2024 ANNUAL REPORT
ARBN 627 968 567
TSXV: EMN | ASX: EMN | OTCQB: EUMNF | WWW.MN25.CA
Crystallization Module of the Chvaletice Manganese Project Demonstration Plant
CORPORATE DIRECTORY
Board of Directors
John Webster
David B. Dreisinger
Thomas M. Stepien
Ludivine Wouters
Non-Executive Chairman Non-Executive
Non-Executive Director
Non-Executive Director
Non-Executive Director
Management
Martina Blahova
Dean Larocque
Andrea Zaradic
Laurel Petryk
Jan Votava
James Fraser
Interim Chief Executive Officer
Chief Financial Officer
Vice President Operations
Chief Legal Officer and Corp. Secretary
Managing Director, Mangan Chvaletice s.r.o.
Vice President Commercial
Incorporation Details
Business Corporations Act (British
Columbia)
Registered Office
Suite 1700 - 666 Burrard Street,
Vancouver, British Columbia
V6C 2X8 Canada
Head Office
#709 - 700 West Pender Street,
Vancouver, British Columbia,
V6C 1G8 Canada
Tel: + 1 604 681 1010
Website
e-mail
www.mn25.ca
info@mn25.ca
Share Registry
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
Legal Counsel
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, 2024,
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, 2024
IV.
MINING TENEMENTS AND MINERAL RESOURCE / RESERVE STATEMENT
V.
OTHER ASX ANNUAL REPORT INFORMATION
LETTER TO SHAREHOLDERS
Dear fellow shareholders,
2024 was a challenging year for Euro Manganese and its shareholders. Markets continued to show
weakness for stocks in our sector.
While the demand for EVs remains resilient, growth expectations have moderated. The global EV market
is now projected to expand at over 20% annually - still strong, though down from earlier forecasts
exceeding 30% annually.
This shift has brought a ripple effect across the battery metals market. Prices for key materials, including
lithium, cobalt, nickel and high-purity manganese have softened due to more tempered Western EV
production forecasts. This adjustment is a reminder of the complexities involved in adopting new
technologies and transitioning to sustainable energy solutions. Despite these challenges the medium and
long term still show a significant supply deficit for high purity manganese products.
We are encouraged by supportive regulatory updates that were announced in Europe and the U.S. this
year, such as the final approval of the EU Critical Raw Materials Act (“CRMA”) and EV tax credit incentives
under the Inflation Reduction Act. These measures are aimed at encouraging the development of Western
EV supply chains and promoting the adoption of electric vehicles. In August 2024, we submitted an
application to designate the Chvaletice Manganese Project as a Strategic Project under the CRMA. The
first list of approved projects is expected to be announced in March 2025, and if the Chvaletice Project is
designated a Strategic Project, it would strengthen our role in the EU’s raw materials value chain, enable
access to government-backed funding, facilitate collaboration with EU institutions and accelerate
permitting.
In 2024, we made significant progress. We received approval for the Environmental and Social Impact
Assessment from the Czech Ministry of Environment. This was a major milestone that was required in
order to advance the Chvaletice Project.and critical for the awarding of subsequent permits. Another key
milestone was the completion of the commissioning of our high-purity manganese Demonstration Plant.
In the fourth quarter of calendar 2024, the Demonstration Plant completed a five-day continuous
operation program for the production of high-purity electrolytic manganese metal, achieving 100%
reliability over the five-day program and exceeding the production target by over 30%. The ability to
produce bulk samples of on-spec, high-purity manganese for prospective customers is vital to their
product qualification processes and our offtake negotiations. We will use the insights we learn from
operating the Demonstration Plant to improve the engineering of the Chvaletice Project.
We remain focused on moving forward while adapting to changing market conditions and a slower pace
of growth in the EV market. Cathode and battery producers are adjusting their manufacturing plans, which
is affecting demand for products like ours. This uncertainty has also cooled the near-term funding
environment. We have implemented a number of initiatives aimed at reducing costs, improving our
capital position, and providing optionality for proceeding with developing of the Chvaletice Project. As
part of these measures, in December we announced amendments to the US$100 million non-dilutive
funding package with Orion Resource Partners. These amendments significantly improve our short term
cash flows and provides the company with greater financial flexibility.
To address long-term funding for the development of Chvaletice, we initiated the application process for
several funding sources through national and EU grant and incentive programs, such as the European
Innovation Fund and CzechInvest, the Investment and Business Development Agency of the Czech
Republic. The Project is also listed on the European Investment Bank’s website as under appraisal, passing
the first stage of the bank’s due diligence process.
We continue to see interest in our high-purity manganese products, as evidenced by three new offtake
agreements signed this year with FeMoCat Ltd, Blue Grass Chemical Specialties and Wildcat Discovery
Technologies. Securing more offtakes with high quality customers remains a primary focus.
As we continue to position Euro Manganese for long-term success, we welcomed Ms. Ludivine Wouters
to the Board as a Non-Executive Director. With more than 20 years of experience in European and
emerging markets, she brings extensive legal, governance, and strategic experience to our board. We said
farewell to Greg Martyr, who delivered outstanding service to our board since 2018.
On the management side we parted company with Dr Matthew James, our CEO, late in the year. We
were very happy to announce the appointment of Martina Blahova, who has served as our Chief
Financial Officer since 2020, as Interim Chief Executive Officer. Dean Larocque also joined the company
as our new Chief Financial Officer. These appointments reflect our commitment to aligning the company
for its next phase of growth.
We remain focused on delivering on our near-term and 2025 goals, which are:
•
Securing additional short-term funding
•
Securing additional offtake term sheets and contracts;
•
Securing a strategic investor at the project level;
•
Completing the remaining land-access agreement in the tailings area;
•
Obtaining additional project permits, now we have received the ESIA approval;
We continue to believe that Euro Manganese has a distinct competitive edge over other emerging
producers. We have the only manganese resource in the EU, have a strong management team and the
technical capabilities to produce high purity manganese products with a low environmental impact.
As we continue to navigate this challenging environment while working towards our goals, I would like to
express my gratitude. First, to our dedicated team - your unwavering commitment drives our progress. To
the national and local governments, community members, partners, suppliers, and prospective customers
that we continue to work with, your collaboration and support are vital as we navigate the path forward
and build a sustainable future together. Finally, to our shareholders, I sincerely appreciate your continued
support and belief in our vision, especially in these trying times.
Yours faithfully,
"John Webster"
John Webster
Non-Executive Chairman
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.
19 December 2024
(Signed) “Dean Larocque”
(Signed) "Martina Blahova"
Interim Chief Executive Officer
Chief Financial Officer
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
SEPTEMBER 30, 2024 AND 2023
Financial Statements
Management's Report
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 Going Concern
Note 2 - Basis of Preparation
Note 3 - Material Accounting Policies, Estimates and Judgments
Note 4 - Acquisition of EP Chvaletice s.r.o.
Note 5 - Exploration and Evaluation Assets
Note 6 - Property, Plant and Equipment
Note 7 - Other Assets
Note 8 - Convertible Loan Facility
Note 9 - Equity
Note 10 - Related Party Transactions
Note 11 - Fair Value Measurement of Financial Instruments
Note 12 - Financial Risk Management
Note 13 - Segmented Information
Note 14 - Commitments
Note 15 - Supplemental Cash Flow Information
Note 16 - Management of Capital
Note 17 - Income Taxes
Note 18 - Cost of Goods Sold
Note 19 - Chvaletice Project Evaluation
Note 20 - Corporate and Administrative
Note 21 - Events after the Reporting Period
Contents
Financial Statements
Year Ended September 30, 2024 | 2
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 ("IFRS Accounting Standards"). 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 material accounting policies of the Company are summarized in Note 3 to these
consolidated financial statements.
The consolidated financial statements have been prepared by management on a going concern basis in accordance
with IFRS Accounting Standards. When alternative accounting methods exist, management has chosen those it
deems most appropriate in the circumstances. Financial statements are not exact since they include certain
amounts based on estimates and judgments. Management has determined such amounts on a reasonable basis in
order to ensure that the financial statements are presented fairly, in all material respects. Management has
prepared the financial information presented elsewhere in the annual report and has ensured that it is consistent
with that in the 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.
