$
$
$
$
5,216,357
2,641,156
—
7,857,513
—
—
—
—
144,334
38,188
(3,312)
179,210
(100,454)
(27,725)
1,848
(126,331)
333,331
—
—
333,331
586,094
17,337
—
603,431
6,280,116
2,696,681
(3,312)
8,973,485
—
—
—
—
(228,413)
(233,448)
—
(461,861)
(328,867)
(261,173)
1,848
(588,192)
5,216,357
7,857,513
43,880
52,879
333,331
333,331
357,681
141,570
5,951,249
8,385,293
September 30, 2022
Demonstration
plant under
construction
Equipment
Land
Lease assets
Total
$
$
$
$
$
2,064,835
3,151,522
5,216,357
112,503
31,831
144,334
333,331
—
333,331
364,231
221,863
586,094
2,874,900
3,405,216
6,280,116
—
—
—
(79,306)
(21,148)
(100,454)
—
—
—
(58,432)
(169,981)
(228,413)
(137,738)
(191,129)
(328,867)
2,064,835
5,216,357
33,197
43,880
333,331
333,331
305,799
357,681
2,737,162
5,951,249
Cost
October 1, 2022
Additions
Disposals
September 30, 2023
Accumulated depreciation
October 1, 2022
Additions
Disposals
September 30, 2023
Net Book Value
October 1, 2022
September 30, 2023
Cost
October 1, 2021
Additions
September 30, 2022
Accumulated depreciation
October 1, 2021
Additions
September 30, 2022
Net Book Value
October 1, 2021
September 30, 2022
25 | P a g e
Notes to Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
6. EPCS Option and Other Assets
a) Option
On October 17, 2018, the Company, through its Czech subsidiary Mangan, made the first option payment of 14 million
Czech Koruna ($815,000) pursuant to an option agreement for the purchase of a 100% interest in EP Chvaletice s.r.o.
("EPCS") dated August 13, 2018. EPCS is a Czech operating company whose principal asset is a large parcel of industrial
zoned land adjacent to the Chvaletice Manganese Project, where the Company proposes to develop its high-purity
manganese processing facility. On August 13, 2021, the Company exercised the option to extend the payment terms of the
subsequent option payments by one year and made a payment of 14 million Czech Koruna ($819,576) to EPCS.
On August 10, 2022, the Company made the third option payment of 42 million Czech Koruna ($2,304,402) together with
the fee for the extension of 2.1 million Czech Koruna ($115,220).
Pursuant to the EPCS Option Agreement, the Company had the right to acquire a 100% interest in EPCS by making the final
option payment of 70 million Czech Koruna (approximately $4.09 million at September 30, 2023), due upon receipt of all
development permits for the Chvaletice Manganese Project, but no later than August 13, 2023. Following an amendment
to the EPCS Option Agreement dated November 29, 2023, the final payment was split into two instalments. The first
instalment of 20 million Czech Koruna ($1.2 million) was paid on November 29, 2023. The Company can complete the
acquisition of EPCS by paying the final instalment of 50 million Czech Koruna (approximately $2.92 million at September
30, 2023), no later than December 31, 2023. The extension fee in the amendment is 1 million Czech Koruna (approximately
$60,000).
The first, second, and third option payments made on October 17, 2018, August 13, 2021, and August 10, 2022,
respectively, are a derivative classified as FVTPL due to the following:
i)
ii)
The option is for the acquisition of shares of EPCS rather than a non-monetary asset;
It does not meet any of the scope exceptions from recognition as a derivative asset under IFRS 9 Financial Instruments;
iii) Control of EPCS is not present until the last option payment is made. The remaining payment is dependent on the
Board's approval and is not legally enforceable by the shareholder of EPCS.
At September 30, 2023, the option was revalued at $4,215,881, resulting in $280,077 of foreign exchange gain. There was
no other change in the fair value of the option in the year ended September 30, 2023.
b) Other assets
Other assets, representing deposits for additional land purchases and payments under land option agreements, are as
follows:
Miscellaneous land parcels and second railway switch (plant area)
Land for buffer zone and infrastructure corridor (tailings area)
Additional land and rail spur extension (plant area)
Additional land parcels for residue storage facility (tailings area)
i)
ii)
iii)
iv)
2022
$
227,667
28,951
268,064
1,096,770
2,034,147
September 30,
2021
$
227,667
28,951
268,064
516,452
1,041,134
26 | P a g e
Notes to Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
6. EPCS Option and Other Assets (continued)
i. On February 7, 2019, the Company signed an amendment to the EPCS Option Agreement (the “Amendment”),
funding, through EPCS, the purchase of several land parcels adjacent to the land owned by EPCS, and thus
increasing the Option Agreement value by 3,500,000 Czech Koruna ($203,220). Pursuant to the Amendment, in
the event that EPCS is not ultimately acquired under the EPCS Option Agreement, the ownership of these land
parcels will be transferred to Mangan at no additional cost. The Company also capitalized transaction costs of
$24,447.
ii. On May 11, 2019, the Company signed a purchase contract with the Municipality of Trnavka for a 2.96-hectare
parcel of land adjacent to the Chvaletice Manganese Project tailings, on which the Company plans to construct a
visual and acoustic barrier between Trnavka and the Chvaletice Manganese Project tailings. The first payment,
representing 10% of the total amount, 202,699 Czech Koruna ($11,867) was paid on May 20, 2019. Subsequent
payments totaling 1,824,291 Czech Koruna (approximately $106,000) are based on permitting milestones over the
period to March 2029. On April 13, 2022, following the rezoning approval for mining use of the land area under
the jurisdiction of the Trnavka Municipality, on which 85% of the Chvaletice Manganese Project's tailings are
located, the Company made the second payment of 304,409 Czech Koruna ($17,038) to the Municipality of
Trnavka.
iii. On December 18, 2020, the Company paid the first instalment of $86,373 pursuant to an agreement with Sprava
Nemovitosti Kirchdorfer CZ s.r.o. to acquire a parcel of land, including a rail spur extension that provides additional
room and flexibility for the Chvaletice commercial plant layout. The cost of the land is 18,739,125 Czech Koruna
(approximately $1.1 million) and is to be paid in five annual instalments of approximately $80,000, followed by
the remaining balance of approximately $700,000 in the final year. To date, the Company made the first three
payments under the agreement and capitalized transaction costs of $20,834. In October 2023, the Company paid
the fourth annual instalment.
iv. On June 7, 2022, the Company signed an agreement with a private landowner to acquire several land parcels.
These land parcels are adjacent to the tailings area and provide additional room and flexibility for the Chvaletice
residue storage facility layout. The total cost of the land is 54,327,751 Czech Koruna (approximately $3.0 million).
The first instalment of $516,452 was paid in June 2022. The second instalment of $580,318 was paid in January
2023 and the remaining amount of approximately $2,207,000 is to be paid in January 2024.
v. On December 16, 2022, the Company entered into an option agreement with The Société du parc industriel et
portuaire de Bécancour (“SPIPB”), a Québec state enterprise and owner of a 15-hectare land parcel within
Bécancour (the “Bécancour Option Agreement”) where the Company proposes to establish its North American
facilities. The Bécancour Option Agreement allows the Company to exclusively access the land parcel and conduct
due diligence thereon over a maximum term of 21 months, during which the Company has the opportunity to
purchase the site. The Bécancour Option Agreement provides that the Company pay $45,855 per month for this
option, whereas these option payments shall be deducted from the final purchase price of $9,171,200. As at
September 30, 2023, the Company has made nine payments aggregating $412,695.
27 | P a g e
Notes to Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
7. Government Grant
In August 2022, the Company was approved to receive advisory services and up to $165,000 ($61,752 received in total to
September 30, 2023, of which $48,005 was received in the twelve months ended September 30, 2023) from National
Research Council of Canada’s Industrial Research Assistance Program (“IRAP”). The funding supports the initiative the
Company is undertaking with Nano One Materials Corp., the Metal direct to Cathode Active Material process, as well as
the evaluation of the manganese metal by-product from the battery black mass recycling. The funding covers a portion of
the internal and external labour costs in relation to these projects. The grant income is recorded separately on the income
statement.
8. Equity
a) Common shares
The Company has unlimited authorized common shares with no par value.
During the year ended September 30, 2023, 1,316,599 stock options were exercised for proceeds to the Company of
$207,650.
On February 22, 2021, the Company entered into an agreement with EIT InnoEnergy, securing their support for the
Chvaletice Manganese Project. In connection with their support, EIT InnoEnergy was to invest €250,000 over three
instalments that would go towards the Chvaletice feasibility study and demonstration plant. The first and second
investment tranches of €62,500 ($92,850) and €125,000 ($185,162) were advanced on March 24, 2021, and July 26, 2021,
respectively. Accordingly, on January 6, 2022, the Company issued 147,380 and 330,647 common shares to EIT InnoEnergy
at the price of $0.63 and $0.56 per share, respectively, in connection with the first two instalment tranches. The third
instalment tranche of €62,500 ($80,606) was made on August 26, 2022, and 237,077 common shares at the price of $0.34
per share were issued on January 5, 2023 in connection with the final instalment.
b)
Share options
The Company has a rolling share-based compensation plan (the “Plan”) allowing for the reservation of a maximum 10% of
the common shares issued and outstanding at any given time for issuance under the Plan. Under the Plan, all share options
are granted at the discretion of the Company’s Board. The term of any option granted may not exceed ten years and the
exercise price may not be less than the market value of the Company shares at the date of the grant.
Current outstanding options have an expiry date of ten years and vest over a period of 36 months, except for 900,000
options granted to certain officers of the Company which vest in 5 years from the date of grant and 350,000 options granted
to a consultant, vesting one-third on the date of grant and one-third on each of the four and eight-month anniversaries of
the date of grant. Additionally, 9,000,000 options granted to the President and CEO of the Company include market
conditions and non-market performance vesting conditions. The performance vesting conditions are based on achieving
project development milestones and the price-vesting thresholds are based on a daily volume weighted average share price
of the Company. A continuity summary of the share options granted and outstanding under the Plan for the year ended
September 30, 2023 and 2022, is presented below:
28 | P a g e
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
8. Equity (continued)
Year ended September 30,
2023
Weighted
average
exercise price
($ per share)
0.40
0.48
0.16
0.60
0.58
0.41
Number of
share options
35,312,664
5,118,251
(1,316,599)
(566,732)
(50,000)
38,497,584
Number of
share options
18,970,998
16,800,000
—
(325,000)
(133,334)
35,312,664
2021
Weighted
average
exercise price
($ per share)
0.23
0.58
—
0.12
0.60
0.40
Balance, beginning of the year
Options granted
Options exercised
Options expired
Options forfeited
Balance, end of the year
During the year ended September 30, 2023, the Company recorded share-based compensation expense of
$1,610,576 (2022 - $2,741,227) of which $166,728 has been allocated to project expenses (2022 - $488,518) and
$1,443,848 to administrative expenses (2022 - $2,252,709).
The balance of options outstanding and exercisable at September 30, 2023, is as follows:
Options outstanding & exercisable
Options exercisable
Exercise price
($ per share)
Number of share
options
Weighted average
remaining contractual
life (years)
Number of share
options
Weighted average
remaining contractual
life (years)
0.08
0.10
0.11
0.13
0.20
0.25
0.28
0.48
0.59
0.58
0.61
0.41
1,150,000
900,000
6,137,667
500,000
2,500,000
1,450,000
1,841,666
5,768,251
500,000
15,950,000
1,800,000
38,497,584
2.6
3.5
5.8
7.0
4.4
5.2
5.4
9.5
7.7
8.2
7.5
7.2
1,150,000
900,000
6,137,667
500,000
2,500,000
1,450,000
1,841,666
216,666
500,000
3,633,327
900,000
19,729,326
2.6
3.5
5.8
7.0
4.4
5.2
5.4
8.6
7.7
8.2
7.5
5.9
Option pricing models require the input of subjective assumptions. The expected life of the options considered
such factors as the average length of time similar option grants in the past have remained outstanding prior to
exercise and the vesting period of the grants. The selection of alternative assumptions could have a material
impact on the estimated fair value of the options.
29 | P a g e
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
8. Equity (continued)
In the years ended September 30, 2023 and 2022, the Company applied the Black-Scholes option pricing model
to determine the value of 5,118,251 and 13,800,000 stock options, respectively. These stock options were
granted to employees, including directors, and non-employees and valued on the date of grant using the
following weighted-average assumptions:
Risk free rate
Expected life (years)
Annualized volatility
Dividend yield
Option exercise price
Grant date fair value
Year ended September 30,
2022
0.99%
7.9
90%
—%
$0.58
$0.31
2023
2.93%
9.0
90%
—%
$0.48
$0.15
The weighted average fair value of 3,000,000 share options granted in the year ended September 30, 2022,
which include market conditions for vesting, was estimated to be $0.32 per share option. To determine the fair
value of these options on the grant date, the Company used the Monte Carlo Simulation Method with the
following assumptions: risk free interest rate of 1.920%, expected life of 10.0 years, annualized volatility of 90%,
dividend and forfeiture rates at nil%, and option exercise price of $0.58 per share option.
c) Warrants
2023
Year ended September 30,
2022
Number of
warrants
Weighted-average
exercise price
Number of
warrants
Weighted-average
exercise price
Outstanding, beginning of the year
Exercised
Outstanding, end of the year
8,500,000
(2,500,000)
6,000,000
$
0.40
0.58
0.33
8,500,000
—
8,500,000
$
0.40
—
0.40
As at September 30, 2023, the following warrants were outstanding:
Expiry date
December 16, 2023
December 16, 2023
Weighted average
exercise price
0.30
0.35
0.33
Number of
warrants
3,000,000
3,000,000
6,000,000
Weighted average
remaining contractual life
(years)
0.2
0.2
0.2
30 | P a g e
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
9. Related Party Transactions
Transactions between the Company and its subsidiary have been eliminated on consolidation and are not
disclosed in this note. Details of transactions between the Company and other related parties are disclosed
below. Related parties include the Board and the Company's officers, close family members and enterprises that
are controlled by these individuals as well as certain consultants performing similar functions.
a) Key management compensation
Key management personnel include the Board, President and Chief Executive Officer, Chief Financial Officer,
Vice President, Commercial, Vice President, Corporate Development and Corporate Secretary, Vice President,
Operations, and the Managing Director of the Company’s Czech subsidiary. During the years ended September
30, 2023 and 2022, the Company incurred the following compensation expenses to key management of the
Company and director fees:
Salaries and fees
Share-based compensation
Year ended September 30,
2022
$
2,162,807
2,051,389
4,214,196
2023
$
2,379,749
1,314,075
3,693,824
b) The balances payable to key management and other related parties at the period ends were as follows:
Salaries and fees payable
Outstanding payables due to directors and officers
2023
$
35,904
3,010
38,914
September 30,
2022
$
378,373
31,093
409,466
The salaries and fees payable at both year ends include a salary and bonuses owing to the Managing Director of
Mangan. Other amounts payable to officers and directors represent the reimbursement of office and travel
related expenses. These transactions were incurred in the normal course of operations.
10. Fair Value Measurement of Financial Instruments
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy
according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair
value hierarchy are:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly;
and
31 | P a g e
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
10. Fair Value Measurement of Financial Instruments (continued)
Level 3: Inputs that are not based on observable market data.
The fair values of the Company’s cash and cash equivalents, accounts receivable, accounts payable, due to
related parties, and land deposits approximate carrying values recorded on the consolidated statements of
financial position due to their short-term nature.
The payments made pursuant to the EPCS Option Agreement (Note 6(a)) are a derivative asset. It is a financial
instrument measured at fair value through profit and loss using Level 3 inputs as there is no observable market
data available. The option was initially recognized at fair value which equaled the initial cash payment of
$815,000 under the EPCS Option Agreement. The option increased by $819,576 on August 13, 2021, with the
second option payment. The option further increased by $2,419,622 on August 10, 2022, with the third option
payment. At September 30, 2023, the Company revalued the option at $4,215,881, taking into consideration
the recent transactions related to land purchases in the area and the foreign exchange rate movement between
the Czech Koruna and the Canadian dollar. There were no transfers between the levels of the fair value hierarchy
in the year ended September 30, 2023.
11. Financial Risk Management
a) Credit risk
Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet
its contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial assets
including cash and cash equivalents. Management believes that the credit risk with respect to these instruments
is remote as they primarily consist of amounts on deposit with a major financial institution.
At September 30, 2023 and 2022, the Company’s maximum exposure to credit risk was its cash and cash
equivalents balance of $7,649,711 and $21,560,561, respectively.
b) Liquidity risk
Liquidity risk is the risk that the Company will incur difficulties meeting its financial obligations as they are due.
The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity
to meet its liabilities when due, under both normal and stressed conditions without incurring unacceptable
losses or risking harm to the Company’s reputation (Note 1). At September 30, 2023, the maturity of accounts
payable and the due to related parties balances are under one year. Subsequent to the year end, the Company
entered into a financing agreement (Note 17(b)).
c) Market risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign
exchange rates and price risk.
Interest rate risk
Interest rate risk is the risk that the fair value or cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Company has interest-bearing assets in relation to cash in savings accounts
and GIC’s carried at fixed interest rates, invested with major Canadian and Czech banks.
32 | P a g e
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
11. Financial Risk Management (continued)
Foreign currency risk
Currency risk is the risk that the fair values or future cash flows of the Company's financial instruments will
fluctuate because of changes in foreign currency rates. The Company's financial instruments are exposed to
currency risk where those instruments are denominated in currencies that are not the functional currency of
the entity that holds them. Exchange gains and losses in these situations impact earnings.
12. Segmented Information
The Company has one operating segment, the development of the Chvaletice Manganese Project in the Czech
Republic.
13. Commitments
At September 30, 2023, the Company was committed to make the minimum annual cash payments as follows:
Payments due by period
Less than one
year
1 - 2 years
$
240,820
2,077,678
456,413
2,774,911
$
287,513
—
5,450
292,963
Total
$
528,333
2,077,678
461,863
3,067,874
Minimum lease payments (1)
Land acquisition payments (2)
Operating expenditure commitments
Total contractual obligations
(1)
(2)
The Company has signed a non-cancellable office lease, with the option to sublet the premises, that will commence in 2024.
Land acquisition payments related to land parcels described in Note 6(b)(iv).
The Company agreed to acquire a right-of-way for a period of 30 years having an annual rental of 60,000 Czech
Koruna (approximately $3,000).
The Company and the Municipality of Chvaletice, being the land owners, signed a land access agreement via
rental of the land to the Company until the earlier of a 40-year period or upon remediation of the land. The
annual rental effective as of July 1, 2022 is 7.46 million Czech Koruna (approximately $420,000), adjusted for
inflation based on the average annual Czech consumer price index for the 12 months of the previous calendar
year.
33 | P a g e
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
14. Supplemental Cash Flow Information
Non-cash financing and investing transactions in the year ended September 30, 2023 and 2022 were as follows:
Capital expenditures included in accounts payable
Shares issued for deferred equity commitment
Shares issued to settle the royalty buy back
Transfer of reserves on exercise of share options
15. Management of Capital
Year ended September 30,
2022
$
201,367
278,012
2,278,080
—
2023
$
212,123
80,606
—
146,708
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going
concern, to pursue suitable business opportunities and to maintain a flexible capital structure for its projects for
the benefit of its stakeholders. As the Company is in the evaluation stage and has not achieved commercial
operations from its projects, its principal source of funds is from the issuance of common shares. Further
information related to liquidity risk is disclosed in Note 1 and 11.
In the management of capital, the Company includes the components of equity. The Company manages and
adjusts its capital structure considering changes in economic conditions and the risk characteristics of the
underlying assets. To maintain and adjust the capital structure, the Company may attempt to issue new shares,
enter joint venture property arrangements, acquire or dispose of assets or adjust the amount of cash and cash
equivalents and investments.
To facilitate the management of its capital requirements, the Company prepares annual expenditure budgets
that are updated as necessary, depending on various factors, including successful capital deployment and
general industry conditions. The annual and updated budgets are approved by the Board.
The Company’s investment policy is to invest its cash in high-quality, highly liquid short-term interest-bearing
investments with maturities of one year or less from the original date of acquisition, selected with regards to
the expected timing of expenditures from continuing operations.
The Company is uncertain as to whether its current capital resources will be sufficient to carry on its evaluation
and development plans and operations through its current operating period and, accordingly, management is
reviewing the timing and scope of current evaluation plans and is also pursuing other financing alternatives to
fund the Company’s operations. The Company is not currently subject to externally imposed capital
requirements. There were no changes in the Company’s approach to capital management in the period.
34 | P a g e
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
16. Income Taxes
A reconciliation of the income tax recoveries at the statutory tax rate of 27% (2022 - 27%) is as follows:
Loss for the year
Expected income tax recovery
Non-deductible expenses and other
Effect of foreign tax rates and tax rate changes
Effect of deductible temporary difference not recognized
Income tax recovery
2023
$
September 30,
2022
$
(12,008,131)
(13,457,373)
(3,242,195)
498,826
846,329
1,897,7040
—
(3,633,491)
759,665
1,385,080
1,488,746
—
The Company has not recognized any deferred tax assets as realization is not probable. The significant
components of the Company’s deferred tax assets are as follows:
Equipment
Exploration and evaluation assets
Share issuance costs
Tax operating losses
Unrecognized deferred income tax assets
Deferred income tax assets
2023
$
46,142
5,374,006
1,110,925
7,405,382
13,936,455
(13,936,455)
—
September 30,
2022
$
36,234
4,566,103
934,204
5,119,654
10,656,195
(10,656,195)
—
At September 30, 2023, the Company had the following estimated tax operating losses available to reduce
future taxable income, including losses for which deferred tax assets are not recognized as listed in the table
above. Losses expire at various dates and amounts between 2024 and 2043.
At September 30, 2023
Canada
Czech Republic
Tax operating losses
$
25,138,200
8,233,300
33,371,500
35 | P a g e
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(Expressed in Canadian dollars)
17. Events after the Reporting Period
a) On October 30, 2023, the Company signed the CEZ Lease Agreement granting it access to approximately 60% of
the reserves in the Project’s tailings area, including for mining infrastructure and tailings transportation.
Together with the land access agreement with the Municipality of Chvaletice, the CEZ Lease Agreement secures
access to approximately 85% of the total reserves of the Project. Pursuant to the CEZ Lease Agreement, land
access has been granted for the life of the Project and during the subsequent period in which reclamation and
revitalization of the premises is to take place, in return for a royalty on the Project’s gross sales. During the
period in which Project is expected to have project finance debt (the "Debt Period"), estimated to be seven
years, the royalty will operate on a sliding scale from 0.2% to 1.8%, dependent on the average prices received
for the Project’s high-purity manganese products. Post the Debt Period, the royalty will be 1.8% of gross sales
from the Project. Additionally, the CEZ Lease Agreement also requires the Company to pay, commencing in
2027, a minimum rent of CZK 625,000 per calendar quarter (approximately $37,000), adjusted annually
commencing in 2028, based on inflation during the immediately preceding year.
b) On November 28, 2023, the Company signed definitive agreements with OMRF (BK) LLC ("Orion"), which is
managed by the Orion Resource Partners Group, for US$100 million in financing (the "Funding Package") to
advance the development of the Project. The US$100 million Funding is split into two US$50 million
components: (a) a US$50 million loan facility convertible into a 1.29-1.65% royalty on Project revenues (the
"Convertible Loan Facility"), with US$20 million received upon closing on November 29, 2023, and an additional
US$30 million to be received upon meeting milestones; and (b) and receipt of US$50 million in exchange for a
1.93-2.47% royalty on Project revenues following a final investment decision by the Company’s Board of
Directors and other conditions precedents typical for this type of financing (the "Royalty Financing").
The Convertible Loan Facility bears interest at 12% per annum, payable quarterly, and has an initial maturity of
36 months, which may be extended by Orion up to an additional 36 months. Orion may convert the Convertible
Loan Facility into the royalty at any time, while the Company may force conversion into the royalty upon a
successful completion test of the Project’s commercial plant. The converted royalty and the royalty under to
the Royalty Financing are for the life of the Project.
In connection with the Funding Package, Orion has been granted comprehensive security over the assets and
rights of the Project. Conditions precedent to the US$30 million tranche of the Convertible Loan Facility include
completion of offtake agreements for 40% of the Project’s high-purity manganese production for the first five
years of production and securing a strategic investor. Covenants and events of default include customary
covenants and undertakings and events of default for a secured financing of this nature, including, but not
limited to, completion of key commercial agreements, securing a strategic investor, and completion of various
technical milestones aligned with the Company’s progress to final investment decision.
In connection with the Funding Package, Orion have been granted an off-take option of between 20-22.5% of
the Project’s high-purity manganese total production for a term of 10 years from first delivery, matching the
commercial terms of the Company’s sales. Such right is exercisable until the Company signs 60% of the total
Project offtake.
36 | P a g e
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2023
1. Introduction
The principal business and current focus of Euro Manganese Inc. (the "Company" or "EMN") is the development of the
Chvaletice Manganese Project (the "Project"), in which the Company has a 100% ownership interest. The Project involves the
re-processing of a readily leachable manganese deposit hosted in the tailings of a decommissioned mine in the Czech Republic.
The Company has also started to progress an opportunity to develop a project to produce high-purity manganese products in
Canada for the North American market. The Company's goal is to produce high-purity manganese products in an economically,
socially and environmentally-sound manner, principally for use in lithium-ion batteries.
EMN was incorporated under the British Columbia Business Corporations Act on November 24, 2014. The Company’s corporate
offices are located at 700 West Pender Street, Suite 709, Vancouver, B.C., Canada, and its registered offices are located at 666
Burrard Street, Suite 1700, Vancouver, B.C., Canada. The Company’s common shares are traded on the TSX Venture Exchange
("TSX-V") and on the OTC Best Market ("OTCQX") under the symbols "EMN.V" and "EUMNF", respectively. CHESS Depositary
Interests ("CDIs", with each CDI representing one common share) are traded on the Australia Securities Exchange ("ASX") under
the symbol "EMN.AX".
This Management’s Discussion and Analysis (“MD&A”) of the financial condition and results of operations of the Company,
prepared as of December 13, 2023, is intended to be read in conjunction with the Company's audited consolidated financial
statements for the year ended September 30, 2023 (the “September 2023 Financial Statements”), which can be found along
with other information of the Company on SEDAR+ at www.sedarplus.ca. The Company prepares its financial statements in
accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board
("IASB"). The Company’s significant accounting policies are set out in Note 3 of the September 2023 Financial Statements.
Additional information relating to the Company, including the Annual Information Form for the year ended September 30, 2023,
is available on SEDAR+ at www.sedarplus.ca and on the Company's website www.mn25.ca.
The technical information in this MD&A concerning the Chvaletice Manganese Project was prepared under the supervision of
Ms. Andrea Zaradic, P. Eng., a Qualified Person under the National Instrument 43-101 Standards of Disclosure for Mineral
Projects ("NI 43-101").
This MD&A contains "forward-looking statements" that are subject to risk factors as set out in a cautionary note contained in
Section 19. The financial information presented in this MD&A is in Canadian dollars, unless otherwise stated.
2. Overview
About the Chvaletice Manganese Project
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 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 industrialized and skilled labour is expected to be available from
local markets.
The Project resource is contained in flotation tailings piles, adjacent to the former Chvaletice open pit mine. The tailings were
deposited from historical milling operations for the recovery of pyrite used for the production of sulfuric acid. The tailings, which
consist of three separate piles ranging from 12 to 28 metres in thickness, cover a cumulative surface area of approximately one
square kilometre. The Project is expected to result in the environmental remediation of this former mine tailings site, bringing
it into full compliance with modern Czech and European Union environmental standards and regulations.
37 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
2. Overview (continued)
The Company’s wholly-owned subsidiary, Mangan Chvaletice s.r.o. (“Mangan”) holds two licenses covering mineral exploration
rights for the Project ("Licenses"), which are both valid until May 31, 2026. Mangan also holds a Preliminary Mining Permit,
referred to by the Czech Ministry of Environment as the Prior Consent for the Establishment of a Mining Lease District, which
is also valid until May 31, 2026. The Preliminary Mining Permit which represents one of the key steps towards final permitting
for the Project, covers the areas included in the Licenses, and secures Mangan’s exploration rights for the entire deposit. The
establishment of the Mining Lease District, the application for the Final Mining Permit, and applications for permits relating to
the construction of infrastructure and operation of a processing facility required for the Project, must be submitted and
approved prior to any commercial extraction and processing activities at the Project.
The area of interest for the Project overlies several privately-owned land parcels with surface rights. To date, Mangan has
received the consent to conduct exploration activities and to access the site from the landowners whose surface properties
underlie the tailings. At present, Mangan does not hold all surface rights to the Project area, which includes those parcels of
land underlying and immediately surrounding the three tailings deposits. In June 2022, and in October 2023, Mangan and the
Municipality of Chvaletice (“Chvaletice”) and ČEZ a.s. (“ČEZ”), respectively, signed land lease agreements, granting the Company
access to approximately 85% of the total reserves of the Project (Section 6 of this MD&A). Additionally, Mangan signed a land
purchase agreement with the owners of certain land parcels which are adjacent to the tailings area and provides additional
room and flexibility for the Chvaletice residue storage facility layout (Section 6 of this MD&A). The Company is currently in
commercial negotiations for the acquisition of the remaining surface rights; however, there is no assurance that access to the
remaining areas will be secured.
With the option to make one final instalment before the end of calendar 2023, Mangan expects to acquire 100% of a company
that owns the land intended for the Project's high-purity processing plant. This land is located immediately south of the highway
and rail line that bound the Chvaletice tailings deposit and is adjacent to the Chvaletice power plant and another parcel of land
and rail siding that was previously acquired by Mangan. The Company also signed further agreements to acquire rights to several
additional strategic parcels of land, completing its land assembly for the proposed Chvaletice commercial plant (Section 6 of
this MD&A). All such land parcels for the proposed processing plant are already zoned for industrial use. The land area where
the Project’s tailings are located, is now formally rezoned for mining use.
The Project is targeting production of high-purity electrolytic manganese metal ("HPEMM") with specifications exceeding 99.9%
manganese ("Mn") and high-purity manganese sulphate monohydrate ("HPMSM") with a minimum Mn content of 32.34%.
These products will be selenium, fluorine, and chromium-free and are designed to contain very low levels of deleterious
impurities.
HPEMM and HPMSM are critical components of Li-ion batteries and few sources of manganese ore are suitable for production
of high-purity manganese products. As such, demand for high-purity manganese products is growing rapidly, fueled largely by
the Li-ion and electric vehicle ("EV") markets. An overview of the high-purity manganese market can be found in Section 6 of
this MD&A.
The Company has entered into one non-binding off-take term sheet for the sale of HPMSM from the Chvaletice Manganese
Project with a consumer of high-purity manganese products and expects to enter into a binding offtake agreement with that
customer in calendar 2024. The Company is in active discussions and negotiations with multiple other parties, including battery,
chemical, and automobile manufacturers, and anticipates more term sheets or offtake agreements will follow in the near term.
The Company is targeting 80% of production capacity under offtake contract to support project finance. There can be no
assurance, however, that current discussions will lead to off-take agreements or commercial or strategic relationships in the
near term, if at all.
The Company announced the results of the Chvaletice Manganese Project feasibility study on July 27, 2022 ("Feasibility Study"),
including the conversion of 98.4% of the Mineral Resources into Mineral Reserves. The results of the Feasibility Study are
summarized in Section 6 of this MD&A.