December 18, 2024
“Martina Blahova”
“Dean Larocque”
Interim Chief Executive Officer
Chief Financial Officer
Management's Report
Euro Manganese Inc.
Financial Statements
Year Ended September 30, 2024 | 3
PricewaterhouseCoopers LLP
PwC Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7
T.: +1 604 806 7000, F.: +1 604 806 7806, Fax to mail: ca_vancouver_main_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
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 subsidiaries (together, the Company) as at
September 30, 2024 and 2023, and its financial performance and its cash flows for the years then ended
in accordance with IFRS Accounting Standards.
What we have audited
The Company’s consolidated financial statements comprise:
the consolidated statements of financial position as at September 30, 2024 and 2023;
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, comprising material accounting policy information
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.
Material uncertainty related to going concern
We draw attention to note 1 to the consolidated financial statements, which describes events or conditions
that indicate the existence of a material uncertainty that may cast significant doubt about the Company’s
ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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, 2024. 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. In addition to the
matter described in the Material uncertainty related to going concern section, we have determined the
matters described below to be the key audit matters to be communicated in our report.
Key audit matter
How our audit addressed the key audit matter
Valuation of buildings and land acquired in the
EP Chvaletice s.r.o. acquisition
Refer to note 3 – Material accounting policies,
estimates and judgments and note 4 – Acquisition
of EP Chvaletice s.r.o. to the consolidated financial
statements
On December 28, 2023, the Company completed
the acquisition of EP Chvaletice s.r.o. (EPCS) for a
total consideration of $10.8 million. The acquisition
was accounted for as a purchase of assets. The
cost of the net assets is allocated to the individual
identifiable assets and liabilities on the basis of their
fair values at the date of purchase. The identifiable
assets acquired included $4.4 million of land and
$4.2 million of buildings. The value of the land was
determined using the comparative method to reflect
the real estate prices achievable for comparable
undeveloped land plots in the market. The buildings
currently in use by EPCS were valued using the
income method, assuming rent rates for similar
spaces in nearby areas.
The assumptions used to determine the fair values
of the acquired land and buildings require
significant judgment by management and include
capitalization rates, current market rents, vacancy
rates and comparable market transactions.
Our approach to addressing the matter included the
following procedures, among others:
Professionals with specialized skill and
knowledge in the field of valuation assisted in
testing how management estimated the fair
value of the land and buildings, which included
the following:
–
Evaluated the appropriateness of the
methods used by management in
determining the fair values.
–
Evaluated the reasonableness of estimated
capitalization rates, current market rents,
vacancy rates and comparable market
transactions by comparing the assumptions
used by management with market data.
Tested the related disclosures made in the
consolidated financial statements.
Key audit matter
How our audit addressed the key audit matter
We considered this a key audit matter due to the
significant judgment applied by management when
developing the fair values of the acquired land and
buildings, including the development of
assumptions. This, in turn, led to a high degree of
auditor judgment, subjectivity and effort in
performing procedures and evaluating audit
evidence related to the assumptions used by
management. The audit effort involved the use of
professionals with specialized skill and knowledge
in the field of valuation.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis.
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 Accounting Standards, 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
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
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 18, 2024
Note
September 30, 2024
September 30, 2023
$
$
ASSETS
Current assets
Cash and cash equivalents
9,364,063
7,649,711
Prepaid expenses
412,108
523,014
Accounts and other receivables
511,120
370,964
Taxes receivable
93,858
—
Inventory
572,951
—
10,954,100
8,543,689
Non-current assets
Exploration and evaluation assets
5
6,773,544
6,773,544
Property, plant and equipment
6
19,484,637
8,385,293
Deferred transaction costs
8
1,879,654
—
Other assets
7
1,376,521
2,034,147
Option
4
—
4,215,881
Total assets
40,468,456
29,952,554
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities
2,821,473
2,641,155
Due to related parties
10
33,060
38,914
Lease liability
117,117
172,417
2,971,650
2,852,486
Lease liability
140,487
—
Convertible Loan
8
27,541,272
—
Total liabilities
30,653,409
2,852,486
EQUITY
Share capital
9
78,733,328
78,733,328
Equity reserves
9
10,032,209
9,023,890
Other comprehensive income
33,761
—
Deficit
(78,984,251)
(60,657,150)
Total shareholders' equity
9,815,047
27,100,068
Total liabilities and shareholders' equity
40,468,456
29,952,554
Going Concern (Note 1)
Approved on behalf of the Board of Directors on December 18, 2024.
"Martina Blahova"
"John Webster"
Martina Blahova, Interim CEO
John Webster, Director
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Financial Position
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 9
Note
Year ended September 30,
2024
2023
$
$
Revenue
3,217,089
—
Cost of goods sold
18
(3,775,589)
—
Gross loss
(558,500)
—
Operating Expenses
Chvaletice Project evaluation
19
(8,339,900)
(5,339,344)
Other evaluation
(94,964)
(381,697)
Corporate and administrative
20
(6,397,068)
(6,922,156)
Gain on derivative instruments
4
315,901
—
Operating loss
(15,074,531)
(12,643,197)
Interest income
419,675
635,066
Loss before financing and income tax
(14,654,856)
(12,008,131)
Finance expense
8
(3,581,867)
—
Loss before income taxes
(18,236,723)
(12,008,131)
Income tax expense
17
(90,378)
—
Loss for the year
(18,327,101)
(12,008,131)
Other comprehensive income (loss) for the year
33,761
—
Loss and comprehensive loss for the year
(18,293,340)
(12,008,131)
Weighted average number of common shares
outstanding - basic and diluted
402,669,227
402,342,620
Basic and diluted loss per common share
$
0.05 $
0.03
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Loss and Comprehensive Loss
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 10
Attributable to equity shareholders of the Company
Share
Capital
Share
Capital
Equity
Reserves
Other
Comprehensive
Income
Deficit
Shareholders'
Equity
(Deficit)
#
$
$
$
$
$
Balance at September 30, 2022
401,115,551
78,298,364
7,640,628
—
(48,649,019)
37,289,973
Options exercised
1,316,599
354,358
(146,708)
—
—
207,650
Shares issued to settle deferred share consideration
237,077
80,606
(80,606)
—
—
—
Share-based compensation
—
—
1,610,576
—
—
1,610,576
Loss and comprehensive loss for the period
—
—
—
—
(12,008,131)
(12,008,131)
Balance at September 30, 2023
402,669,227
78,733,328
9,023,890
—
(60,657,150)
27,100,068
Share-based compensation
—
—
1,008,319
—
—
1,008,319
Loss and comprehensive loss for the period
—
—
—
33,761
(18,327,101)
(18,293,340)
Balance at September 30, 2024
402,669,227
78,733,328
10,032,209
33,761
(78,984,251)
9,815,047
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Changes in Shareholders' Equity
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 11
(unaudited)
Year ended September 30,
Note
2024
2023
$
$
Operating activities
Loss for the year
(18,327,101)
(12,008,131)
Items not affecting cash:
Share-based compensation
1,008,319
1,610,576
Transaction costs on land deposit
24,447
—
Depreciation and amortization
2,597,995
261,173
Loss of disposal of fixed assets
3,652
—
Finance expense
3,598,674
25,157
Gain on derivative instruments
(315,901)
—
Unrealized foreign exchange loss (gain)
(361,547)
(313,231)
Interest income
(419,675)
(635,066)
(12,191,137)
(11,059,522)
Changes in non-cash working capital items:
Accounts payable and accrued liabilities
(2,234,578)
650,724
Accounts and other receivables
911,718
10,952
Income tax receivable
(93,858)
—
Prepaid expenses
124,825
(75,801)
Inventory
(96,272)
—
Related parties
(5,853)
(370,552)
Cash used in operating activities
(13,585,155)
(10,844,199)
Investing activities
Purchase of property, plant & equipment
(4,205,011)
(3,537,868)
Proceeds from sale of equipment
64,178
1,464
Cash used on acquisition of EPCS
4
(4,265,441)
—
Cash acquired on acquisition of EPCS
887,185
—
Interest received
611,162
439,121
Cash used in investing activities
(6,907,927)
(3,097,283)
Financing activities
Exercise of stock options
—
207,650
Lease principal and interest payments
(275,886)
(210,171)
Proceeds from convertible loan
8
25,973,055
—
Interest paid on convertible loan
(1,922,326)
—
Transaction costs paid on convertible loan
(1,789,852)
—
Cash generated from financing activities
21,984,991
(2,521)
Effect of exchange rate change on cash and cash
equivalents
222,443
33,153
Increase (Decrease) in cash and cash equivalents
1,714,352
(13,910,850)
Cash and cash equivalents - beginning of year
7,649,711
21,560,561
Cash and cash equivalents - end of year
9,364,063
7,649,711
Supplemental cash flow information (Note 15)
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Cash Flows
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 12
1. Nature of Operations and Going Concern
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 reprocessing 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. During the year, the Company
acquired 100% of EP Chvaletice s.r.o.("EPCS"), a Czech operating company, whose current operations are the
fabrication of specialty steel products and its 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. The EPCS operations will continue until certain commercial plant site works for the Project
commence.
EMN was incorporated under the British Columbia Business Corporations Act on November 24, 2014. The
Company’s corporate offices are located at Suite 709, 700 West Pender Street, Vancouver, B.C., Canada, and
its registered offices are located at Suite 1700, 666 Burrard Street, Vancouver, B.C., Canada. The Company’s
common shares are traded on the TSX Venture Exchange ("TSX-V") and on the OTC Venture Market
("OTCQB") 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".
These consolidated financial statements have been prepared on a going concern basis in accordance with IFRS
Accounting Standards, which contemplates the realization of assets and the satisfaction of liabilities in the
normal course of business.
As an early stage development company, EMN has no material operating revenues and is unable to self-finance
its operations. During the year ended September 30, 2024, the Company incurred a net loss of $18,327,101
and used $13,585,155 cash for operating activities and $6,907,927 for investing activities. As at September 30,
2024, the Company's working capital (current assets less current liabilities) was $7,982,450 however the
Company's capital resources are not expected to provide sufficient working capital to fund its corporate and
project development costs for at least twelve months from the date of these financial statements. Further, there
is no assurance that the evaluation and development 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.
The Company has deferred its interest payments with Orion (Note 21(a)) to provide additional liquidity however
it is anticipated that the Company will be required to obtain financing from the sale of equity and/ or another
form of financing. The ability of the Company to arrange such financing in the future will depend principally upon
prevailing market conditions and the performance of the Company. Such additional funding may not be
available when needed, if at all, or may not be available on terms favorable to the Company. These factors give
rise to material uncertainty that may cast significant doubt upon the Company's ability to continue as a going
concern. The consolidated financial statements do not reflect adjustments in the carrying values of the assets
and liabilities, the reported revenues and expenses and the balance sheet classifications used, that would be
necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the
normal course of operations. Such adjustments could be material.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 13
2. Basis of Preparation
2.1 Statement of compliance
These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards.
These consolidated financial statements were prepared by management and approved by the Board of
Directors of the Company (the “Board”) on December 18, 2024.
2.2 Basis of measurement
These consolidated financial statements have been prepared on a historical cost basis except for certain
financial instruments, which are measured at fair value.
2.3 Principles of consolidation
These consolidated financial statements incorporate the accounts of the Company and the entities 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 results of its wholly-owned subsidiary, Mangan
Chvaletice s.r.o. ("Mangan"), are included in the consolidated financial statements for both periods presented
and the results of EP Chvaletice s.r.o. ("EPCS") are included from the date of its acquisition by the Company on
December 28, 2023 (Note 4). All significant intercompany transactions and balances have been eliminated on
consolidation.
3. Material 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 Mangan. The functional currency of the Company's subsidiary EPCS is the Czech Koruna.
Transactions in foreign currencies are initially recorded in the entity'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.
Assets and liabilities of the subsidiary, EPCS, are translated into Canadian dollars at the exchange rate in effect
on the date of the statement of the financial position. Gains, expenses and equity items are translated at the
exchange rates approximating those in effect on the date of the transactions. Gains and losses from these
translations are recognized in accumulated other comprehensive income(loss).
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 14
3. Material Accounting Policies, Estimates and Judgments (continued)
3.2 Exploration and evaluation costs
Mineral exploration and evaluation costs include costs to acquire the rights to explore, geological studies,
exploratory drilling and sampling, royalty buy back costs, operation of the demonstration plant 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 providing the ability to finance the project; 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.
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.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 15
3. Material Accounting Policies, Estimates and Judgments (continued)
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.
The carrying values of property, plant and equipment are depreciated using the straight-line depreciation
method based on their expected useful life.
Land
Not depreciated
Buildings
Straight line basis over 25 years
Buildings - EPCS
Straight line basis over 2 years
Demonstration plant
Straight line basis over 3 years
Office furniture and equipment
Straight line basis over 3 years
Right-of-use assets
Straight line over the term of the lease
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.
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.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 16
3. Material Accounting Policies, Estimates and Judgments (continued)
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.
3.8 Financial instruments
The Company’s financial instruments consist of cash and cash equivalents, accounts and other receivables,
accounts payable and accrued liabilities, 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. The Company's cash and cash equivalents and accounts and other
receivables 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 derivative liability related to the convertible loan facility is measured at FVTPL. The Company's
accounts payable and due to related parties are classified as measured at amortized cost.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 17
3. Material Accounting Policies, Estimates and Judgments (continued)
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 Company uses the simplified approach to measuring the ECL by using a lifetime expected loss
allowance for all trade receivables.
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.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 18
3. Material Accounting Policies, Estimates and Judgments (continued)
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.
The Company does not 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.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 19
3. Material Accounting Policies, Estimates and Judgments (continued)
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, 2024 and
2023 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 Critical Estimates and Judgments
The preparation of consolidated financial statements in conformity with IFRS Accounting Standards 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.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 20
3. Material Accounting Policies, Estimates and Judgments (continued)
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 indicators at each
period end. The impairment indicators 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 impairment indicators present for the exploration and
evaluation assets and as such, no impairment test was performed at September 30, 2024.
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 4).
c)
In assessing the Convertible Loan Facility (Note 8), management identified an extension and conversion
option embedded derivative within the convertible debt. The derivative is required to be revalued at each
period end with the movements recorded as gains or losses in the statement of loss and comprehensive
loss. Significant estimates and judgments were used such as the expected future high purity manganese
prices and the probability of the debt being extended or converted.
d)
The assumptions and estimates used to determine the fair values of the land and buildings acquired from
EPCS required significant judgment by management and include capitalization rate, current market rent,
vacancy rate and comparable market transactions. The fair values of land and buildings acquired are
estimated by the Company’s independent qualified evaluators (management’s experts).
3.15 Newly Adopted Policies
As a result of the acquisition of EPCS the Company adopted the following accounting policies during the current
year. It also clarified the foreign exchange policy for the treatment of functional currency of EPCS (Note 3.1).
Business combinations
A business combination is an acquisition of assets and liabilities that constitute a business and whereby the
Company obtains control of the business. A business is an integrated set of activities and assets that consist of
inputs and processes, including a substantive process that, when applied to those inputs, have the ability to
create or significantly contribute to the creation of outputs that generate investment income or other income
from ordinary activities.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 21
3. Material Accounting Policies, Estimates and Judgments (continued)
Business combinations are accounted for using the acquisition method whereby acquired assets and liabilities
are recorded at fair value as of the date of acquisition with the excess of the purchase consideration over such
fair value being recorded as goodwill. Non-controlling interest in an acquisition may be measured at either fair
value or at the non-controlling interest’s proportionate share of the fair value of the acquiree’s net identifiable
assets. The excess of (i) total consideration transferred by the Company, measured at fair value, including
contingent consideration, and (ii) the non-controlling interests in the acquiree’s, over the acquisition-date fair
value of the net of the assets acquired and liabilities assumed, is recorded as goodwill. If the fair value
attributable to the Company’s share of the identifiable net assets exceeds the cost of acquisition, the difference
is recognized as a gain in the consolidated statement of operations.
Should the consideration be contingent on future events, the preliminary cost of the acquisition recorded
includes management’s best estimate of the fair value of the contingent amounts expected to be payable.