The Company submitted the final Environmental and Social Impact Assessment (“ESIA”) for the Project to the Ministry of
Environment in the Czech Republic, for which approval is anticipated early in calendar 2024.
38 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
2. Overview (continued)
The Company engaged Wood Australia Pty Ltd ("Wood") as the preferred Engineering, Procurement, and Construction
Management ("EPCM") (Section 6 of this MD&A).
About the Bécancour Plant
The Company is progressing work on its North American growth strategy and is evaluating several opportunities to develop a
project to produce high-purity manganese products for the North American market. The Company has entered into an option
agreement with the owner of a 15-hectare land parcel at Bécancour, Quebec, Canada, where it proposes to establish its North
American facilities., which allows the Company exclusive access to the land parcel and conduct due diligence thereon over a
maximum term of 21 months. A scoping study was completed for a metal dissolution plant at the proposed Bécancour site (the
“Bécancour Plant”) and WSP Canada Inc. ("WSP") has been selected to complete the feasibility study for the plant, which is
subject to financing.
The Company announced the highlights of a positive scoping study for the Bécancour Project on August 9, 2023, which are
summarized in Section 6 of this MD&A. At the same time, the Company announced it had signed a memorandum of
understanding (“MoU”) with Manganese Metal Company ("MMC"), a South African high-purity manganese producer for the
supply of 99.9% pure HPEMM, allowing the Bécancour Plant to be fed with this HPEMM and/or with HPEMM from the Chvaletice
Project, once operational. The MoU could enable the potential supply of high-purity manganese products to the North American
market as early as mid-2027. The Company also announced it had signed a Cooperation Agreement with the Grand Council of
the Waban-Aki Nation, a tribal council consisting of the Abenaki Bands of Odanak and Wôlinak, on whose ancestral territory
the Bécancour Project would be situated (see Section 6).
3. Financial and Project Highlights
The following is a summary of the Company’s highlights during the year ended September 30, 2023, and to the date of this
MD&A:
▪ On November 28, 2023, the Company signed definitive agreements with OMRF (BK) LLC ("Orion"), which is managed by
the Orion Resource Partners Group, for US$100 million in non-dilutive financing (the "Funding Package") to advance the
development of the Project. The US$100 million Funding Package is split into two US$50 million components: (a) a US$50
million loan facility convertible into a 1.29-1.65% royalty on Project revenues (the "Convertible Loan Facility"), with US$20
million received upon closing on November 29, 2023, and an additional US$30 million to be received upon meeting
milestones; and (b) and receipt of US$50 million in exchange for a 1.93-2.47% royalty on revenues following a final
investment decision by the Company’s Board of Directors and other conditions precedents typical for this type of financing
(the "Royalty Financing"). In connection with the Funding Package, Orion have been granted an off-take option of between
20-22.5% of the Chvaletice Manganese Project’s high-purity manganese total production for a term of 10 years from first
delivery, matching the commercial terms of the Company’s sales. Such right is exercisable until the Company signs 60% of
the total Project offtake.
▪ On November 13, 2023, the Company announced successful production of on-spec high-purity manganese sulphate
monohydrate from the dissolution and crystallization module at the Chvaletice demonstration plant in the Czech Republic.
Earlier in the year, the Company announced that an external laboratory confirmed that HPEMM produced at the
demonstration plant met its target specifications of 99.9% manganese metal purity.
▪ On October 30, 2023, the Company signed a lease agreement with ČEZ for access to land in the tailings area that is required
for the development of the Project (the "ČEZ Lease Agreement"). The Company now has access to approximately 85% of
the total Proven + Probable manganese Reserves required for the Project.
▪ On October 11, 2023, the Chvaletice Manganese Project was announced as a project to be supported under the inter-
governmental Minerals Security Partnership ("MSP"). The MSP is a collection of 13 countries and the European Union,
representing over 50 percent of global GDP, that aims to catalyze public and private sector investment to build diverse,
secure and responsible critical mineral supply chains globally.
39 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
3. Financial and Project Highlights (continued)
▪ On October 4, 2023, the Company announced the completion of the rezoning of tailings land and commercial plant land
for the intended use and the resubmission of the Project's ESIA which addressed the noise abatement. Approval of the
revised final ESIA is expected in early calendar 2024.
▪ On August 9, 2023, the Company announced key developments on its Bécancour Plant in Québec. These included: releasing
highlights of its Scoping Study for the Bécancour Dissolution Plant, signing a strategic memorandum of understanding
("MoU") with the Manganese Mining Company ("MMC"), and signing a Cooperation Agreement with the Grand Council of
the Waban-Aki Nation (the "W8banaki Nation" or "W8banaki"). The MoU with MMC provides an opportunity to accelerate
the supply of high-purity manganese products to the North American market possibly as early as mid-2027, thus bringing
forward cash flows for the Company.
▪ On June 30, 2023, the Company announced it had awarded the EPCM contract for its Chvaletice Manganese Project to
Wood. This followed a rigorous selection process, involving evaluating bids submitted by five international EPCM firms.
Wood was selected based on cost of service as well as their proposed project schedule, technical and engineering capability,
EU experience, team skill set, and overall execution strategy. The contract is cost reimbursable and is structured in two
phases, with an approval stage gate between each phase as well as after a gap analysis review in Phase 1. Completion of
Phase 1, involves the gap analysis review, advancing basic engineering design, selection and placing deposits for long lead
process equipment, construction permit documentation and a final total installed cost and construction schedule for the
plant, with Final Investment Decision ("FID") to be made prior to commencement of Phase 2, being the EPCM phase.
▪ On January 11, 2023, the Company signed a non-binding term sheet with Verkor, a low-carbon battery manufacturer based
in Grenoble, France, for the sale of HPMSM from the Chvaletice Manganese Project. The parties intend to enter into a
binding offtake agreement in calendar 2024.
▪
▪
In fiscal Q1 2023 the Company published its inaugural Sustainability Report which outlines how it is leading the way for
sustainable production of high-purity manganese for the EV industry.
In fiscal Q1 2023 the Company entered into an option agreement with The Société du parc industriel et portuaire de
Bécancour (“SPIPB”), a Québec state enterprise and owner of a 15-hectare land parcel within Bécancour (the “Bécancour
Option Agreement”) where the Company proposes to establish its North American facilities. The Bécancour Option
Agreement allows the Company to exclusively access the land parcel and conduct due diligence thereon over a maximum
term of 21 months, during which the Company has the opportunity to purchase the site. The Bécancour Option Agreement
provides that the Company pay $45,855 per month for this option starting January 2023, whereas these option payments
shall be deducted from the final purchase price of $9,171,200.
▪ On December 7, 2022, the Company announced positive results of the life cycle assessment study ("LCA") comparing the
Global Warming Potential of the Chvaletice Project to the incumbent industry in China, showing an average 60% lower
greenhouse emission potential of both products planned for the Project.
4. Outlook
The Company expects that the net proceeds from the first tranche of the Convertible Loan Facility will be sufficient funding to
complete the permitting of the Project, complete the commissioning of the demonstration plant and to fund its operation,
complete acquisitions of the certain land parcels needed for the Project, initiate certain FEED Phase 1 activities from the EPCM
contract and certain site preparation works, and for general and administration expenses for more than 12 months. Upon
achieving the conditions precedent to the second tranche of the Convertible Loan Facility, the Company will have available to
it a further USD 30 million for the Project, including the completion of the Phase 1 expenditures of the EPCM contract required
to achieve FID. Following an FID by the Company’s Board of Directors and upon achieving other conditions precedent under
the Royalty Financing, the Company will have available to it a further USD 50 million for the Project to fund procurement,
construction, and commissioning of the Chvaletice commercial plant and related infrastructure. Both the Convertible Loan
Facility and the Royalty Financing sit alongside, and reduce, the project finance debt and equity required for the full financing
of the Project. Funding to progress the Company's North American strategy, including the Bécancour Plant feasibility study, is
expected to be provided by the Company’s current cash and cash equivalents and future equity raises, and possible funding by
strategic industry investors and government programs. (Section 9 of this MD&A).
40 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
4. Outlook (continued)
The ability of the Company to arrange additional equity, debt or other financing for the construction and operation of the
Project will depend principally upon prevailing market conditions and the performance of the Company. There can be no
assurance that the Company will satisfy the conditions precedent in order to access the USD 30 million and USD 50 million
under the Convertible Loan Facility and Royalty Financing, respectively, or that additional funding will be available when needed,
if at all, or that it may not be available on terms favorable to the Company. Failure to obtain such additional financing could
result in delay or indefinite postponement of further evaluation and development of the Company’s projects.
The Company's short-term operating priorities include:
▪
▪
▪
▪
▪
▪
▪
Full commissioning and operating the demonstration plant to allow production of multi-tonne high-purity manganese
product samples for prospective customers' supply chain qualification;
continuing negotiations with potential customers to enter offtake contracts, as well as with strategic and financial partners
and government agencies;
completing the acquisition of, or access to, the remaining land surface rights fort he Project;
initiating the remaining work of Phase 1 (FEED) of the EPCM contract with Wood;
securing an optimum financing structure for the Project, which is dependent upon the above milestones being achieved;
and
initiating the project finance debt process; and
progressing the feasibility study for the Bécancour Dissolution Plant, subject to financing, for the potential production of
high-purity manganese products in Canada for the North American EV market.
5. Significant Transactions During the Year Ended September 30, 2023
The Company did not complete any additional transactions in the year ended September 30, 2023, other than the transactions
described in Section 3 of this MD&A.
6. Review of Operations
Chvaletice Manganese Project
Feasibility Study
The Feasibility Study results are based on a Proven and Probable Reserve Estimate that is detailed in the NI 43-101 and JORC
Code Technical Reports on the Chvaletice Manganese Project. The 43-101 technical report, entitled “Technical Report and
Feasibility Study for the Chvaletice Manganese Project, Chvaletice, Czech Republic”, with an effective date of July 27, 2022, was
filed on SEDAR+ at www.sedarplus.ca on September 9, 2022, and the JORC Code technical report, entitled “Public Report and
Feasibility Study for the Chvaletice Manganese Project, Chvaletice, Czech Republic”, with an effective date of July 27, 2022, was
lodged on the ASX announcement platform on September 14, 2022 (together, the “Feasibility Study Technical Reports”).
The highlights of the Feasibility Study are as follows:
▪
▪
▪
Conversion of the Mineral Resource to a 27 million tonne Proven and Probable Reserve (98.3% Proven) with a grade
averaging 7.41% Mn. Recycling of the historic tailings without the requirement of any hard rock mining, crushing or milling.
25-year project operating life producing 1.19 million tonnes of HPEMM, approximately two-thirds of which is expected to
be converted into HPMSM.
Saleable product includes 2.5 million tonnes of HPMSM (32.34% Mn) and 372,300 tonnes of HPEMM (99.9% Mn) over the
life of project, averaging 98,600 tonnes of HPMSM and 14,890 tonnes of HPEMM annually, principally focused on Europe’s
rapidly growing EV battery industry.
41 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
6. Review of Operations (continued)
▪
▪
Saleable product includes 2.5 million tonnes of HPMSM (32.34% Mn) and 372,300 tonnes of HPEMM (99.9% Mn) over the
life of project, averaging 98,600 tonnes of HPMSM and 14,890 tonnes of HPEMM annually, principally focused on Europe’s
rapidly growing EV battery industry.
Base case after-tax NPV of US$1.34 billion and pre-tax NPV of US$1.75 billion, using an 8% real discount rate and risk-
adjusted base case price forecast.
▪ Ungeared after-tax Internal IRR of 21.9% with a 4.1-year payback period; and an ungeared pre-tax IRR of 24.9% with a 3.6-
year payback period.
▪
▪
▪
▪
▪
Initial capital ("Capex") of US$757.3 million, including contingencies of US$103.2 million (US$78.4 million on direct costs
and US$24.8 million of growth allowance) and sustaining capital ("Sustaining Capex") of US$117.0 million over the 25-year
life of project.
Life of project revenues of US$13.9 billion with gross revenues expected to average US$554 million per year over the 25-
year project life.
Project earnings before interest, taxes, depreciation and amortization ("EBITDA") and annual average EBITDA forecasted
to be US$8.1 billion and US$326 million respectively, averaging 58.8% EBITDA over the life of project.
Base case project economics are based on Tetra Tech adoption of a risk-adjusted short-term price forecast that follows
CPM Group’s forecast for HPMSM and HPEMM to 2031 and then holds prices flat over the remaining life of project, resulting
in average prices of $4,019 per tonne of HPMSM containing 32.34% Mn and $10,545/t of HPEMM containing 99.9% Mn.
CPM Group’s unaltered price forecast was used as the upside case in the Feasibility Study sensitivity analysis with average
life of project prices of $4,509/t for HPMSM and $12,075/t for HPEMM.
▪ Using the CPM Group price forecast for HPMSM and HPEMM, after-tax NPV8% increases to US$1.79 billion, with an
ungeared IRR of 24.1%.
▪
▪
Project has access to excellent transportation, energy, and community infrastructure. Proposed process plant site to be
located in an industrially-zoned brownfield site, where a historical process plant generated the Chvaletice tailings.
Exceptional green project credentials resulting in a significant remediation of the Chvaletice tailings site, arresting the
ongoing pollution related to historical tailings disposal activities with opportunities to enhance returns through process
optimization initiatives and various government investment incentives and financial support programs that may be
available.
Resource and Reserve Estimate
a. Resource Estimate
Tetra Tech was engaged in 2018 to prepare the Resource Estimate for EMN's Chvaletice Manganese Project and to prepare
technical reports in accordance with NI 43-101 and the JORC Code. The 43-101 Technical Report, entitled “Technical Report and
Mineral Resource Estimate for the Chvaletice Manganese Project, Chvaletice, Czech Republic”, with an effective date of
December 8, 2018, was filed on SEDAR on January 28, 2019, and the JORC Code Technical Report, entitled “Public Report and
Mineral Resource Estimate for the Chvaletice Manganese Project, Chvaletice, Czech Republic”, with an effective date of
December 8, 2018, was lodged on the ASX announcement platform on February 6, 2019 (together, the "Mineral Resource
Estimate").
In 2019, the Company appointed Tetra Tech as the owner’s engineering representative for the Feasibility Study, responsible for
overseeing the consultants and service providers in connection with the Feasibility Study, and for the preparation of Feasibility
Study Technical Reports. No additional drilling or data collection pertaining to the technical disclosure of mineral inventory has
been undertaken since the completion of the Mineral Resource Estimate, and the effective date for the Mineral Resource
Estimate is revised to July 1, 2022. The Project's combined Measured and Indicated Mineral Resources amount to 26,960,000
tonnes, grading 7.33% total manganese as detailed in the table below.
42 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
6. Review of Operations (continued)
Tailings Cell
#
Classification
Dry In-situ
Bulk Density
(t/m3)
Volume
(x1,000 m3)
Tonnage
(kt)
Total Mn
(%)
#1
#2
#3
Measured
Indicated
Measured
Indicated
Measured
Indicated
Measured
Indicated
Combined Measured and Indicated
Notes:
Total
1.52
1.47
1.53
1.55
1.45
1.45
1.51
1.50
1.51
6,577
160
7,990
123
2,942
27
17,509
309
17,818
10,029
236
12,201
189
4,265
39
26,496
464
26,960
7.95
8.35
6.79
7.22
7.35
7.90
7.32
7.85
7.33
1.
2.
3.
4.
5.
Estimated in accordance with the Canadian Institution of Mining ("CIM") Definition Standards on Mineral Resources and Mineral
Reserves adopted by CIM Council, as amended, which are materially identical to the JORC Code.
The Chvaletice Mineral Resource has a reasonable prospect for eventual economic extraction. Mineral Resources do not have
demonstrated economic viability.
Indicated Resources have lower confidence than Measured Resources.
A break-even grade of 2.18% total Mn has been estimated for the Chvaletice deposit based on preliminary pre-concentration
operating costs of US$6.47/t feed, leaching and refining operating cost estimates of US$188/t feed, total recovery to HPEMM and
HPMSM of approximately 60.5% and 58.9%, respectively, and product prices of US$9.60 kg/t for HPEMM and US$3.72 kg/t for
HPMSM (CPM Group Report, June 2022). The actual commodity price for these products may vary.
A cut-off grade has not been applied to the block model. The estimated break-even cut-off grade falls below the grade of most of
the blocks (excluding 5,000 tonnes which have grades less than 2.18% total Mn). It is assumed that material segregation will not be
possible during extraction due to inherent difficulty of grade control and selective mining for this deposit type.
6. Grade capping has not been applied.
7. Numbers may not add exactly due to rounding.
b. Reserve Estimate
Mineral Reserves for the Project are based on the Measured and Indicated Resource and adhere to the guidelines set by the
Canadian Institute of Mining ("CIM"), NI 43-101 and the CIM Best Practices. Material economic modifying factors were applied
to each block in the block model including mined grade, contained metal, recovery rates for HPEMM and HPMSM, mining
operating cost, processing cost (including EMM to MSM conversion cost), residue placement cost, general and administrative
costs, site service costs, water treatment, shipping cost, product insurance, and royalties. The Project’s combined Proven and
Probable Mineral Reserve (effective July 14, 2022) amount to 26,644,000 tonnes, grading at 7.41% total manganese as detailed
in the following table:
43 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
6. Review of Operations (continued)
Tailings Cell
#
#1
#2
#3
Total
Combined
Notes:
Classification
Proven
Probable
Proven
Probable
Proven
Probable
Proven
Probable
Proven and Probable
Dry In-situ
Bulk Density
(t/m3)
Volume
(m3)
Tonnage
(metric tonnes)
Total Mn
(%)
1.51
1.52
1.53
1.54
1.46
1.46
1.50
1.51
1.51
6,651
141
7,929
199
2,744
25
17,325
284
17,609
10,132
208
12,106
183
3,979
36
26,217
427
26,644
7.83
8.24
6.91
7.35
7.49
7.98
7.35
7.84
7.41
1.
2.
3.
4.
Estimated in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by CIM Council, as
amended, which are materially identical to the JORC Code.
The Mineral Resource is inclusive of the Mineral Reserves.
Probable Reserves have lower confidence than Proven Reserves. Inferred Resources have not been included in the Reserves.
A break-even grade of 2.18% total Mn has been estimated for the Chvaletice deposit based on preliminary pre-concentration
operating costs of US$6.47/t feed, leaching and refining operating cost estimates of US$188/t feed, total recovery to HPEMM and
HPMSM of approximately 60.5% and 58.9% respectively and product prices of US$9.60 kg/t for HPEMM and US$3.72 kg/t for
HPMSM (CPM Group Report, June 2022). The actual commodity price for these products may vary.
5. Grade capping has not been applied.
6. Numbers may not add exactly due to rounding.
7. Minimal dilution and losses of <1% are expected to occur at the interface between the lower bounds of the tailings cells and original
ground as the surface is uneven.
Life Cycle Assessment
During fiscal 2022, the Company released the highlights from its Life Cycle Assessment study ("LCA") for the Project. Euro
Manganese engaged Minviro Ltd. ("Minviro"), a UK-based and globally recognized sustainability and life cycle assessment
consultancy, and RCS Global Ltd. ("RCS Global"), a leading global auditor of battery material supply chains, to conduct a cradle-
to-gate, critically reviewed study quantifying the environmental impacts, including the carbon footprint, of producing high-
purity manganese products at the Project.
The results of the LCA validate the environmental value proposition of the Project including multiple environmental benefits
from the remediation of the historic tailings area, particularly in terms of soil quality and freshwater quality as the remediation
avoids the current leaching of metals and reduces the impacts of the historic tailings to soil and water streams. The Company
plans to use 100% renewable, carbon free electricity, which reduces the GWP of the Project by half compared to the use of non-
renewable electricity.
The LCA provides EMN with an independently verified assessment for financiers and customers. RCS Global also reviewed and
commented on the LCA study. Minviro has also completed a benchmarking exercise of the Project’s GWP against similar projects
and operations producing high-purity manganese products. The results of the benchmarking exercise show that the high-purity
manganese products from the Chvaletice Project have a carbon footprint that is approximately one-third of the China-based
incumbent industry.
44 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
6. Review of Operations (continued)
EPCM Contract Award
In July 2023, the Company selected Wood as its EPCM partner for the Project. The contract is cost reimbursable and is structured
in two phases, with an approval stage gate between each phase as well as after the gap analysis in Phase 1, with an FID to be
made prior to commencement of Phase 2, dependent upon securing outstanding permits and project finance.
The FEED phase includes an initial gap analysis and in-depth review of the Feasibility Study deliverables, including the test work
and flowsheet development conducted by the Company over the last seven years.
Following completion of the gap analysis, other key deliverables to be derived over the remainder of Phase 1 include:
completion of value engineering; identification of long-lead time equipment; vendor engagement, selection and firm pricing
for major equipment items and packages; total installed capital cost estimate to AACE Class 3 estimate accuracy (+/- 10%);
project implementation strategy; a baseline schedule for the EPCM phase; and preparation of construction permit
documentation.
Upon making the FID, the Company will enter into the EPCM phase of the contract once conditions precedent are satisfied.
Wood will provide overall project and construction management services throughout the EPCM phase of the Project, which
includes detailed design, procurement, construction, and commissioning.
Environmental and Social Impact Assessment
Documentation for the final stage of the Project’s ESIA was submitted to the Czech Ministry of Environment in December
2022. In June 2023, the Ministry of Environment received comments from 14 relevant authorities, all but one of which
approved the relevant studies, signaling a positive perception of the Project by regulators. The Ministry returned the ESIA to
the Company to address comments from the authority yet to approve the ESIA, related to noise abatement.
While the Chvaletice Project’s anticipated noise levels are within legislative limits for an industrial project, as neighbouring
operations adjacent to the Project site have existing noise emissions, the cumulative effect marginally exceeds permitted noise
levels at the measurement points, located at the closest residential areas. The revision of the noise study within the ESIA also
requested the Company to consider new noise legislation related to traffic noise which came into force in July 2023. The
details of this new legislation were released after the ESIA was submitted in December 2022. The necessary work to
address the comments related to noise was completed and the revised ESIA was submitted in October 2023. The Company
anticipates the issuance of a positive decision on the revised ESIA early in calendar 2024.
Upon approval of the ESIA, the Land Planning Permit can be submitted. The documentation for this application is substantially
complete and will be finalized upon receipt of the conditions in the approved ESIA. The Land Planning Permit approval timeline
is typically three months once submitted, resulting in an anticipated approval by early calendar Q2 2024. The Construction
Permit documentation is a deliverable of the FEED phase of the EPCM work with an expected permit approval timeline of
approximately three months post submission, resulting in an anticipated approval in late 2024 or early 2025, subject to
securing sufficient funds for the completion of FEED Phase 1.
Demonstration Plant Progress Update
The demonstration plant is intended to produce and deliver high-purity manganese products to prospective customers for
testing and qualification. The Demonstration Plant replicates the process flowsheet used in the Feasibility Study and has been
designed as a semi-batch, manually operated system of interconnected modules that can be utilized as a circuit or as stand-
alone components. The demonstration plant will also enable process optimization and testing for final product development
and serve as a testing and training facility for future operators. It is expected to operate for up to three years and will also be
available for testing of potential additional feedstock for the commercial plant.
45 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
6. Review of Operations - (continued)
HPEMM at 99.9% purity was produced from the demonstration plant in the second quarter of calendar 2023 and external
laboratory testing confirmed that the first sample met the demonstration plant target specifications. Corrosion inside the
crystallizer due to a manufacturing fault has resulted in delayed production of on-spec HPMSM material. This issue was
addressed and HPMSM was successfully produced from third party metal with similar specifications to HPEMM from the
demonstration plant. HPEMM from the Chvaletice demonstration plant will be used to complete commissioning. Deliveries of
HPEMM and HPMSM samples to potential customers are expected to commence thereafter. Customer deliveries of the
Company’s demonstration plant products, however, are not expected to be required for completion of offtake contracts.
The Company estimates that the cost, including fabrication, delivery, commissioning, laboratory set-up, and an operator
training program, as well as the cost of operation for one year, will be approximately US$6.5 million ($8.7 million). To the date
of this MD&A, the Company made total payments of US$1.8 million ($2.2 million) for the demonstration plant, accrued $0.9
incurred additional expenses of $4.5 million for permitting, site
million for the next milestone payments, and
preparation and commissioning.
Option Agreement and Land Acquisitions
The Company, through its subsidiary, Mangan, entered into an option agreement dated August 13, 2018 (the "EPCS Option
Agreement"), 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 and is adjacent to the Chvaletice power plant and 1.7-hectare parcel of land and rail siding that was 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, including office, warehousing, and other industrial structures,
several of which are leased to short-term tenants. The land contains two rail spurs and is served by gas, water, and power.
The Company has the right to acquire EPCS by making payments aggregating 140 million Czech Koruna payable in four cash
instalments, the first and second of which were paid on October 17, 2018, and August 13, 2021, respectively, each in the
amount of 14 million Czech Koruna ($815,000 and $819,576, respectively). On August 10, 2022, the Company made the third
option payment of 42 million Czech Koruna ($2,304,402) together with an extension fee of 2.1 million Czech Koruna
($115,220) for partial deferral of the second instalment. The total value of the instalments, revalued at September 30, 2023, is
$4.22 million. Following an amendment to the EPCS Option Agreement dated November 29, 2023, the final payment was
split into two instalments. The first instalment of 20,000,000 Czech Koruna ($1.2 million) was paid on November 29, 2023. The
Company can complete the acquisition of EPCS by making the final instalment of 50 million Czech Koruna (approximately
$2.92 million at September 30, 2023), due no later than December 31, 2023, The extension fee in the amendment is
1,000,000 Czech Koruna (approximately $60,000).
The Company entered into the following agreements to acquire rights to three additional strategic parcels of land, completing
its land assembly for the proposed Chvaletice commercial plant:
i.
ii.
iii.
Purchase on April 15, 2021, from the owner of the nearby Chvaletice power plant, a 1,952 m² section of land
encompassing Rail Spur no. 1, through which the proposed Chvaletice process plant will be serviced and connected
to existing rail infrastructure, providing greater logistical capacity and flexibility for the Project. The cost of the
land was 252,762 Czech Koruna (approximately $14,000).
Purchase of a 49,971 m² parcel of land, including a rail spur extension that will provide additional room and
flexibility for the definitive Chvaletice commercial plant layout. The cost of the land is 18,739,125 Czech Koruna
(approximately $1.1 million) and can be paid in five 7.5% annual instalments (approximately $80,000 each),
followed by the remaining balance of approximately $700,000 in the final year.
Lease of a 3,504 m² right-of-way for a period of 30 years, with a one-month cancellation notice period, to allow
the straightening of a proposed conveyor route. Annual rental will be 60,000 Czech Koruna (approximately $3,000)
and the Company will retain an option to purchase this land.
46 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
6. Review of Operations (continued)
The area of interest for the Project overlies several privately-owned land parcels with surface rights. To date, Mangan has
received the consent to access the site from the landowners whose surface properties underlie the tailings. On June 6, 2022,
the Company and the Municipality of Chvaletice, being one of the landowners, signed a Land Access Agreement via rental of
the land to the Company until the earlier of a 40-year period or upon remediation of the land. The annual rental is 7.46 million
Czech Koruna (approximately $420,000), adjusted for inflation based on the average annual Czech consumer price index for the
12 months of the previous calendar year. The land rental agreement is effective July 1, 2022.
On June 7, 2022, the Company signed an agreement with Helot, spol. s.r.o. and Ing. Martin Vanek to acquire 78,437m² in total
consisting of several land parcels adjacent to the tailings area that provide additional room and flexibility for the Chvaletice
residue storage facility layout. The total cost of the land is 54,327,751 Czech Koruna (approximately $3.0 million). The first
instalment of $516,452 was paid in June 2022. The second instalment of $570,824 was paid in January 2023 and the remaining
amount of approximately $2 million is scheduled to be paid in January 2024.
On October 30, 2023, the Company signed the ČEZ Lease Agreement with ČEZ granting it access to approximately 60% of the
reserves in the Project’s tailings area, including for mining infrastructure and tailings transportation. Together with the land
access agreement with the Municipality of Chvaletice, the Company now has access to approximately 85% of the total Proven
+ Probable manganese Reserves required for the Project. Pursuant to the ČEZ Lease Agreement, land access has been granted
for the life of the Project and during the subsequent period in which reclamation and revitalization of the premises is to take
place, in return for a royalty on the Project’s gross sales. During the period in which Project is expected to have project finance
debt (the "Debt Period"), estimated to be seven years, the royalty will operate on a sliding scale from 0.2% to 1.8%, dependent
on the average prices received for the Project’s high-purity manganese products. Post the Debt Period, the royalty will be 1.8%
of gross sales. Additionally, the ČEZ Lease Agreement also requires the Company to pay, commencing in 2027, a Minimum Rent
of CZK 625,000 per calendar quarter (approximately $37,000), adjusted annually commencing in 2028, based on inflation during
the immediately preceding year.
The Company continues to negotiate the acquisition of the balance of the surface rights with the remaining landowner. Upon
acquisition of such surface rights with the remaining owner, the Company will have access to all the surface rights to the Project
area, which include those lands of original ground elevation surrounding, and those parcels of original ground underlying and
immediately surrounding, the three tailings deposits which comprise the Chvaletice Manganese Project However, there can be
no assurance that access to the remaining area will be secured by the Company.
High-Purity Manganese Market Overview and Product Marketing
High-performance Lithium-ion (Li-ion") batteries are being increasingly used in EVs and other energy storage applications. The
dominant Li-ion battery cathode chemistry used in EVs in the Western world is nickel-manganese-cobalt (“NMC”), which
accounts for nearly half of all Li-ion batteries produced, measured by megawatt hours ("MWh"). The amount of these metals
can vary within the NMC family of chemistries, such as NMC811, which is 80% nickel, 10% manganese, and 10% cobalt. With
rising battery metal prices, battery companies are seeking ways to reduce the cost of batteries. As the least expensive battery
metal, increasing the manganese content in batteries is gaining traction. Both BASF and Umicore have announced plans to scale
up production of manganese-rich chemistries, with BASF's NMC370 battery, containing 70% manganese (and no cobalt) and
Umicore's High Lithium Manganese ("HLM") battery, which is targeting commercial production in 2026, containing up to 60%
manganese.
Additionally, high-purity manganese is now being added to lithium-iron-phosphate (“LFP”) chemistries, creating a new family
of lithium-manganese-iron-phosphate (“LMFP”) chemistries with improved performance, with the manganese content of
certain LMFP chemistries being as high as 60%. Recent (2023) analysis by Fastmarkets has shown that LMFP batteries are
projected to be the lowest cost of all EV batteries on a $/KWh basis (however, this analysis has yet to include manganese- rich
chemistries). Contemporary Amperex Technology Co., Limited ("CATL”), China’s largest battery producer and Tesla’s main
battery supplier, has reported that they are planning to add manganese to their LFP chemistry, increasing the battery’s voltage,
thus boosting its energy density by up to 20%. Other companies progressing with LMFP chemistries include Samsung, Gotion,
HCM and a range of smaller start-ups.