Provisional fair values allocated at the reporting date are finalized within one year of the acquisition date with
retroactive restatement to the acquisition date as required. Transaction costs, other than those associated with
the issue of debt or equity securities, which the Company incurs in connection with a business combination, are
expensed as incurred.
The Company has an option to apply a ‘concentration test’ to assess whether an acquired set of activities and
assets are not a business. If substantially all of the fair value of the gross assets acquired are concentrated in a
single, identifiable asset or group of similar identifiable assets, the concentration test is met, and the transaction
is accounted for as an asset acquisition. In such cases, the acquirer identifies and recognizes the individual
identifiable assets acquired and liabilities assumed. The cost of the net assets is allocated to the individual
identifiable assets and liabilities on the basis of their fair values at the date of purchase. Such a transaction or
event will not give rise to goodwill. Acquisition-related costs in an asset acquisition are recognized as part of the
cost of the assets acquired.
Inventory
Inventory consists of materials and supplies. Materials and supplies expected to be used in operations are
valued at the lower of weighted average cost or net realizable value, reduced by an amount to take into account
any impairment caused by obsolescence, deterioration, damage or other factors. If the circumstances that
previously caused impairment are mitigated, the provision for impairment is reversed to the lesser of the new
determination of net realizable value or original cost. Impairment provisions for inventory and any subsequent
reversal are included as part of net loss in the consolidated statement of loss and comprehensive loss.
Revenue
Revenue from contracts with customers is recognized when a customer obtains control of the goods and
performance obligations are satisfied. In the case of specialty steel products from EPCS, the performance
obligations are satisfied based on customers' acceptance of the products.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 22
3. Material Accounting Policies, Estimates and Judgments (continued)
3.16 New Accounting Standards Issued But Not Yet Effective
The International Accounting Standards Board has issued classification and measurement and disclosure
amendments to IFRS 9 and IFRS 7 which are effective for years beginning on or after January 1, 2026 with
earlier application permitted. The amendments clarify the date of recognition and derecognition of some
financial assets and liabilities and introduce a new exception for some financial liabilities settled through an
electronic payment system. Other changes include a clarification of the requirements when assessing whether a
financial asset meets the payments of principal and interest criteria and new disclosures for certain instruments
with contractual terms that can change cash flows (including instruments where cash flow changes are linked to
environmental, social or governance targets).
IFRS 18 Presentation and Disclosure in Financial Statements ("IFRS 18") is a new standard that will provide
new presentation and disclosure requirements and which will replace International Accounting Standard ("IAS")
1, Presentation of Financial Statements. IFRS 18 introduces changes to the structure of the statement of
income; provides required disclosures in financial statements for certain profit or loss performance measures
that are reported outside an entity’s financial statements; and provides enhanced principles on aggregation and
disaggregation in financial statements. Many other existing principles in IAS 1 have been maintained. IFRS 18
is effective for years beginning on or after January 1, 2027, with earlier application permitted.
The Company is currently assessing the impact of the new and amended standards.
4. Acquisition of EP Chvaletice s.r.o.
On August 13, 2018, the Company, through its Czech subsidiary Mangan, entered into an option agreement to
acquire 100% interest in EPCS, 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.
The Company made total payments of 72.1 million Czech Koruna ($4.22 million) from October 17, 2018, to
September 30, 2023. During the current year, the Company completed the purchase of EPCS by making two
additional payments of 20 million Czech Koruna ($1.2 million) and 51 million Czech Koruna ($3.0 million) on
November 29, 2023, and December 28, 2023, respectively. Additionally, 3.5 million Czech Koruna ($0.23
million) that was paid in 2019 for a plot of land pursuant to an amendment to the option agreement with EPCS
and classified as a land deposit, was included in the total purchase price.
The option payments made prior to the acquisition of EPCS were a derivative classified as fair value through
profit or loss ("FVTPL") due to the following: i) the option was for the acquisition of shares of EPCS rather than a
non-monetary asset; ii) it did not meet any of the scope exceptions from recognition as a derivative asset under
IFRS 9 Financial Instruments; iii) control of EPCS was not present until the last option payment was made. The
remaining payment was dependent on the Board's approval and was not legally enforceable by the shareholder
of EPCS. On acquisition of EPCS, on December 28, 2023, the option was revalued based on a third party
valuation of acquired assets at $9.0 million, resulting in $0.3 million increase in the value of the option and
corresponding gain in the statement of loss and comprehensive loss.
The acquisition was accounted for as a purchase of assets as it met the concentration test under IFRS 3
Business Combinations.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 23
4. Acquisition of EP Chvaletice s.r.o. (continued)
The final purchase price consideration was as follows:
$
Cash paid including option payments
8,682,263
Revaluation of derivative
315,901
Net working capital adjustment
1,776,987
10,775,151
The purchase price was allocated based on the fair value of the assets acquired and liabilities assumed as
follows:
$
Cash and cash equivalents
887,185
Accounts receivable
1,243,362
Prepaids and other
13,922
Inventory
476,679
Equipment
407,107
Buildings
4,181,226
Land
4,396,231
Accounts payable and accrued liabilities
(457,028)
Income tax and other taxes payable
(290,800)
Operating lease liabilities
(82,733)
10,775,151
The value of the land was determined using the comparative method to reflect the real estate prices achievable
for comparable undeveloped land plots in the market. The buildings currently in use by EPCS were valued using
the income method, assuming rent rates for similar spaces in nearby areas. The valuation of movable assets
(equipment and vehicles) was based on historical prices, reflecting the technical value and saleability factor.
5. 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 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 and funding.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 24
6. Property, Plant and Equipment
September 30, 2024
Demonstration
plant &
Buildings
under
construction
Buildings &
Equipment
Land
Lease assets
Total
$
$
$
$
$
Cost
September 30, 2023
7,857,513
179,210
333,331
603,431
8,973,485
Additions EPCS
—
4,588,333
4,396,231
—
8,984,564
Additions other
1,152,487
8,500
3,258,706
360,914
4,780,607
Disposals
—
(78,575)
—
(603,431)
(682,006)
Transfers
(9,010,000)
9,010,000
—
—
—
September 30, 2024
—
13,707,468
7,988,268
360,914
22,056,650
Accumulated depreciation
September 30, 2023
—
(126,331)
—
(461,861)
(588,192)
Additions
—
(2,366,199)
—
(231,796)
(2,597,995)
Disposals
—
10,743
—
603,431
614,174
September 30, 2024
—
(2,481,787)
—
(90,226)
(2,572,013)
Net Book Value
October 1, 2023
7,857,513
52,879
333,331
141,570
8,385,293
September 30, 2024
—
11,225,681
7,988,268
270,688
19,484,637
In the current year, depreciation and amortization was recorded in the current year $1,236,704 (2023 - nil) to Cost
of goods sold, $1,235,170 (2023 - $142,314) to Chvaletice Project evaluation and $126,121 (2023 - $118,859) to
Corporate and administrative.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 25
6. Property, Plant and Equipment (continued)
September 30, 2023
Demonstration
plant under
construction
Equipment
Land
Lease assets
Total
$
$
$
$
$
Cost
September 30, 2022
5,216,357
144,334
333,331
586,094
6,280,116
Additions
2,641,156
38,188
—
17,337
2,696,681
Disposals
—
(3,312)
—
—
(3,312)
September 30, 2023
7,857,513
179,210
333,331
603,431
8,973,485
Accumulated depreciation
September 30, 2022
—
(100,454)
—
(228,413)
(328,867)
Additions
—
(27,725)
—
(233,448)
(261,173)
Disposals
—
1,848
—
—
1,848
September 30, 2023
—
(126,331)
—
(461,861)
(588,192)
Net Book Value
September 30, 2022
5,216,357
43,880
333,331
357,681
5,951,249
September 30, 2023
7,857,513
52,879
333,331
141,570
8,385,293
7. Other Assets
Other assets, representing deposits for land, are as follows:
September 30,
2024
2023
$
$
Miscellaneous land parcels and second railway switch (plant area)
i)
—
227,667
Land for buffer zone and infrastructure corridor (tailings area)
ii)
65,412
28,951
Additional land and rail spur extension (plant area)
iii)
348,154
268,064
Additional land parcels for residue storage facility (tailings area)
iv)
—
1,096,770
Land parcel within the Port of Bécancour
v)
962,955
412,695
1,376,521
2,034,147
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 26
7. 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 increased the Option Agreement value by 3,500,000 Czech Koruna ($203,220). This was
acquired as part of the EPCS acquisition (Note 4).