47 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
6. Review of Operations (continued)
One of the more recent developments in the battery industry has been the rise of Sodium-ion (“Na-ion”) chemistries, both for
static storage applications and also smaller EVs. This has been driven by the rising Lithium prices and this chemistry looks set to
become a significant part of the battery chemistry mix going forward. Of the three principal Na-ion variants, the most
favourable, layered oxide, is another manganese containing chemistry with up to 30%.
The dominant form of manganese used in Li-ion batteries is currently High Purity Manganese Sulphate Monohydrate (HPMSM).
This very high purity chemical can be manufactured directly from manganese ore or produced by dissolving High Purity
Electrolytic Manganese Metal (HPEMM). While HPMSM is projected to remain the dominant form of manganese used in the
EV industry, there is a growing interest in other forms of manganese, especially for some of the more innovative battery
chemistries such as LMFP, LMNO and Na-ion. These can include manganese carbonate and manganese oxides (Mn3O4).
Producing these different manganese salts is likely to be more economic from HPEMM than from HPMSM or similar direct ore
purification processes.
In connection with the preparation of the Feasibility Study, the Company commissioned the independent research and
consultancy firm, CPM Group, to provide an HPEMM and HPMSM (collectively described as "High-Purity Manganese" or "HPM")
product market outlook study for the Project. Highlights are as follows:
▪
▪
▪
▪
The market for HPMSM and HPEMM is forecast to be radically transformed as a result of the ‘EV revolution’. Most Li-
ion batteries that power EVs are expected to use manganese in their cathodes and these manganese-containing
battery chemistries are expected to dominate the battery market for the next two decades.
CPM Group's current (November 2023) forecast sees the demand for high-purity manganese increasing 13 times
between 2022 and 2032 (from 100 kt to 1.3 million tonnes of Mn contained). These forecasts do not include the full
range of manganese-rich chemistries currently under development (for example Umicore’s HLM) or any demand from
Na-ion batteries.
The total Mn market in 2022 was approximately 22 million tonnes, with Mn use currently dominated by the steel
industry, high-purity manganese suitable for the battery market makes up less than 0.5% of the global manganese
market.
The bottleneck in supply of all forms of high-purity battery grade manganese is the lack of high-purity refining capacity.
Known expansions and new projects are unable to satisfy this demand. CPM Group forecasts the 2032 deficit to be 541
kt Mn equivalent. If battery demand continues to grow as expected and no additional new projects come to the market,
the forecast deficit would increase to 1 million tonnes by 2037.
According to the International Manganese Institute, China retains its dominant position as a supplier of high-purity manganese
products – more than 93% of the HPMSM suitable for the battery industry originates in China. However, China relies heavily on
imported ore, mainly from South Africa, Australia, Gabon, and Ghana. A consequence of this is that Chinese HPM has a very
high CO2 footprint on a per tonne basis, which is compounded by the production processes used. At present, only about 2.5%
of HPMSM suitable for the battery industry is produced in Europe. The Company's prospective customers are increasingly
interested in diversifying their strategic raw material sourcing, driven by geopolitical and ESG concerns, and wish to promote
the creation of independent, local supply chains, particularly in regions such as Europe, where the automobile manufacturing
industry employs over 14 million people directly and indirectly and where the automotive companies have made strong
commitments to the electrification of their fleets.
Europe is rapidly becoming a major hub in the global electric car and battery industries, with seven battery cell gigafactories
(defined as >1GWh/annum of battery production) in operation now. According to announcements from the battery makers, by
2030, Europe could have 56 battery gigafactories, with more than 1,458 GWh of production capacity installed (30% of global
capacity, second after China). CPM Group believes that the entire planned output of the Project can be consumed by the
growing Li-ion-battery sector in Europe.
48 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
6. Review of Operations (continued)
In March 2023, the European Commission published the European Critical Raw Materials Act ("CRMA"), classifying battery-
grade manganese as a strategic raw material and outlining targets for extraction, processing and recycling of critical raw
materials within the European Union. Specifically, to reduce the European Union's reliance on a single supply country for certain
raw materials, the CRMA would require that, by 2030, no more than 65% of any strategic raw materials come from a single
third country. The Chvaletice Project expects to deliver almost 50,000 tonnes of HPEMM per year when in full production,
meeting approximately 25% of European demand and helping the EU reduce its trade reliance on this strategic raw material. In
addition, the US Department of Treasury published a clarification to the Inflation Reduction Act on how manufacturers may
satisfy the critical mineral and battery component requirements of the clean vehicle tax credit. Specifically, beginning in 2025,
an eligible clean vehicle may not contain any critical minerals that were extracted, processed, or recycled by a foreign entity of
concern.
The above announcements have triggered a noticeable change in dynamics with potential customers, with off-takers reaching
out proactively, and a growing acknowledgement of price premiums for western extracted and processed products. This has
resulted in the off-take tender process initiated by the Company having more than 190,000 tonnes of Chvaletice HPMSM (over
100% of annual production capacity) under discussion as part of the process. Discussions are progressing with potential
customers across the battery supply chain, including cathode active material ("CAM") and the precursor product ("pCAM")
producers, battery makers and automobile manufacturers. In addition, several larger potential customers are yet to provide an
allocation of tonnage to the Company but have expressed an expectation to do so.
In January 2023, the Company signed a non-binding term sheet with Verkor, a low-carbon battery manufacturer based in
Grenoble, France, for the sale of HPMSM from the Project. The Company expects to enter into a binding offtake agreement
with Verkor in calendar 2024 and it anticipates more term sheets or agreements will follow in the near term. The Company is
targeting 80% of production capacity under offtake contract to support project finance. There can be no assurance, however,
that current discussions will lead to offtake agreements or commercial or strategic relationships in the near term, if at all.
Bécancour Plant
In response to encouraging discussions with automotive OEMs, battery and cathode manufacturers seeking to procure local,
responsibly produced high-purity manganese in North America, the Company commenced work on a North American growth
strategy. The Company selected a site at the Port of Bécancour, Québec, which is emerging as an important hub for the supply
of low-carbon battery materials to the EV supply chain in North America due to its numerous advantages, including a year-
round deep-water port, extensive road and rail infrastructure, access to low-cost hydro-electric power, strong governmental
support, sophisticated local service, equipment and reagent suppliers, and a qualified work force.
The Company entered into an option agreement with the Société du parc industriel et portuaire de Bécancour "SPIPB"), a
Québec provincial enterprise and owner of a 15-hectare land parcel within Bécancour (the “Bécancour Option Agreement”)
where the Company proposes to establish its North American facilities. The Bécancour Option Agreement allows the Company
to exclusively access the land parcel and conduct due diligence thereon over a maximum term of 21 months, during which the
Company has the opportunity to purchase the site. The Bécancour Option Agreement provides that the Company pay $45,855
per month for this option starting January 2023. These option payments are to be deducted from the final purchase price of
$9,171,200. As at September 30, 2023, the Company has made nine payments aggregating $412,695.
The site of the Bécancour Plant is strategically located adjacent to a cluster of planned CAM manufacturing plants, including
GM/Posco and BASF. Québec also offers attractive government financial support programs that may provide incentives for the
construction of the dissolution plant. The Company is currently exploring these incentives with the relevant agencies.
In late 2022, the Company engaged AtkinsRéalis (formerly SNC-Lavalin Inc.), a global engineering services company and having
extensive knowledge of the area, to conduct site due diligence and advise on permitting processes. In parallel, the Company
commissioned Ausenco Engineering Canada Inc., a global engineering consultancy firm with expertise in battery metals, to
conduct a scoping study for the dissolution plant, leveraging the extensive process development and recent engineering work
from the Chvaletice Project. The Bécancour Plant scoping study was based on a dissolution plant capable of producing 48,500
tpa of battery-grade HPMSM, which could meet up to 20% of projected North American 2027 demand. The demand for North
49 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
6. Review of Operations (continued)
American HPMSM is forecast by CPM Group to rise to approximately 250,000 tpa in 2027 and over 800,000 tpa by 2031. There
is no current processing capacity or production of battery-grade manganese in North America.
The scoping study delivered strong preliminary project economics, with a post-tax NPV of $190 million using an 8% discount
rate, a post-tax IRR of 26%, and a payback period of approximately 4 years. The economic analysis was run on a constant dollar
basis with no inflation, no government grants, and was unlevered.
Initial capital was estimated at $110.8 million (AACE class 5 estimate +50%/-30% level of accuracy), including contingencies of
$15.1 million. A key aspect of the dissolution plant is a short build time, estimated by the study to be approximately a two-year
engineering/construction duration.
The plant design allows for production of both HPMSM and high-purity manganese sulphate solution ("HPMSS"), allowing for
customer offtake flexibility. Producing HPMSS provides both cost and environmental benefits, as an HPMSS product could be
pumped as a solution to nearby pCAM manufacturers, which eliminates the need to crystallize, dry and package a powdered
HPMSM product. HPMSM is ultimately dissolved in water by pCAM plants, therefore delivering a solution saves costs for both
parties, reduces water consumption and CO2 emissions.
Minimal infrastructure improvements are required to build the Bécancour Plant. Offsite infrastructure is limited to a power line
connection from the main Bécancour power distribution network and the potential construction of a railway spur from the
Bécancour site railway line. Onsite infrastructure includes roads, plant and administrative buildings, power distribution and
storage buildings for HPEMM feedstock and HPMSS/HPMSM products. Feedstock optionality via a third-party metal supply was
modeled. This may facilitate operation of the Bécancour Plant as early as mid-2027, ahead of the Chvaletice Project, bringing
projected cash flows for the Company forward by at least a year. This projected timeline and feedstock mix will be assessed as
key outputs of the Bécancour Plant feasibility study, which is subject to financing.
The Company has selected WSP to complete a feasibility study for the Bécancour Plant, which will further refine Plant design,
costs, economics, and customer off-take opportunities. Permitting is expected to advance in parallel with the feasibility study.
A number of general assumptions were used in the Scoping Study to assess the economics of constructing and operating the
Bécancour dissolution plant. As such, the outcomes and economic metrics have a margin of error of -30%/+50%. Metal prices
were based on market analyst long-term forecasts. An exchange rate of US$0.77 per C$1.00 was used. Forward escalation and
contingencies for scope changes and associated costs were not considered. Cost estimates are based on Q4 2022 pricing without
allowances for inflation.
Euro Manganese cautions that the Bécancour Plant scoping study does not constitute a scoping study within the definition used
by the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM"), as it relates to a standalone industrial project and does
not concern a mineral project of the Company. As a result, disclosure standards prescribed by NI 43-101 are not applicable to
the scientific and technical disclosure in the Study. Any references to scoping study or feasibility study by Euro Manganese in
relation to the Bécancour Plant are not the same as terms defined by the CIM Definition Standards and used in NI 43-101.
Subsequent to quarter-end, the Company signed a Cooperation Agreement with the Grand Council of the Waban-Aki Nation, a
tribal council consisting of the Abenaki Bands of Odanak and Wôlinak, on whose ancestral territory the Bécancour Plant would
be situated. The Agreement outlines how the Company and the W8banaki intend to communicate openly and regularly, and
work together for the mutually acceptable development of the Bécancour Plant, especially during the evaluation and planning
phases.
The Company also signed an MoU with MMC, a South African producer of HPEMM, to supply the Bécancour dissolution plant
with selenium-free, 99.9% pure HPEMM. The MoU provides feedstock optionality for the Bécancour Plant, allowing it to be fed
with HPEMM from MMC and/or with HPEMM from the Chvaletice Project. The MoU is strategically significant for the Company
as it enables the potential acceleration of the Bécancour Plant to supply the North American market possibly as early as mid-
2027, thus bringing forward cash flows for the Company.
50 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
7. Annual Financial Review
(expressed in thousands of Canadian dollars, except per share data)
Revenue
Chvaletice Project evaluation expenses
Other evaluation expenses
Other expenses
Net loss for the year attributable to shareholders
Basic and diluted loss per share attributable to shareholders (1)
Cash and cash equivalents
Total assets (2)
Non-current financial liabilities (2)
Years ended September 30,
2021
2022
$
—
5,671
456
7,330
13,457
$
—
4,950
—
4,590
9,540
$0.03
$0.03
As at September 30,
2021
2022
$
21,561
39,896
166
$
31,219
43,336
248
2023
$
—
5,197
382
6,429
12,008
$0.03
2023
$
7,650
29,953
—
(1) Fully diluted weighted average common shares outstanding, used in the calculation of diluted net loss per share in each of the periods
presented, is not reflective of the outstanding stock options and warrants as their exercises would be anti-dilutive in the net loss per
share calculation.
(2) Total assets for each year shown include $1,249,086 in mineral property interest related to the acquisition of the Chvaletice Manganese
Project on May 13, 2016, and at September 30, 2023 and 2022, total assets also include the net smelter royalty buy back from the original
owners of Mangan in the amount of $5,424,458.
51 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
7. Annual Financial Review (continued)
Year ended September 30, 2023, compared to the year ended September 30, 2022
The loss for the year ended September 30, 2023, of $12,008,131 compared to a loss of $13,457,373 for the year ended
September 30, 2022, represents a decrease of $1,449,242 or 10.8%. Basic and fully diluted loss per share in the current period
remain unchanged at $0.03 per common share. An overview of the project evaluation and other expenses, and an explanation
of the significant variances is as follows:
(expressed in thousands of Canadian dollars, except per share data)
Chvaletice Project evaluation expenses
Year ended September 30,
2022
$
2023
$
Engineering
Remuneration
Share-based compensation
Metallurgical
Travel
Legal and professional fees
Geological
Market studies
Supplies and rentals
Other evaluation expenses
Engineering
Legal and professional fees
Travel
Other income
Other expenses
Remuneration
Share-based compensation
Total remuneration
Legal and professional fees
Investor relations
Product sales and marketing
Travel
Filing and compliance fees
Office, general and administrative
Insurance
Conferences
Depreciation
Accretion expense
Interest income
Foreign exchange
Loss and comprehensive loss for the year
2,478
1,215
167
—
121
419
—
107
690
5,197
170
237
23
(48)
382
2,973
1,444
4,417
1,114
264
87
294
301
244
232
296
261
25
(635)
(371)
6,429
12,008
2,518
1,585
489
48
103
405
57
221
245
5,671
123
291
57
(15)
456
2,494
2,253
4,747
809
372
23
293
371
157
245
120
191
26
(171)
147
7,330
13,457
Basic and diluted loss per common share
$0.03
$0.03
52 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
7. Annual Financial Review (continued)
Chvaletice Project evaluation costs for the year ended September 30, 2023 and 2022, were $5,197,030 and $5,671,342,
respectively. The decrease from the comparative year is due to the reduction of the level of work required on the Project as the
Feasibility Study work was completed in the last quarter of fiscal 2022. During the year ended September 30, 2023, the Company
focused on EPCM and the preparation and submission of the ESIA. Accordingly, the Chvaletice Project evaluation costs were 8%
lower in fiscal 2023 than in fiscal 2022.
The main cost variances include: a decrease of $369,643 in remuneration as a result of the higher labour costs related to
mobilisation for the commissioning of the demonstration plant in fiscal 2022 while in the current year, these costs were partially
capitalized from the commencement of the commissioning; a decrease of $321,790 in share-based compensation due to the
partial vesting of a share option grant in the comparative year and smaller options grant in the current year; a decrease of
$114,175 in market studies due to fewer studies and lower costs for services; and decreases of $57,173, $47,939 and $40,576
in geological, metallurgical and engineering costs, respectively, as these parts of the Feasibility Study work were completed in
the previous fiscal year. The overall decrease in the Chvaletice Project evaluation costs was partially offset by a $445,450
increase in supplies and rentals due to land rental from the Municipality of Chvaletice; an increase of $18,132 in travel expenses
in the current year versus the comparative year due to more travel to site; and an increase of $13,402 in legal and professional
fees mainly related to land purchase negotiations and documentation.
Other evaluation costs for the year ended September 30, 2023 and 2022, were $381,697 and $455,769, respectively. These
costs mostly represent the scoping study and due diligence related to the Company's evaluation of opportunities in the North
American market, particularly the potential Port of Bécancour site in Québec, Canada. The decrease in costs over the
comparative year is mainly attributable to a decrease of $54,055 and $33,791 in professional fees and travel expenses,
respectively, due to a lower volume of consulting work and less travel to the site. The overall decrease in the other evaluation
costs was partially offset by an increase of $46,882 in engineering costs mainly due to the scoping study conducted in fiscal
2023. Additionally, the Company has progressed work on the initiatives with Nano One Materials Corp. ("Nano One") and it has
received $48,005 from the National Research Council of Canada’s Industrial Research Assistance Program ("IRAP") in the year
ended September 30, 2023, offsetting a portion of these costs. The IRAP funding is shown as other income within other
evaluation costs.
The $900,858 decrease in administrative costs for the year ended September 30, 2023, over the same period in 2022 is mainly
attributable to: a decrease of $808,861 in share-based compensation due to the partial vesting of a share option grant in the
comparative year; a $108,336 decrease in investor relations expenses due to fewer campaigns and promotional activities; and
a decrease of $70,122 in filing and compliance fees due to lower annual general meeting costs in the current fiscal year, as well
as higher listing fees incurred in the comparative year for share issuances related to the royalty buyback. The overall decrease
in administrative costs was partially offset by a $479,713 increase in remuneration mainly due to a higher number of employees
in the corporate office in Canada and short-term incentive payments made during the fiscal year; a $305,191 increase in legal
and professional expenses related to costs for the project financial advisor; an increase of $86,479 in general and administrative
expenses due to increased IT, communications, and other administrative expenses; an increase of $77,056 in conferences due
to more in-person events attended; an increase of $70,044 in depreciation due to the new lease of two buildings at the project
site which hosts the demonstration plant; and an increase of $64,016 in marketing resulting from an increase engagement with
customers. Additionally, there was an increase of $464,390 from interest earned on the Company's bank deposits, and a change
of $518,140 in foreign exchange due to a gain of $370,724 in this fiscal year compared to a loss of $147,416 in the previous
fiscal year, mainly arising from the revaluation of the EPCS Option.
53 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
8. Quarterly Financial Review
The following table summarizes selected financial information for each of the eight most recently completed quarters,
expressed in thousands of Canadian dollars, except for share amounts:
As at the end of or for the period
ending
Cash and cash equivalents
Total assets
Working capital (1)
Current liabilities
Revenue
Chvaletice Project evaluation
expenses
Other evaluation expenses
Other administrative expenses
Jul to
Sep'23
$
7,650
29,953
5,691
2,852
—
1,853
34
1,337
Apr to
Jun'23
$
10,896
32,603
9,187
2,333
—
604
51
1,449
Jan to
Mar'23
$
13,805
34,956
11,191
3,008
—
1,722
87
2,161
Oct to
Dec'22
$
18,305
38,212
16,129
2,758
—
1,018
210
1,480
Jul to
Sep'22
$
21,561
39,896
19,754
2,440
—
1,739
95
2,089
Apr to
Jun'22
$
28,026
42,280
26,839
1,630
—
1,023
280
1,804
Jan to
Mar'22
$
32,070
44,800
30,676
1,823
—
1,511
71
1,673
Oct to
Dec'21
$
29,129
41,589
23,341
6,549
—
1,399
10
1,763
Net loss attributable to shareholders
3,224
2,104
3,970
2,708
3,923
3,106
3,255
3,172
Net loss per share, basic and diluted,
0.01
attributable to shareholders (2)
(1) The additional non-GAAP financial measure of working capital is calculated as current assets less current liabilities.
(2) Figures may not add to annual results due to rounding.
0.01
0.01
0.01
0.01
0.01
0.01
0.01
Summary of major variations in quarterly financial activities:
The variation in quarterly evaluation expenditures is mainly attributed to the following:
•
•
•
In the four quarters from October 2021 to September 2022, the Company focused on progressing and completing the
Feasibility Study, preparation work and permitting of the demonstration plant, and the preparation of the final ESIA. The
Company completed the Feasibility Study in the quarter ended September 2022. The number of employees at the Project
site has risen continuously in relation to the demonstration plant site preparation and commissioning. In the three quarters
from January to September 2023, the Company focused on awarding the EPCM contract and initiating Phase 1 with the gap
analysis work.
In the two quarters from October 2022 to March 2023, the Company continued the work related to the preparation and
submission of the final ESIA.
In the most recent five quarters, the Company also incurred expenses related to the evaluation of a potential dissolution
plant at the Port of Bécancour in Québec, Canada, which would produce high-purity manganese products for the North
American EV market.
Fluctuations in the level of quarterly administrative expenditures is mainly attributed to the following:
▪
For the four quarters from October 2021 to September 2022, other administrative expenses steadily increased mostly as a
result of a higher number of employees in the corporate office in Canada and higher share-based compensation expenses.
In the quarter ended December 2021, increased remuneration costs are attributable to the change in the Company's CEO
and to non-cash share-based expenses in the period.
54 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
8. Quarterly Financial Review (continued)
▪
▪
Compared to the other periods, the quarter ended December 31, 2022, was significantly impacted by an unrealized foreign
exchange gain relating to the revaluation of the EPCS Option and in the quarter ended March 31, 2023, other administrative
expenses increased mainly as a result of a higher number of employees in the corporate office in Canada along with short
term incentive payments paid during the quarter, and higher legal and professional fees relating to the project financing
efforts.
In the two most recent quarters from April 2023 to September 2023, the interest income from bank deposits partially offset
the administrative expenditures.
Three months ended September 30, 2023, compared to the three months ended September 30, 2022
The loss for the three months ended September 30, 2023, of $3,225,594 compared to a loss of $3,922,555 for the three months
ended September 30, 2022, represents a decrease of $696,961 or 17.8%. Basic and fully diluted loss per share in the current
period remain unchanged at $0.01 per common share. An overview of the project evaluation and other expenses, and an
explanation of the significant variances is as follows:
Three months ended September 30,
(expressed in thousands of Canadian dollars, except per share data)
Chvaletice Project evaluation expenses
Engineering
Remuneration
Share-based compensation
Metallurgical
Travel
Legal and professional fees
Geological
Market studies
Supplies and rentals
Other evaluation expenses
Engineering
Legal and professional fees
Travel
Other income
Other expenses
Remuneration
Share-based compensation
Total remuneration
Legal and professional fees
Investor relations
Product sales and marketing
Travel
Filing and compliance fees
Office, general and administrative
Insurance
Conferences
Depreciation
Accretion expense
Interest income
Foreign exchange
Loss and comprehensive loss for the period
Basic and diluted loss per common share
2023
$
1,058
370
38
—
36
169
—
19
163
1,853
9
33
(6)
(2)
34
622
18
640
236
57
20
81
49
57
61
20
68
5
(116)
159
1,337
3,224
$0.01
2022
$
512
727
77
2
37
69
(1)
110
206
1,739
20
80
10
(15)
95
569
599
1,168
365
107
14
85
57
13
73
44
63
9
(75)
166
2,089
3,923
$0.01
55 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
8. Quarterly Financial Review (continued)
Chvaletice Project evaluation costs for the three months ended September 30, 2023 and 2022, were $1,853,245 and $1,737,667,
respectively. The increase over the comparative quarter in fiscal 2022 is mainly due to the gap analysis work which is part of
the EPCM work and due to permitting costs. The main cost variances include: an increase of $546,532 in engineering costs due
to the gap analysis work required for Phase 1 of the EPCM; and a $100,346 increase in legal and professional fees mainly related
to land purchase negotiations and documentation. The overall increase in the Chvaletice Project evaluation costs was partially
offset by a decrease in remuneration of $356,987 as a result of higher amount of labour costs related to mobilisation for the
commissioning of the demonstration plant in the comparative period; a decrease of $89,966 in market studies due to lower
costs for services; a $43,031 decrease in supplies and rentals due to site preparation costs in the comparative period; and a
$39,581 decrease in share-based compensation due to the partial vesting of a share option grant in the comparative period.
Other evaluation costs for the three months ended September 30, 2023 and 2022, were $33,720 and $95,103, respectively.
These costs mostly represent the scoping study and due diligence related to the Company's evaluation of opportunities in the
North American market, particularly the potential Port of Bécancour site in Québec, Canada. The decrease in costs over the
comparative period is mainly attributable to a decrease of $47,940 in professional fees due to a lower volume of consulting
work; a decrease of $15,847 in travel expenses due to fewer trips to site; and a decrease of $10,393 in engineering costs due to
fewer engineering studies performed in the current period. Additionally, the Company has progressed work on the initiatives
with Nano One and the Company has received $2,100 from IRAP in the three months ended September 30, 2023, offsetting a
portion of these costs. The IRAP funding is shown as other income within other evaluation costs.
The $751,156 decrease in administrative costs for the three months ended September 30, 2023, compared to the same period
in 2022 is mainly attributable to: a decrease of $580,526 in share-based compensation due to the partial vesting of a large share
option grant in the comparative period; a decrease of $49,811 in investor relations expenses due to fewer campaigns and
promotional activities; a $128,617 decrease in legal and professional expenses due to lower volume of consulting work
compared to the previous period; and a $23,554 decrease in conferences due to the attendance of fewer conferences in the
current period. The overall decrease in administrative costs was partially offset by a $52,971 increase in remuneration due to a
higher number of employees in the corporate office in Canada; and a $44,428 increase in office, general and administrative
costs due to increased IT, communications, and other administrative expenses. Additionally, there was a $7,911 change in
foreign exchange loss mainly arising from revaluation of the EPCS Option; and a $41,509 increase in interest earned on the
Company's bank deposits.
9. Liquidity and Capital Resources
As at September 30, 2023, the Company held cash and cash equivalents of approximately $7.6 million. Cash and cash
equivalents are held with reputable financial institutions and are invested in highly liquid short-term investments with
maturities of one year or less. The funds are not exposed to significant credit risk and there are no restrictions on the ability of
the Company to use these funds to meet its obligations.
The decrease in cash of $13.9 million during the year ended September 30, 2023, is a result of $10.8 million used in operating
activities and $3.1 million used in investing activities, which included the payment for demonstration plant costs and certain
land related payments. Working capital decreased by $14.1 million during the year ended September 30, 2023, to $5.7 million
from $19.8 million at September 30, 2022.
As described in Sections 3 and 4 of this MD&A, the Company signed definitive agreements on November 28, 2023 with Orion
for a non-dilutive USD 100 million Funding Package, which included a two-tranche USD 50 million Convertible Loan Facility and
a USD 50 million Royalty Financing. The Company closed the initial tranche USD 20 million of the Convertible Loan Facility on
November 29, 2023. Conditions precedent to the USD 30 million tranche of the Convertible Loan Facility include completion of
offtake agreements for 40% of the Chvaletice Manganese Project’s high-purity manganese production for the first five years of
production and securing a strategic investor. Conditions precedent to drawing the USD 50 million Royalty Financing a final
investment decision by the Company’s Board of Directors and other conditions precedents typical for this type of financing.
56 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
9. Liquidity and Capital Resources (continued)
The Convertible Loan Facility bears interest at 12% per annum, payable quarterly, and has an initial maturity of 36 months,
which may be extended by Orion up to an additional 36 months. Orion may convert the Convertible Loan Facility into the royalty
at any time, while the Company may force conversion into the royalty upon a successful completion test of the Project’s
commercial plant. The converted royalty and the royalty under to the Royalty Financing are for the life of the Project.
In connection with the Funding Package, Orion has been granted comprehensive security over the assets of Mangan and rights
of the Project. Covenants and events of default include customary covenants and undertakings and events of default for a
secured financing of this nature, including, but not limited to, completion of key commercial agreements, securing a strategic
investor, and completion of various technical milestones aligned with the Company’s progress to final investment decision.
The Company expects that the net proceeds from the first tranche of the Convertible Loan Facility will be sufficient funding to
complete the permitting of the Project, complete the commissioning of the demonstration plant and its operation, complete
the acquisition of certain land parcels needed for the Project, initiate specific early FEED activities of the EPCM contract and
certain site preparation works, and for general and administration expenses for more than 12 months.
In 2022, the Company appointed equity and debt financial advisors to assist with the structuring and securing of debt financing
for the Project of US$757.3 million as well as a working capital facility. The results of the Feasibility Study confirm several factors,
including robust project economics, in-demand products, unique environmental credentials, stable jurisdiction, and strong
support from leading European institutions, that the Company has reasonable grounds to assume that it will be able to fund
the development of the Project (see also Section 4 of this MD&A). However, its ability to arrange additional equity, debt or
other financing for the construction and operation of the Project, and/or to progress its North American strategy, will depend
principally upon prevailing market conditions and the performance of the Company. Further, there can be no assurance that
the Company will satisfy the conditions precedent in order to access the USD 30 million and USD 50 million under the
Convertible Loan Facility and Royalty Financing, respectively, or that additional funding will be available when needed, if at all,
or that it may not be available on terms favorable to the Company. Failure to obtain such additional financing could result in
delay or indefinite postponement of further evaluation and development of the Company’s projects.
The Company’s commitments at September 30, 2023, are shown in Section 12 of this MD&A.
10. Off Balance Sheet Arrangements
As at September 30, 2023, there are no off-balance sheet arrangements which could have a material impact on current or future
results of operations or the financial condition of the Company.
11. Related Party Transactions
For the twelve months ended September 30, 2023 and 2022, amounts paid to related parties were incurred in the normal
course of operations and measured at the exchange amount, which is the amount of consideration established and agreed to
by the transacting parties.
At September 30, 2023, key management personnel include those persons having authority and responsibility for planning,
directing and controlling the activities of the Company as a whole, and consisted of the Company’s Board of Directors, President
and Chief Executive Officer, Chief Financial Officer, Vice President, Commercial, Vice President, Corporate Development and
Corporate Secretary, Vice President, Operations, and the Managing Director of the Company’s Czech subsidiary.
Salaries and fees
Share-based compensation
Year ended September 30,
2022
$
2,162,807
2,051,389
4,214,196
2023
$
2,379,749
1,314,075
3,693,824
57 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
11. Related Party Transactions (continued)
At September 30, 2023, amounts owing to directors and officers of the Company for salaries and directors' fees amounted to
$35,904 (2022 - $378,373). The salaries and fees payable at both year ends include a salary and bonuses owing to the Managing
Director of Mangan. Other amounts payable to officers and directors at September 30, 2023, for the reimbursement of office
and travel related expenses were $3,010 (2022 - $31,093).
12. Contractual Commitments
As at September 30, 2023, the Company was committed to make the minimum annual cash payments, as follows:
Minimum lease payments (1)
Land acquisition payments (2)
Operating expenditure commitments
Total contractual obligations
Payments due by period
Less than one
year
1 - 2 years
$
$
Total
$
528,333
240,820
287,513
2,077,678
2,077,678
461,863
456,413
—
5,450
3,067,874
2,774,911
292,963
(1) The Company has signed a non-cancellable office lease, with the option to sublet the premises, that will commence in 2024.
(2) Land acquisition payments related to land parcels described in Section 6 of this MD&A.
In addition to the commitments disclosed above, the Company agreed to acquire a right-of-way for a period of 30 years having
an annual rental of 60,000 Czech Koruna (approximately $3,000).
Annual rental payments pursuant to the land access agreement with the Municipality of Chvaletice, which became effective in
July 2022, and Minimum Rent payments due under the CEZ Lease Agreement, which become effective in 2027, are described
in Section 6 of this MD&A.
The Company is not subject to any externally imposed capital requirements.