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 total cost of the land is 2,026,990 Czech Koruna (approximately $120,000). The first payment of
202,699 Czech Koruna ($11,867) was paid on May 20, 2019. Subsequent payments 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). On May 23, 2024, the Company made the third payment of 608,097 Czech
Koruna ($36,507).
iii)
On December 18, 2020, the Company signed 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 on or before October 10, 2025. To September 30, 2024, the Company
has made the first four payments under the agreement and capitalized transaction costs of $20,834.
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. The remaining amount of $2,038,007 was paid in January 2024. The
total value of the deposit was transferred to land under property, plant and equipment (Note 6).
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, 2024, the Company has made twenty-one payments
aggregating $962,955. Subsequent to year end the Company signed an amendment to this agreement
(Note 21(b)).
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 27
8. Convertible Loan Facility
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 Chvaletice Manganese Project. The 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 certain milestones; and (b) 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 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. 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. These
include, but are not limited to, completion of the key commercial agreements referred to above, securing a
strategic investor, and completion of various technical milestones aligned with the Company’s progress to final
investment decision, all subject to time limits.
In connection with the first tranche of the Convertible Loan Facility, the Company determined that Orion’s right
to extend the Convertible Loan Facility up to an additional 36 months met the definition of a financial derivative
liability, which was separated, not being closely related to its debt host. Accordingly, the $25,973,055 (US$20
million) gross proceeds were allocated as follows: $844,397 to the derivative liability as its estimated fair value
with the residual of $25,128,658 to the debt host. In determining the estimated fair value of the separated
derivative liability, the key inputs were the estimated royalty payments if converted, the expected future
manganese prices, the production schedule, and the probability of the royalty being converted. These are level
3 in the fair value hierarchy (Note 11).
The Company incurred transaction costs of $2,975,788, of which $1,879,654 was allocated to the US$80 million
undrawn portion of the Funding Package and is deferred until drawn, $1,059,259 was allocated to the first
tranche of the Convertible Loan Facility and is deferred and amortized using the effective interest method, and
$36,875 was allocated to the derivative liability and recognized in profit or loss.
From the inception of the US$20 million Convertible Loan Facility to September 30, 2024, the Company
recognized $1,922,326 of contractual interest expense and $468,039 of accretion expense in profit or loss.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 28
8. Convertible Loan Facility (continued)
A summary of the Company’s first tranche of the Convertible Loan Facility is as follows:
Convertible loan - liability component
$
October 1, 2023
—
Advances
27,162,000
Transaction costs
(1,059,259)
Derivative liability value
(844,397)
Unwinding of discount
468,039
Interest accrued
2,725,740
Interest paid
(1,922,326)
Foreign exchange loss (gain)
(175,034)
September 30, 2024
26,354,763
Convertible loan - derivative component
$
October 1, 2023
—
Initial recognition of derivative liability
844,397
Change in fair value
345,232
Foreign exchange loss (gain)
(3,120)
September 30, 2024
1,186,509
Balance, end of year
27,541,272
Finance expense
$
Transaction costs allocated to derivative
36,875
Accretion expense
468,039
Interest expense
2,725,740
Change in fair value of derivative
345,232
Other
5,981
3,581,867
Subsequent to year end the terms of the Convertible Loan Facility were amended (Note 21).
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 29
9. Equity
a)
Common shares
The Company has unlimited authorized common shares with no par value.
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.
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. No options were granted in the year ended September 30, 2024. A continuity
summary of the share options granted and outstanding under the Plan for the year ended September 30, 2024
and 2023, is presented below:
Year ended September 30,
2024
2023
Number of
share options
Weighted
average
exercise price
($ per share)
Number of
share options
Weighted
average
exercise price
($ per share)
Balance, beginning of the year
38,497,584
0.41
35,312,664
0.40
Options granted
—
—
5,118,251
0.48
Options exercised
—
—
(1,316,599)
0.16
Options expired
(718,025)
0.56
(566,732)
0.60
Options forfeited
(844,366)
0.48
(50,000)
0.58
Balance, end of the year
36,935,193
0.41
38,497,584
0.41
During the year ended September 30, 2024, the Company recorded share-based compensation expense of
$1,008,319 (2023 - $1,610,576) of which $70,190 (2023 - $166,728) has been allocated to Chvaletice Project
evaluation and $938,129 (2023 - $1,443,848) to corporate and administrative.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 30
9. Equity (continued)
The balance of options outstanding and exercisable at September 30, 2024, is as follows:
Options outstanding & exercisable
Options exercisable
Exercise price
($ per share)
Number of share
options
Weighted average
remaining
contractual life
(years)
Number of share
options
Weighted average
remaining
contractual life
(years)
0.08
1,150,000
1.6
1,150,000
1.6
0.10
900,000
2.5
900,000
2.5
0.11
6,137,667
4.8
6,137,667
4.8
0.13
500,000
6.0
500,000
6.0
0.20
2,500,000
3.4
2,500,000
3.4
0.25
1,450,000
4.2
1,450,000
4.2
0.28
1,841,666
4.4
1,841,666
4.4
0.48
4,655,860
8.6
1,551,952
8.6
0.59
500,000
6.7
500,000
6.7
0.58
15,850,000
7.2
7,350,000
7.2
0.61
1,450,000
6.5
550,000
6.5
0.41
36,935,193
6.1
24,431,285
5.4
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.
In the year ended September 30, 2024, the Company did not grant any stock options. In the year ended
September 30, 2023, the Company applied the Black-Scholes option pricing model to determine the value of
stock options. 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 interest rate of 2.93%,
expected life of 9 years, annualized volatility of 90%, dividend yield of nil%, option exercise price of $0.48 per
share option. The average fair value of share options granted was estimated to be $0.15 per share option.
c)
Warrants
Year ended September 30,
2024
2023
Number of
warrants
Weighted-
average
exercise price
Number of
warrants
Weighted-
average
exercise price
$
$
Outstanding, beginning of the year
6,000,000
0.33
8,500,000
0.40
Expired
(6,000,000)
0.33
(2,500,000)
0.58
Outstanding, end of the year
—
0.33
6,000,000
0.33
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 31
10.Related Party Transactions
a)
Key management compensation
The remuneration of directors and those persons having authority and responsibility for planning, directing and
controlling activities of the Company are as follows:
Year ended September 30,
2024
2023
$
$
Salaries and benefits
2,387,495
2,379,749
Share-based compensation
1,221,426
1,314,075
3,608,921
3,693,824
b)
The balances payable to key management and other related parties at the period ends were as
follows:
September 30,
2024
2023
$
$
Salaries and benefits
27,839
35,904
Other amounts due to directors and officers
5,221
3,010
33,060
38,914
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.
11.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
Level 3: Inputs that are not based on observable market data.
The fair values of the Company’s cash and cash equivalents, accounts and other receivables, accounts payable
and accrued liabilities, and due to related parties 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 4) were a derivative asset. It was a
financial instrument measured at fair value through profit and loss using Level 3 inputs as there were no
observable market data available. Immediately prior to exercise the Company revalued the option at
$8,998,164, 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. The value of the
derivative asset was included in the purchase price of EPCS (Note 4). There were no transfers between the
levels of the fair value hierarchy prior to the acquisition.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 32
11.Fair Value Measurement of Financial Instruments (continued)
The Convertible Loan derivative liability which was separated from the host convertible loan contract, is a
financial instrument measured at fair value through profit and loss using Level 3 inputs as there is no observable
market data available (Note 8). The significant assumptions used in the valuation were the discount rate and the
probability of conversion and extension. The initial valuation of the convertible loan derivative liability was
prepared by an independent valuation specialist under the direct oversight of the Chief Financial Officer.
Discussions of valuation processes and results are reported to the audit committee every three months, in line
with the Company's quarterly reporting periods.
12.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 and accounts and other receivables. 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.
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, 2024 the maturity
of accounts payable and the due to related parties balances are under one year. The Company's contractual
obligations related to the Convertible Loan and interest are disclosed in Note 8. See Note 1.