13. Outstanding Share Data
The Company’s authorized share capital consists of an unlimited number of common shares without par value. The following
common shares, stock options and share purchase warrants were outstanding at December 13, 2023:
Issued and outstanding common shares
Share options
Warrants
14. Proposed Transactions
Number of securities
402,669,227
38,497,584
6,000,000
As at September 30, 2023, there is no proposed asset or business acquisition or disposition being considered that would affect
the financial condition, financial performance or cash flows of the Company, other than the Funding Package entered into with
Orion as described in Section 9 of this MD&A.
15. Events After the Reporting Period
There were no additional events after the reporting period other than the Funding Package entered into with Orion and the
ČEZ Lease Agreement as described in Section 9 of this MD&A.
58 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
16. Significant Accounting Policies, Estimates and Judgments
Basis of preparation and accounting policies
The Company's annual consolidated financial statements were prepared in accordance with IFRS as issued by the IASB. Detailed
description of the Company's significant accounting policies can be found in Note 3 of the Company's audited consolidated
financial statements for the year ended September 30, 2023. The impact of future accounting pronouncements is disclosed in
Note 3.14 of the September 2023 Financial Statements.
Critical accounting estimates and judgments
The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates that
affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the
consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Areas of
judgment and key sources of estimation uncertainty that have the most significant effect are disclosed in Note 3.15 of the
September 2023 Financial Statements.
17. Financial Instruments and Financial Risk Management
A description of the Company's financial instruments and financial risks that the Company is exposed to and management of
these risks can be found in Notes 10 and 11, respectively, of the September 2023 Financial Statements.
18. Internal Controls over Financial Reporting and Disclosure Controls and Procedures
Disclosure Controls and Procedures
The Company’s management, under the supervision of the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO")
are responsible for establishing and maintaining adequate disclosure controls and procedures. Disclosure controls and
procedures are designed to provide reasonable assurance that material information relating to the Company, including its
consolidated subsidiaries, is made known to the CEO and CFO during the reporting period. The Company’s CEO and CFO believe
that the Company’s disclosure controls and procedures are effective in providing reasonable assurance that information
required to be disclosed under applicable securities regulations is recorded, processed, summarized and reported within the
time periods specified in the securities legislation.
Management, including the CEO and CFO, has evaluated the design and operating effectiveness of the Company’s disclosure
controls and procedures as of September 30, 2023. Based on this evaluation, management concluded that the Company’s
disclosure controls and procedures, as defined in NI 52-109 Certification of Disclosure in Issuer’s Annual and Interim Filings, are
effective to achieve the purpose for which they have been designed.
Internal Controls Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with IFRS. The Company uses the Committee of Sponsoring Organizations of the Treadway Commission
("COSO") internal control framework to design internal controls over financial reporting.
Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records
that in reasonable detail accurately and fairly reflect the transactions and disposition of assets, (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that
receipts and expenditures are being made only in accordance with authorizations of management and directors of the
Company, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of assets that could have a material effect on the financial statements.
Because of their inherent limitations, internal controls over financial reporting can provide only reasonable assurance and may
not prevent or detect misstatements. The design, maintenance and testing of any system of controls is based in part upon
certain assumptions about the likelihood of future events, and any control system may not succeed in achieving its stated goals
under all potential future conditions.
59 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
18. . Internal Controls over Financial Reporting and Disclosure Controls and Procedures
(continued)
Management, under the supervision and with the participation of our CEO and CFO, has evaluated the effectiveness of the
design and operating effectiveness of the Company’s internal control over financial reporting as of September 30, 2023. Based
on its evaluation, management concluded that the Company’s internal controls over financial reporting, as defined in NI 52-109
- Certification of Disclosure in Issuer’s Annual and Interim Filings, are effective to achieve the purpose for which they have been
designed.
19. Forward-Looking Statements and Risks Notice
Certain statements in this MD&A constitute “forward-looking statements” or “forward-looking information” within the meaning
of applicable securities laws. Such statements and information involve known and unknown risks, uncertainties and other
factors that may cause the actual results, performance or achievements of the Company, its Chvaletice mineral project, its
proposed Bécancour Plant or industry results, to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements or information. Such statements can be identified by the use of words
such as “may”, “would”, “could”, “will”, “intend”, “expect”, “believe”, “plan”, “anticipate”, “estimate”, “scheduled”, “forecast”,
“predict” and other similar terminology, or state that certain actions, events or results “may”, “could”, “would”, “might” or
“will” be taken, occur or be achieved.
Regarding the Chvaletice Project, results of the Feasibility Study constitutes forward-looking information or statements,
including but not limited to estimates of internal rates of return payback periods, net present values, future production,
assumed prices for HPMSM and HPEMM, ability of the Company to achieve a pricing premium for its products, proposed
extraction plans and methods, operating life estimates, cash flow forecasts, metal recoveries and estimates of capital and
operating costs. In addition, forward-looking information or statements also include, but are not limited to, statements
regarding the ability of the Company to deliver on samples meeting specifications to potential customers from the
demonstration plant, the timing for each phase of the EPCM contract, timing of final investment decision, the acceptability of
the revised ESIA documentation by the Czech Ministry of Environment and the anticipated timing of various regulatory
approvals, statements regarding the ability of the Company to obtain remaining surface rights and various permits, the benefits
of remediating the historic tailings areas, statements regarding the expectation of the Company that the net proceeds
from the first tranche of the Convertible Loan Facility will be sufficient funding to complete the permitting of the Chvaletice
mineral project, complete the commissioning of the demonstration plant and its operation, complete the acquisition of certain
land parcels needed for the Project, and certain site preparation works, and for general and administration expenses for more
than 12 months, the growth and development of the high purity manganese products market, the desirability of the Company’s
products, the ability of the Company to enter into binding offtake agreements with potential customers, the growth of the EV
industry, the use of manganese in batteries, the manganese project supply line, support from European financial institutions,
any anticipated benefits from legislation and the Company’s ability to obtain financing.
Regarding the Bécancour Plant, forward-looking statements include, but are not limited to, statements concerning the
Company’s plans for advancing the Bécancour Plant and results of the Scoping Study including estimates of internal rates of
return, net present values, and estimates of costs. Such forward-looking information or statements also include, but are not
limited to, statements regarding the timing for completion of the Bécancour feasibility study, the Company’s ability to acquire
the Bécancour land parcel, the Company’s ability to reach a definitive agreement with MMC to supply feedstock, the Company’s
estimated engineering/construction timelines to build the Bécancour Plant and ability to arrange necessary infrastructure, the
Company’s ability to provide supplemental HPEMM feedstock to the Bécancour Plant from the Chvaletice Project and source
other feedstock, the technical capability of the Bécancour Plant and the Company’s ability to operate the Bécancour Plant and
produce both HPMSS and HPMSM and any associated cash flow and timelines for cash flow, the projected growth of the North
American demand for high-purity manganese products, any benefits of legislation, the economic and environmental benefits
of producing HPMSS, the Company’s ability to secure offtake from North American customers, the Company’s ability to raise
the necessary financing, and the timing of any permit application submissions and approvals and continuing successful
cooperation with the W8banaki Nation.
60 | P a g e
Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
19. Forward-Looking Statements and Risks Notice (continued)
Readers are cautioned not to place undue reliance on forward-looking information or statements. Forward-looking statements
are subject to a number of risks and uncertainties that may cause the actual results of the Company to differ materially from
those discussed in the forward-looking statements and, even if such actual results are realized or substantially realized, there
can be no assurance that they will have the expected consequences to, or effects on, the Company.
Factors that could cause actual results or events to differ materially from current expectations include, among other things for
the Chvaletice Project, lack of sufficient funding, the ability to develop adequate processing capacity and production; the
availability of equipment, facilities, and suppliers necessary to complete development; the cost of consumables and extraction
and processing equipment; risks and uncertainties related to the ability to obtain, amend, or maintain necessary licenses, or
permits, risks related to acquisition of surface rights; the potential for unknown or unexpected events to cause contractual
conditions to not be satisfied; the failure of parties to contracts with the Company to perform as agreed; risks and uncertainties
related to the accuracy of mineral resource and reserve estimates, variations in rates of recovery and extraction, the price of
HPEMM and HPMSM, power supply sources and price, reagent supply resources and prices, future cash flow, total costs of
production, and diminishing quantities or grades of mineral resources and reserves; the inability to secure sufficient offtake
agreements; the inability to meet conditions under the Company’s secured credit facility and risks related to granting security;
a delay or inability to get the ESIA approved by relevant authorities; unexpected results or unsuccessful completion of the
various stages of the EPCM contract; and changes in project parameters as plans continue to be refined. For the Bécancour
Plant, factors include, among other things: assumptions in the scoping study not proving accurate over time and negatively
affecting results; an inability to obtain financing, unanticipated operational difficulties including failure of the Bécancour Plant;
cost escalation for reagents, labour, power and other cost increase; inability to secure key reagents; a delay or inability to obtain
or maintain necessary licenses or permits; the potential for unknown or unexpected events to cause contractual conditions to
not be satisfied; inability to complete feasibility study or other technical studies or unexpected results; and risks and
uncertainties related to limited feedstock supply options.
Additional factors that could cause results or events to differ materially from current expectations include risks related to global
epidemics or pandemics and other health crises; availability and productivity of skilled labour; risks and uncertainties related to
interruptions in production; unforeseen technological and engineering problems; the adequacy of infrastructure; risks related
to working conditions, accidents or labour disputes; social unrest or war; the possibility that future results will not be consistent
with the Company's expectations; increase in competition, developments in EV battery markets and chemistries; risks related
to fluctuations in currency exchange rates, changes in laws or regulations; and regulation by various governmental agencies
and changes or deterioration in general economic conditions. For a further discussion of risks relevant to The Company, see
"Risk Factors" in the Company's annual information form for the year ended September 30, 2023, available on the Company's
SEDAR+ profile at www.sedarplus.ca.
All forward-looking statements are made based on the Company's current beliefs as well as various assumptions made by the
Company and information currently available to the Company. For the Chvaletice Manganese Project, these assumptions
include, among others: the presence of and continuity of manganese at estimated grades; the ability of the Company to obtain
all necessary land access rights and permits; the availability of personnel, machinery, and equipment at estimated prices and
within estimated delivery times, and the successful completion of the various stages of the EPCM contract. For the Bécancour
Plant, assumptions include demand for products develops as anticipated, that customers and other counterparties perform
their contractual obligations, that operating and capital plans will not be disrupted by issues like lack of availability of personnel,
machinery, equipment, there are no material variations in costs, successful completion and positive outcome of the feasibility
study, and that the Company will obtain required environmental and other permits. In addition, general assumptions include
currency exchange rates; manganese sales prices; growth in the manganese market; appropriate discount rates applied to the
cash flows in economic analyses; tax rates and royalty rates applicable to the proposed operations; the availability of acceptable
financing; success in realizing proposed operations; and favorable regulatory environment.
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Management’s Discussion and Analysis for the Year Ended September 30, 2023
Euro Manganese Inc.
Although the forward-looking statements contained in this MD&A are based upon what management of the Company believes
are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward-
looking statements. These forward-looking statements are made as of the date of this MD&A and are expressly qualified in their
entirety by this cautionary statement. Subject to applicable securities laws, the Company does not assume any obligation to
update or revise the forward-looking statements contained herein to reflect events or circumstances occurring after the date
of this MD&A.
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MINING TENEMENTS AND MINERAL RESOURCE / RESERVE STATEMENT
Mining Tenements Held by the Company and the Percentage Interest held in each Mining Tenement:
Tenement
Trnávka I
Trnávka II
License Status
Reference
Note
Interest
Acquired
During Year
Interest
Divested
During Year
Interest
Held at
Year-end
Exploration
631/550/14-Hd
Exploration
MZP/2018/550/386-HD
1
2
3
-
-
-
-
-
-
100%
100%
100%
Preliminary Mining
Permit
Preliminary Mining
Permit
MZP/2021/550/768-HD
Notes:
1. Exploration license 631/550/14-Hd, issued by the Czech Ministry of Environment in favour of Mangan Chvaletice s.r.o.
(“Mangan”) was originally valid until 31 May 2023 and on 2 July 2021, Mangan received an extension of this license
until 31 May 2026.
2. Exploration license MZP/2018/550/386-HD, issued by the Czech Ministry of Environment in favour of Mangan was
originally valid until 31 May 2023 and on 2 July 2021, Mangan received an extension of this license until 31 May 2026.
3. The Preliminary Mining Permit is the prior consent of the Ministry of Environment of the Czech Republic for the
establishment of the Mining Lease District and covers the areas covered by Exploration Licenses Trnávka I and Trnávka
II. The Preliminary Mining Permit was originally valid until 30 April 2023 and was replaced by a new Preliminary Mining
License valid until 31 May 2026.
Mineral Resource Estimate:
The Company reviews and reports its mineral resources at least annually. The date of reporting is 30 September
each year, to coincide with the Company’s end of fiscal year. If there are any material changes to its mineral
resources over the course of the year, the Company is required to report these changes.
Tetra Tech Canada Inc. (“Tetra Tech”) was engaged to oversee the planning and execution of sampling and assaying,
to prepare the Resource Estimate for the Company’s Chvaletice Manganese Project, to prepare the Technical Report
in accordance with NI 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"), and to prepare the
independent JORC Code technical report in accordance with the Joint Ore Reserves Committee Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 Edition ("JORC Code"). The 43-101
Technical Report, entitled “Technical Report and Mineral Resource Estimate for the Chvaletice Manganese Project,
Chvaletice, Czech Republic”, with an effective date of December 8, 2018, was filed on SEDAR on January 28, 2019,
and the JORC Code Technical Report, entitled “Public Report and Mineral Resource Estimate for the Chvaletice
Manganese Project, Chvaletice, Czech Republic”, with an effective date of December 8, 2018, was lodged on the ASX
announcement platform on February 6, 2019, (together, the "Mineral Resource Estimate").
In mid-2019, the Company appointed Tetra Tech as the owner’s engineering representative for the feasibility study,
responsible for overseeing the consultants and service providers in connection with the feasibility study, and for the
preparation of the NI 43-101/JORC Code feasibility study report for the Chvaletice Manganese Project. The 43-101
technical report, entitled “Technical Report and Feasibility Study for the Chvaletice Manganese Project, Chvaletice,
Czech Republic”, with an effective date of July 27, 2022, was filed on SEDAR on September 9, 2022, and the JORC
Code technical report, entitled “Public Report and Feasibility Study for the Chvaletice Manganese Project, Chvaletice,
Czech Republic”, with an effective date of July 27, 2022, was lodged on the ASX announcement platform on
September 14, 2022. These reports were prepared by Mr. James Barr, P. Geo, Senior Geologist, Mr. Jianhui (John)
Huang, Ph.D., P. Eng., Senior Metallurgical Engineer, Mr. Hassan Ghaffari, P. Eng., M.A.Sc., Senior Process Engineer,
Mr. Chris Johns, P. Eng., Senior Geotechnical Engineer, and Mrs. Maureen Marks, P. Eng., Senior Mining Engineer.
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No additional drilling or data collection pertaining to the technical disclosure of mineral inventory has been
undertaken since the completion of the Mineral Resource Estimate, and the effective date for the Mineral Resource
Estimate is revised to July 1, 2022. The Project's combined Measured and Indicated Mineral Resources amount to
26,960,000 tonnes, grading 7.33% total manganese as detailed below.
Chvaletice Mineral Resource Statement (effective July 1, 2022)
Historic Tailings Cell
Cell #1
Measured
Indicated
Cell #2
Measured
Indicated
Cell #3
Measured
Indicated
Total Measured
Total Indicated
Combined Measured + Indicated
In-situ Dry Bulk
Density
(t/m3)
Volume
(x1,000 m3)
Tonnage
(kt)
Grade Mn
(% total Mn)
1.52
1.47
1.53
1.55
1.45
1.45
1.51
1.50
1.51
6,577
160
7,990
123
2,942
27
17,509
309
17,818
10,029
236
12,201
189
4,265
39
26,496
464
26,960
7.95
8.35
6.79
7.22
7.35
7.90
7.32
7.85
7.33
Notes:
1. Estimated in accordance with the Canadian Institution of Mining ("CIM") Definition Standards on Mineral Resources and
Mineral Reserves adopted by CIM Council, as amended, which are materially identical to JORC Code.