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.
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. A 1% increase of the
value of the Canadian dollar relative to the U.S. dollar as at September 30, 2024 would result in an additional
$200,313 foreign exchange gain (loss) reported in the Company's statement of comprehensive loss for the year
ended September 30, 2024 (year ended September 30, 2023: ($60)). A 1% increase of the value of the
Canadian dollar relative to the Czech koruna as at September 30, 2024 would result in an additional ($205,389)
foreign exchange gain (loss) reported in the Company's statement of comprehensive loss for the year ended
September 30, 2024 (year ended September 30, 2023: ($121,728)).
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 33
13.Segmented Information
The Company has one operating segment, the development of the Chvaletice Manganese Project in the Czech
Republic.
14.Commitments
At September 30, 2024, the Company was committed to make the minimum annual cash payments as follows:
Payments due by period
Total
Less than
one year
1 - 2 years
$
$
$
Minimum rent payments
313,382
143,507
169,875
Operating expenditure commitments
535,330
534,440
890
Total contractual obligations
848,712
677,947
170,765
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 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 a parcel of land that underlies the tailings to the Company until the earlier of a 40-year period or upon
remediation of the land. The agreement grants the Company access to a portion of the tailings surface area.
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 as of July 1, 2022. The first payment of 3.7 million Czech Koruna ($204,000) was made
in July 2022 and the second payment of $10.4 million Czech Koruna ($611,000) was made in October 2023.
15.Supplemental Cash Flow Information
Non-cash financing and investing transactions in the year ended September 30, 2024 and 2023, were as
follows:
Year ended September 30,
2024
2023
$
$
Capital expenditures included in accounts payable
19,472
212,123
Shares issued for deferred equity commitment
—
80,606
Transfer of reserves on exercise of share options
—
146,708
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 34
16.Management of Capital
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,
the convertible financing facility and the operations at EPCS. Further information related to liquidity risk is
disclosed in Note 1 and 12.
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.
17.Income Taxes
A reconciliation of the income tax expense at the statutory tax rate of 27% (2023 - 27%) is as follows:
September 30,
2024
2023
$
$
Loss for the year
(18,327,101)
(12,008,131)
Expected income tax recovery
(4,948,317)
(3,242,195)
Non-deductible expenses and other
567,626
498,826
Effect of foreign tax rates and tax rate changes
1,405,299
846,329
Effect of deductible temporary difference not recognized
3,065,770
1,897,040
Income tax expense
90,378
—
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 35
17.Income Taxes (continued)
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:
September 30,
2024
2023
$
$
Equipment
48,110
46,142
Exploration and evaluation costs
6,140,137
5,374,006
Share issuance costs
1,276,256
1,110,925
Tax operating losses
7,240,051
7,405,382
14,704,554
13,936,455
Unrecognized deferred income tax assets
(14,704,554)
(13,936,455)
Deferred income tax assets
—
—
At September 30, 2024, 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 2025 and 2044.
At September 30, 2024
$
Canada
30,371,800
Czech Republic
8,394,500
Tax operating losses
38,766,300
18.Cost of Goods Sold
Year ended September 30,
2024
2023
$
$
Materials
1,848,828
—
Labour costs
690,057
—
Depreciation
1,236,704
—
3,775,589
—
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 36
19.Chvaletice Project Evaluation
Year ended September 30,
2024
2023
$
$
Engineering
2,332,547
2,477,686
Remuneration
1,227,824
1,215,320
Share-based compensation
70,190
166,728
Travel
70,322
120,760
Legal and professional fees
900,054
418,767
Marketing activities
1,189,870
107,290
Supplies and rentals
1,313,923
690,479
Depreciation
1,235,170
142,314
8,339,900
5,339,344
20.Corporate and Administrative
Year ended September 30,
2024
2023
$
$
Remuneration
2,841,842
2,973,228
Share-based compensation
938,129
1,443,848
Legal and professional fees
975,569
1,114,122
Travel
252,168
293,983
Filing and compliance fees
275,050
301,023
Office and administration
197,155
243,773
Insurance
249,915
231,673
Conferences
28,147
196,022
Investor relations
325,036
263,903
Product sales and marketing
30,782
87,289
Depreciation
126,121
118,859
Accretion
22,787
25,157
Foreign exchange
134,367
(370,724)
6,397,068
6,922,156
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 37
21.Events after the Reporting Period
a)
Orion amendment
Subsequent to year end the Company amended the terms of the Orion agreement (Note 8) whereby, in
exchange for waiving certain covenants of the original agreement for up to one year and the deferral of interest
payments from January 1, 2025 onwards, the Company will pay 14% interest on the outstanding loan and will
issue warrants of the Company matching the same terms for a future financing as if Orion had participated for
US$2,800,000 in that financing. The Company has also been granted the right to repay the convertible loan at
par, including all accrued and unpaid interest, and may cancel the second tranche of the Orion convertible debt
financing without penalty. In addition the Company also has the right to terminate the royalty conversion and
financing at any time prior to the satisfaction of the conditions precedent for the royalty for a fee of US$1 million,
provided that the outstanding loan amounts (and all accrued and unpaid interest) have been repaid in full at
such time. The warrants are subject to regulatory approval.
b)
Bécancour Option Agreement amendment
Subsequent to year end the Company amended the terms with SPIPB whereby the Company now has the
option to acquire an 8 hectare property at the Port of Bécancour for total consideration of $5,111,304 until
September 30, 2025. The total funds of $962,955 paid to date will be applied upon the option exercise against
the total purchase price. Certain conditions exist for closing including approval of project plans by SPIPB and
obtaining project financing.
c)
Options forfeited
Subsequent to the year end, 14,977,739 stock options were forfeited.
Notes to the Consolidated Financial Statements
Euro Manganese Inc.
(expressed in Canadian dollars)
Financial Statements
Year Ended September 30, 2024 | 38
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED SEPTEMBER 30, 2024
1 Introduction
2 Overview
3 Financial and Project Highlights
4 Outlook
5 Significant Transactions During the Year Ended September 30, 2024
6 Review of Operations
7 Annual Financial Review
8 Quarterly Financial Review
9 Liquidity and Capital Resources
10 Off Balance Sheet Arrangements
11 Related Party Transactions
12 Contractual Commitments
13 Outstanding Share Data
14 Proposed Transactions
15 Events after the Reporting Period
16 Significant Accounting Policies, Estimates and Judgments
17 Financial Instruments and Financial Risk Management
18 Internal Controls over Financial Reporting and Disclosure Controls and Procedures
19 Forward-Looking Statements and Risks Notice
Contents
MD&A
Year Ended September 30, 2024 | 2
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, BC, Canada. The Company’s
common shares are traded on the TSX Venture Exchange ("TSX-V") and on the OTC Venture Market
("OTCQB") 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 18, 2024, is intended to be read in conjunction with the Company's audited
consolidated financial statements for the year ended September 30, 2024 (the “September 2024 Financial
Statements”). The Company prepares its financial statements in accordance with International Financial
Reporting Standards, as issued by the International Accounting Standards Board ("IFRS Accounting
Standards"). The Company’s significant accounting policies are set out in Note 3 of the September 30, 2024
Financial Statements.
Additional information relating to the Company, including the Annual Information Form for the year ended
September 30, 2024, 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.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 3
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.
On December 28, 2023, Mangan acquired 100% of EP Chvaletice s.r.o. ("EPCS"') which 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, 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 three non-binding off-take term sheets for the sale of HPEMM or HPMSM from
the Chvaletice Manganese Project with consumers of high-purity manganese products and anticipates entering
into binding offtake agreements with those customers within the next 12 to 18 months. In addition, the Company
has signed two non-binding off-take term sheets for intermediate by products that will be produced concurrently
with the HPEMM and HPMSM. The Company is in active discussions and negotiations with multiple other
parties, including battery, chemical, and automobile manufacturers, and anticipates more term sheets will follow.
The Company is targeting 80% - 90% 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.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 4
2. Overview (continued)
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 the MD&A for the year ended September 30, 2023.
On March 27, 2024, the Company received the approval of the final Environmental and Social Impact
Assessment (“ESIA”) for the Project from the Ministry of Environment in the Czech Republic.
The Company engaged Wood Australia Pty Ltd ("Wood") as the preferred Engineering, Procurement, and
Construction Management ("EPCM") (Section 6 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 development of the Project. The 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 certain milestones; and (b) 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 precedent typical for this type of financing (the "Royalty Financing"). In connection with the
Funding Package, Orion has 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.
Subsequent to year end the Company amended the terms of the Orion agreement whereby, in exchange for
waiving certain covenants of the original agreement for up to one year and the deferral of interest payments
from January 1, 2025 onwards, the Company will pay 14% interest on the outstanding loan and will issue
warrants of the Company matching the same terms for a future financing as if Orion had participated for
US$2,800,000 in that financing. The Company has also been granted the right to repay the convertible loan at
par, including all accrued and unpaid interest, and may cancel the second tranche of the Orion convertible debt
financing without penalty. In addition the Company also has the right to terminate the royalty conversion and
financing at any time prior to the satisfaction of the conditions precedent for the royalty for a fee of US$1 million,
provided that the outstanding loan amounts (and all accrued and unpaid interest) have been repaid in full at
such time. The warrants are subject to regulatory approval.
About the Bécancour Project
The Company is evaluating its North American growth strategy and is evaluating an opportunity to develop a
project to produce high-purity manganese products for the North American market. In December 2022, the
Company entered into an option agreement with Société du parc industriel et portuaire de Bécancour (SPIPB),
the owner of Lot 12, a 15-hectare land parcel at Bécancour, Quebec, Canada, where it proposed 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 Project”) and WSP Canada Inc. ("WSP") was selected in
September 2023 to complete a feasibility study for the project. All work is currently on hold, pending financing.
Subsequent to year end the Company amended the terms with SPIPB whereby the Company now has the
option to acquire an 8 hectare property at the Port of Bécancour for total consideration of $5,111,304 until
September 30, 2025. The total funds of $962,955 paid to date will be applied upon the option exercise against
the total purchase price. Certain conditions exist for closing including approval of project plans by SPIPB and
obtaining project financing. The Company completed due diligence on Lot 3A in September 2024.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 5
2. Overview (continued)
Highlights of the positive scoping study for the Bécancour Project, announced on August 9, 2023, are
summarized in Section 5 of this MD&A. The Bécancour Project is planned to be fed with HPEMM from the
Chvaletice Project or other third-party providers, once operational. The Company also 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, 2024 and to the
date of this MD&A:
•
On November 12, 2024, the Company appointed Martina Blahova as Interim Chief Executive Officer and
Dean Larocque was appointed as Chief Financial Officer. Euro Manganese's Board initiated a process to
select a permanent Chief Executive Officer.
•
On October 16, 2024, the Company successfully completed a 5-day continuous operation program for the
production of high-purity electrolytic manganese metal at the Demonstration Plant. The Demonstration Plant
operated as-designed and without interruption, achieving 100% reliability over the 5-day program (i.e. no
stoppage time). Overall, 172 kg of HPEMM was produced, exceeding target production by over 30%.
•
The Company has three non-binding off-take term sheets for the sale of HPEMM or HPMSM from the
Chvaletice Manganese Project with consumers of high-purity manganese products and anticipates entering
into binding offtake agreements with those customers within the next 12 to 18 months. In addition, the
Company signed two non-binding off-take term sheets for intermediate by-products that will be produced
concurrently with the HPEMM and HPMSM.
•
On June 18, 2024, the commissioning of the high-purity manganese Demonstration Plant at the Company's
Chvaletice Manganese Project in the Czech Republic was successfully completed. Two independent
external laboratories have confirmed that samples of HPMSM made from HPEMM produced at the
Demonstration Plant meet its design target HPMSM specifications with low levels of impurities.
•
On March 27, 2024, the Company received approval of the ESIA for the Chvaletice Manganese Project
from the Czech Ministry of Environment.
•
On March 11, 2024, the Chvaletice Manganese Project was formally listed as under appraisal for debt
financing with the European Investment Bank.
•
On November 28, 2023, the Company signed definitive agreements with Orion 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, 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. In connection with the Funding Package, Orion was 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.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 6
3. Financial and Project Highlights (continued)
•
Subsequent to year end the Company amended the terms of the Orion agreement whereby, in exchange for
waiving certain covenants of the original agreement for up to one year and the deferral of interest payments
from January 1, 2025 onwards, the Company will pay 14% interest on the outstanding loan and will issue
warrants of the Company matching the same terms for a future financing as if Orion had participated for
US$2,800,000 in that financing. The Company has also been granted the right to repay the convertible loan
at par, including all accrued and unpaid interest, and may cancel the second tranche of the Orion
convertible debt financing without penalty. In addition the Company also has the right to terminate the
royalty conversion and financing at any time prior to the satisfaction of the conditions precedent for the
royalty for a fee of US$1 million, provided that the outstanding loan amounts (and all accrued and unpaid
interest) have been repaid in full at such time. The warrants are subject to regulatory approval.
•
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 2023, 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.
•
On October 4, 2023, the Company announced the completion of the rezoning of tailings land and
commercial plant land for the intended use.
4. Outlook
During the year ended September 30, 2024, the Company incurred a net loss of $18,327,101 and used
$13,585,155 cash for operating activities and $6,907,927 for investing activities. As at September 30, 2024, the
Company's working capital (current assets less current liabilities) was $7,982,450 however the Company's
capital resources are not expected to provide sufficient working capital to fund its corporate and project
development costs for at least twelve months from the date of these financial statements. As an early stage
development company, it has no material operating revenues and is unable to self-finance its operations.
Further, there is no assurance that the evaluation and development 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.
The Company has deferred its interest payments with Orion starting January 1, 2025, to provide additional
liquidity; however, it is anticipated that the Company will be required to obtain financing from the sale of equity
and/ or another form of financing. The ability of the Company to arrange such financing in the future will depend
principally upon prevailing market conditions and the performance of the Company. Such additional funding may
not be available when needed, if at all, or may not be available on terms favorable to the Company. These
factors give rise to material uncertainty that may cast significant doubt upon the Company's ability to continue
as a going concern. The consolidated financial statements do not reflect adjustments in the carrying values of
the assets and liabilities, the reported revenues and expenses and the balance sheet classifications used, that
would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern
in the normal course of operations. Such adjustments could be material.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 7
4. Outlook (continued)
The Company's short-term operating priorities include:
•
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;
•
subject to financing, advance the Phase 1 (FEED) of the EPCM contract with Wood and;
•
securing an optimum financing structure for the Project, which is dependent upon the above milestones
being achieved and/ or obtaining alternative or additional financing;
•
obtaining the status of a Strategic Project under the European Critical Raw Materials Act ("CRMA");
•
applying for and securing funding from grants and incentives available from the EU and Czech state;
5. Significant Transactions During the Year Ended September 30, 2024
The Company did not complete any significant transactions in the year ended September 30, 2024, other than
those 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.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 8
6. Review of Operations (continued)
•
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").
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 9
6. Review of Operations (continued)
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.
Tailings
Cell #
Classification
Dry In-situ
Bulk Density
(t/m3)
Volume
(x1,000 m3)
Tonnage
(kt)
Total Mn
(%)
#1
Measured
1.52
6,577
10,029
7.95
Indicated
1.47
160
236
8.35
#2
Measured
1.53
7,990
12,201
6.79
Indicated
1.55
123
189
7.22
#3
Measured
1.45
2,942
4,265
7.35
Indicated
1.45
27
39
7.90
Total
Measured
1.51
17,509
26,496
7.32
Indicated
1.50
309
464
7.85
Combined
Measured and Indicated
1.51
17,818
26,960
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 the JORC Code.
2.
The Chvaletice Mineral Resource has a reasonable prospect for eventual economic extraction. Mineral Resources do
not have demonstrated economic viability.
3.
Indicated Resources have lower confidence than Measured Resources.
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 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.