2. The Chvaletice Mineral Resource has a reasonable prospect for eventual economic extraction. Mineral Resources do not
have demonstrated economic viability.
Indicated Resources have lower confidence than Measured Resources.
3.
4. A break-even grade of 2.18% tMn has been estimated for the Chvaletice deposit based on preliminary pre-concentration
operating costs of US$6.47/t feed, leaching and refining operating cost estimates of US$188/t feed, total recovery to HPEMM
and HPMSM of approximately 60.5% and 58.9%, respectively, and product prices of US$9.60 kg/t for HPEMM and US$3.72
kg/t for HPMSM (CPM Group Report, June 2022). The actual commodity price for these products may vary.
5. A cut-off grade has not been applied to the block model. The estimated break-even cut-off grade falls below the grade of
most of the blocks (excluding 5,000 tonnes which have grades less than 2.18% total Mn). It is assumed that material
segregation will not be possible during extraction due to inherent difficulty of grade control and selective mining for this
deposit type.
6. Grade capping has not been applied.
7. Numbers may not add exactly due to rounding.
RESERVE ESTIMATE
Mineral Reserves for the Chvaletice Manganese Project are based on the Measured and Indicated Resource and
adhere to the guidelines set by the Canadian Institute of Mining ("CIM"), NI 43-101 and the CIM Best Practices which
are materially identical to the JORC Code. Material economic modifying factors were applied to each block in the
block model including mined grade, contained metal, recovery rates for HPEMM and HPMSM, mining operating cost,
processing cost, (including EMM to MSM conversion cost), residue placement cost, general and administrative costs,
site service costs, water treatment, shipping cost, product insurance, and royalties. The Chvaletice Manganese
Project’s combined Proven and Probable Mineral Reserve amount to 26,644,000 tonnes, grading at 7.41% total
manganese as detailed below.
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Chvaletice Mineral Reserve Statement (effective July 14, 2022)
Historic Tailings Cell
Cell #1
Proven
Probable
Cell #2
Proven
Probable
Cell #3
Proven
Probable
Total Proven
Total Probable
Combined Proven + Probable
In-situ Dry Bulk
Density
(t/m3)
Volume
(x1,000 m3)
Tonnage
(kt)
Grade Mn
(% total Mn)
1.51
1.52
1.53
1.54
1.46
1.46
1.50
1.51
1.51
6,651
141
7,929
119
2,744
25
17,325
284
17,609
10,132
208
12,106
183
3,979
36
26,217
427
26,644
7.83
8.24
6.91
7.35
7.49
7.98
7.35
7.84
7.41
Notes:
1. Estimated in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by CIM
Council, as amended, which are materially identical to the JORC Code.
2. The Mineral Resource is inclusive of the Mineral Reserves.
3. Probable Reserves have lower confidence than Proven Reserves. Inferred Resources have not been included in the Reserves.
4. A break-even grade of 2.18% total Mn has been estimated for the Chvaletice deposit based on preliminary pre-concentration
operating costs of $6.47/t feed, leaching and refining operating cost estimates of $188/t feed, total recovery to HPEMM and
HPMSM of approximately 60.5% and 58.9% respectively and product prices of US$9.60 kg/t for HPEMM and US$3.72 kg/t
for HPMSM (CPM Group Report, June 2022). The actual commodity price for these products may vary.
5. Grade capping has not been applied.
6. Numbers may not add exactly due to rounding.
7. Minimal dilution and losses of <1% are expected to occur at the interface between the lower bounds of the tailings cells and
original ground as the surface is uneven.
Governance Arrangements and Internal Controls: The Company has ensured that the mineral resources quoted are
subject to good governance arrangements and internal controls. The mineral resources and reserves reported have
been based on information compiled by Mr. James Barr, P. Geo, Senior Geologist, Mrs. Maureen Marks, P.Eng., and
Mr. Jianhui (John) Huang, Ph.D., P. Eng., Senior Metallurgical Engineer, all with, or formerly with, Tetra Tech. Messrs.
Barr and Huang, and Mrs. Marks are consultants to the Company and have sufficient experience in the field of activity
being reported to qualify as Competent Persons as defined in the 2012 edition of the Australasian Code for Reporting
of Exploration Results, Mineral Resource and Ore Reserves, and both are Qualified Persons under National
Instrument 43-101 – ‘Standards of Disclosure for Mineral Projects’. The consultants have also undertaken reviews
of the quality and suitability of the underlying information used to generate the resource estimation. In addition,
technical information concerning the Chvaletice Manganese Project is reviewed by Ms. Andrea Zaradic, P. Eng., the
Company’s Vice President Operations, and a Qualified Person under NI 43-101. Ms. Zaradic is not independent within
the meaning of NI 43-101.
Competent Persons and Qualifying Person Statements
The information in this annual report that relates to Mineral Resources and Mineral Reserves in relation to the
Chvaletice Manganese Project is based on information compiled by Messrs. Barr and Huang, and Mrs. Marks, of
Tetra Tech, all of whom are members of the Engineers and Geoscientists of British Columbia. Messrs. Barr and
Huang, and Mrs. Marks, are consultants to the Company and have sufficient experience in the style of mineralisation
and to the activity undertaken to qualify as Competent Persons as defined in the 2012 edition of the Australasian
Code for Reporting of Exploration Results, Mineral Resource and Ore Reserves and are Qualified Persons under
National Instrument 43-101 – ‘Standards of Disclosure for Mineral Projects’. Messrs. Barr and Huang, and Mrs.
Marks consent to the inclusion in the annual report of the matters based on this information in the form and context
in which it appears.
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The technical reports and competent persons’ reports relating to Mineral Resources and Mineral Reserves are
available to view on the Company’s website at www.mn25.com and the ASX Market Announcement Platform,
respectively. The Company confirms that it is not aware of any new information or data that materially affects the
information included in the original market announcement and that all material assumptions in the market
announcement continue to apply and have not materially changed. The Company confirms that the form and context
in which the Competent Persons’ and Qualifying Persons’ findings are presented have not been materially modified
from the original market announcements.
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OTHER ASX ANNUAL REPORT INFORMATION
The following information is provided pursuant to ASX Listing Rule 4.10, of Chapter 4 – Periodic Disclosure, and is complete
unless the specific requirement is not applicable to Euro Manganese Inc. or unless the Company has received a waiver with
respect to such requirement:
Corporate Governance Statement
The Company’s Corporate Governance Statement is provided on the Company’s website at
https://www.mn25.ca/corporate-governance-statement
Names of Substantial Shareholders
There are no substantial holders of the Company as of 30 November 2023.
Number of Holders of Each Class of Securities(1)
The Company’s authorized share capital consists of an unlimited number of Shares without par value. As of 30 November
2023, 402,669,227 Shares (including CDIs) were issued and outstanding and held by 6,179 shareholders, one of which (CDS
& Co.) held 141,963,480 Shares on behalf of 28 nominee and depository entities. As of 13 December 2023, the number of
Shares issued and outstanding remained at 402,669,227 and there were 38,497,584 Shares issuable on the exercise of
incentive stock options held by thirty-three option holders, and 6,000,000 Shares issuable on the exercise of common
share purchase warrants held by one warrant holder.
Voting Rights
All of the Shares (including CDIs) rank equally as to voting rights, participation in a distribution of the assets of the Company
on a liquidation, dissolution or winding-up of the Company and entitlement to any dividends declared by the Company.
The holders of the Shares are entitled to receive notice of, and to attend and vote at, all meetings of shareholders, with
each Share carrying the right to one vote. In the event of the liquidation, dissolution or winding-up of the Company, or any
other distribution of the assets of the Company among its shareholders for the purpose of winding-up its affairs, the
holders of the Shares will be entitled to receive, on a pro rata basis, all of the assets remaining after the payment by the
Company of all of its liabilities. The holders of Shares are entitled to receive dividends as and when declared by the Board
in respect of the Shares on a pro rata basis. The Shares do not carry any pre-emptive, subscription, redemption or
conversion rights.
Distribution of Holders(1)
As of 30 November 2023, the distribution of shareholders was as follows:
Size of holding
1 – 1,000
1,000 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of holders
763
2,584
1,065
1,555
212
6,179
Percentage
12.35%
41.82%
17.23%
25.17%
3.43%
100.00%
Holders with Less than a Marketable Parcel of the Company’s Main Class of Securities(1)
As of 30 November 2023, there were approximately 2,805 holders of the Company’s Shares/CDIs with less than a
Marketable Parcel, based on the closing price of the CDIs on the ASX as of that date of A$0.125.
67 | P a g e
Name of Corporate Secretary
Mr. Fausto Taddei is Vice President Corporate Development and Corporate Secretary.
Address and Telephone Number of the Company’s Registered Office in Australia and its Principal Administrative Office
The Company has no registered or administrative offices in Australia. The Company’s registered and principal
administrative offices are located at:
Registered Office:
Suite 1700 - 666 Burrard Street, Vancouver, British
Columbia
V6C 2X8 Canada
Canada:
#709 - 700 West Pender Street,
Vancouver, British Columbia,
V6C 1G8 Canada
Tel: + 1 604 681 1010
Address and Telephone Number of Each Office at which a Register of Securities is Kept
The Register of securities is kept at the following offices
Australia:
Computershare Investor Services Pty Limited
Level 4, 60 Carrington Street
Sydney NSW 2000, Australia
Toll Free 1300 855 080
Toll +61 (03) 9415 4000
Canada:
Computershare Investor Services Inc.
510 Burrard Street, 3rd Floor
Vancouver, British Columbia V6C 3B9
Canada
Tel: + 1 604 661 9400
A list of Other Stock Exchanges on which any of the Company’s Securities are Quoted
The Company’s Common Shares are quoted on the TSX Venture Exchange (“TSXV”) under the symbol “EMN” and on the
OTCQX Best Market (“OTCQX”) under the symbol “EUMNF.”
Number and Class of Restricted Securities
As of 30 November 2023, there are no restricted securities.
Particulars of Unquoted Equity Securities
Unquoted equity securities include options and warrants to purchase shares.
The Board has adopted a stock option plan (the “Stock Option Plan”) whereby the maximum number of Shares that may
be reserved for issuance under outstanding stock options is 10% of the Company’s issued and outstanding Shares on a
non-diluted basis, as constituted on the date of any grant of options under the Stock Option Plan. The purpose of the
Stock Option Plan is to allow the Company to grant options to directors, officers, employees and consultants, as additional
compensation and as an opportunity to participate in the success of the Company. The granting of such options is intended
to align the interests of such persons with that of the Company’s shareholders.
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Particulars of Unquoted Equity Securities (continued)
As of 30 November 2023, there were 38,497,584 Shares issuable on the exercise of incentive stock options held by thirty-
three option holders, having the following exercise prices and expiry dates:
Number of Options
1,150,000
900,000
1,900,000
475,000
2,000,000
500,000
1,000,000
1,841,666
150,000
150,000
150,000
3,762,667
500,000
1,800,000
500,000
15,950,000
500,000
150,000
250,000
4,868,251
Exercise Prices (CAD$)
$0.08
$0.10
$0.11
$0.11
$0.20
$0.20
$0.25
$0.28
$0.25
$0.25
$0.25
$0.11
$0.125
$0.61
$0.59
$0.58
$0.4775
$0.4775
$0.4775
$0.4775
Expiry Date
16 May 2026
06 April 2027
22 September 2027
14 December 2027
21 February 2028
20 March 2028
15 August 2028
14 February 2029
14 May 2029
12 August 2029
06 April 2030
11 September 2030
22 September 2030
30 March 2031
22 June 2031
20 December 2031
25 April 2032
16 August 2032
20 February 2033
15 May 2033
As of 30 November 2023, the Company has outstanding the following broker warrants entitling the holder to purchase
Shares on the exercise of warrants having the following exercise prices and expiry dates:
Number of Warrants
3,000,000
3,000,000
Exercise Prices (CAD$)
$0.30
$0.35
Expiry Date
16 December 2023
16 December 2023
Review of Operations and Activities for the Reporting Period
A review of operations of the consolidated entity for the reporting period ended 30 September 2023 is provided in
Management’s Discussion and Analysis included in this Annual Report immediately following the consolidated financial
statements for the same period.
Additional information on the Company, its directors and executive management, and risk factors faced by the Company
can be found in the Company’s Annual Information Form for the year ended 30 September 2023, dated 13 December 2023,
a copy of which is lodged with ASX (www.asx.com.au) and on SEDAR+ (at www.sedarplus.ca), both under the Company’s
profile.
Details of director and executive compensation will be included in the Management’s Information Circular for the Annual
General Meeting of shareholders.
Details of a Current On-market Buy-back
None.
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Shares and Options Issued under the Stock Option Plan
The following table represents the number of Shares issued and the number of Options expired, forfeited and granted
under the Company’s Stock Option Plan for the reporting period ended 30 September 2023:
Date of Issue
9 December 2022
9 December 2022
9 December 2022
9 December 2022
9 December 2022
16 December 2022
21 December 2022
21 December 2022
21 December 2022
30 December 2022
30 December 2022
30 December 2022
20 February 2023
15 May 2023
30 September 2023
30 September 2023
Number of Securities
200,000 Shares
125,000 Shares
250,000 Shares
250,000 Shares
166,666 Shares
16,600 Shares
150,000 Shares
125,000 Shares
33,333 Shares
200,000 Options
16,666 Options
66 Options
250,000
4,868,251
250,000 Options
150,000 Options
Issue Price (CAD$)
$0.08
$0.10
$0.11
$0.20
$0.28
$0.25
$0.11
$0.20
$0.28
$0.61
$0.58
$0.25
$0.4775
$0.4775
$0.61
$0.58
Description
Exercise of Options
Exercise of Options
Exercise of Options
Exercise of Options
Exercise of Options
Exercise of Options
Exercise of Options
Exercise of Options
Exercise of Options
Forfeiture of Options
Forfeiture of Options
Forfeiture of Options
Option Grant
Option Grant
Forfeiture of Options
Forfeiture of Options
Summary of Securities Approved for the purposes of Item 7 of section 611 of the Corporations Act which have not yet
been completed:
None.
Details of Securities Purchased On-market during the Reporting Period:
None.
Names of any Person having a Beneficial Ownership of more than 10% of any Class of Securities of Voting or Equity
Securities and the Number of Securities in which each Substantial Holder has an interest:
To the best of the Company’s knowledge, there are no persons having beneficial ownership of more than 10% of any class
of any securities of the Company.
Other Information:
The Company was incorporated under the Business Corporations Act (British Columbia) on 24 November 2014.
The Company is not subject to chapters 6, 6A, 6B and 6C of the Corporations Act (Australia) dealing with the acquisition of
its shares (including substantial holdings and takeovers).
There are no limitations on the acquisition of securities imposed by the jurisdiction in which the Company is incorporated
and registered, and there are no limitations on the acquisition of securities imposed under the Company’s articles of
incorporation.
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Note 1: In Canada, in order for shares to settle and trade on the TSXV, shares must be held through a nominee or
depository that is a participant in the Canadian Depository for Securities (“CDS”). Participants in CDS include brokers in
Canada and other registered entities. Through participant accounts in CDS, the ultimate shareholder is able to make and
settle trades on TSXV. As of 30 November 2023, 141,963,480 shares were held through CDS in 28 participant accounts.
The Company is not readily able to determine the range of distribution for these 141,963,480 shares held in CDS and how
many shareholders, if any, hold less than a marketable parcel of the Company’s shares. Accordingly, the distribution of
shareholders and the number of shareholders with less than a marketable parcel of the Company’s shares/CDIs may not
be accurate.
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