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:
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 10
6. Review of Operations (continued)
Tailings
Cell #
Classification
Dry In-situ
Bulk Density
(t/m3)
Volume
(m3)
Tonnage
(metric tonnes)
Total Mn
(%)
#1
Proven
1.51
6,651
10,132
7.83
Probable
1.52
141
208
8.24
#2
Proven
1.53
7,929
12,106
6.91
Probable
1.54
199
183
7.35
#3
Proven
1.46
2,744
3,979
7.49
Probable
1.46
25
36
7.98
Total
Proven
1.50
17,325
26,217
7.35
Probable
1.51
284
427
7.84
Combined
Proven and Probable
1.51
17,609
26,644
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 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% carbon free and renewable
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.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 11
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.
As of end of November 2024, all work on the FEED phase has now been suspended, pending further financing.
Environmental and Social Impact Assessment
The Company received a positive decision on the revised ESIA on March 27, 2024.
History of the ESIA process includes: 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
related to noise abatement from the authority that had yet to approve the ESIA.
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 exceeded permitted noise levels at the measurement points, located at the closest residential areas.
The revision of the noise study within the ESIA also required the Company to consider new noise legislation
related to traffic noise which came into force in July 2023 after the ESIA's original submission in December
2022. The necessary work to address the comments related to noise was completed and the revised ESIA was
submitted in October 2023.
Following approval of the ESIA (March 2024), a Land Planning Permit Documentation is required to be
submitted. Respectively, it is two separate submissions - documentation for the processing plant and
documentation for the railway, shunting yard. The documentation for both applications are complete. The
statements of the concerned authorities of the State administration and opinions of the affected landowners/
neighbours are currently being collected. Documentation will be submitted for final proceedings in the first
quarter of calendar 2025. There are no objections coming from the Authorities. The Land Planning Permit
approval timeline is typically three months once submitted, resulting in an anticipated approval in the first/
second calendar quarter of 2025. The Construction Permit documentation is a deliverable of the FEED phase
as a part of the EPCM work with an expected permit approval timeline of approximately three months post
submission, resulting in an anticipated approval in the last quarter 2026 (assuming FEED work will start mid
2025) or most likely first quarter 2027, subject to securing sufficient funds for the completion of FEED Phase 1.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 12
6. Review of Operations (continued)
The positive binding ESIA statement triggered the Delimitation of the Mining Lease process defined in Act No.
44/1988 Coll., on the Protection and Use of Mineral Resources (the Mining Act). The mining lease will be
granted in the same area as the Protected Deposit Area. Documentation was conducted in June 2024 and after
collection of the state Authorities was submitted to the Mining Authority for final proceeding process. The public
hearing is in December 2024 with anticipated issuance of the permit in the first calendar quarter 2025.
Demonstration Plant Progress Update
The Demonstration Plant was fully commissioned in July 2024, with all modules operating on a consistent basis,
and producing on-spec products. Two independent external laboratories have confirmed that samples of
HPMSM made from HPEMM produced at the Demonstration Plant meet its design target HPMSM specifications
with low levels of impurities. Concurrently, the Permanent Operating Permit for the Demonstration Plant was
received from the Department of Building and Spatial Planning of the Municipality of Chvaletice in June 2024.
On October 16, 2024, the Company successfully completed a 5-day continuous operation program for the
production of high-purity electrolytic manganese metal at the Demonstration Plant. The Demonstration Plant
operated as-designed and without interruption, achieving 100% reliability over the 5-day program (i.e. no
stoppage time). Overall, 172 kg of HPEMM was produced, exceeding target production by over 30%.
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.
Acquisition of EP Chvaletice and Land Acquisitions
On August 13, 2018, the Company, through its Czech subsidiary Mangan, entered into an option agreement
with EPCS to acquire 100% interest in EPCS by making several payments. 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.
The Company made total payments of 72.1 million Czech Koruna ($4.22 million) from October 17, 2018, to
September 30, 2023. In the year ended September 30, 2024, the Company completed the purchase of EPCS
by making two additional payments of 20 million Czech Koruna ($1.2 million) and 51 million Czech Koruna ($3.0
million) on November 29, 2023, and December 28, 2023, respectively.
The option payments made prior to the acquisition of EPCS were a derivative classified as fair value through
profit and loss due to the following: i) the option was for the acquisition of shares of EPCS rather than a non-
monetary asset; ii) it did not meet any of the scope exceptions from recognition as a derivative asset under
IFRS 9 Financial Instruments; and iii) control of EPCS was not present until the last option payment was made.
On the acquisition date on December 28, 2023, the option was revalued based on a third party valuation of
acquired assets at $9.0 million, resulting in $0.3 million increase in the value of the option and corresponding
gain in the statement of loss and comprehensive loss.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 13
6. Review of Operations (continued)
The acquisition was accounted for as a purchase of assets as it met the concentration test under IFRS 3
Business combinations. The cost of the acquisition was $10.8 million (216.1 million Czech Koruna), consisting
of the cash payments made to that date of $8.7 million (143.1 million Czech Koruna), the increase in fair value
of the derivative of $0.3 million (37.1 million Czech Koruna) and a $1.8 million (30.0 million Czech Koruna) of
working capital adjustment. The purchase price was allocated to the assets acquired and the liabilities assumed
in accordance with their fair value. The value of the land was determined using the comparative method to
reflect the real estate prices achievable for comparable undeveloped land plots in the market at the time of
valuation. The buildings currently in use by EPCS were valued using the income method, assuming rent rates
for similar spaces in nearby areas. The valuation of movable assets (machinery equipment and vehicles) was
based on historical prices, reflecting the technical value and saleability factor.
The Company has agreements to acquire rights to three additional strategic parcels of land, completing its land
assembly for the proposed Chvaletice commercial plant.
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 9.50 million Czech Koruna (approximately $568,000), 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 was 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 54.3 million 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 $2,038,007 was paid in January 2024.
On October 30, 2023, the Company signed a 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
(the "ČEZ Lease Agreement"). 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.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 14
6. Review of Operations (continued)
High-Purity Manganese Market Overview and Product Marketing
High-performance Lithium-ion ("Li-ion") batteries are widely used in EVs and other energy storage applications.
Among the various chemistries, the nickel-manganese-cobalt (“NMC”) cathodes dominate the EV batteries in
the Western world, accounting for nearly 50% of total Li-ion batteries produced, measured by megawatt hours
(MWh). Within the NMC family, formulations such as NMC811 - comprising 80% nickel, 10% manganese, and
10% cobalt - are particularly prevalent.
Over the past two quarters, global EV adoption growth has slowed, dropping from over 30% to above 20%, with
significant regional variations: Europe is reporting a slight absolute decline in EV sales; in the United States the
growth continues but at a slower pace and China maintains strong growth.
This deceleration is largely driven by cost barriers as many Western OEMs are struggling to produce EVs at
prices suitable for the mass market, where affordability is key. There are also policy shifts in several countries,
notably Germany, which have phased out EV subsidies that previously spurred demand. Additionally, production
scale limitations can be seen. Without sufficient production scale, the OEMs cannot achieve cost efficiencies,
leading to cautious expansion plans and capital conservation.
These challenges have cascaded through the supply chain, affecting battery, cathode active material ("CAM"),
and precursor CAM ("pCAM") manufacturers. Many are revising schedules, adjusting capacities, and exploring
cost-reduction strategies, including shifts in battery chemistries. Pricing pressure has become a central concern
as stakeholders hesitate to commit to offtake volumes amid market uncertainty.
Manganese in Battery Chemistries
Amid these challenges, increasing the use of manganese, which is the least expensive battery metal, is gaining
traction as a cost-reduction strategy.
Lithium-Iron-Manganese-Phosphate ("LMFP") Chemistries:
•
LMFP batteries are emerging as a new contender, with manganese content reaching 30% or higher.
•
LMFP batteries offer improved performance compared to LFP chemistries and are projected to be the
lowest-cost EV batteries on a $/kWh basis, according to recent (2023) analysis by Fastmarkets.
Other Innovative Chemistries:
•
Manganese-rich chemistries such as LMNO (Lithium-Manganese-Nickel Oxide) and Sodium-Ion (Na-
ion) are also gaining attention.
•
These batteries often utilize alternative manganese forms, including manganese carbonate, phosphate,
and oxides (Mn₂O₃ or Mn₃O₄), which can be produced more economically from High Purity Electrolytic
Manganese Metal (HPEMM) than from HPMSM or direct ore processing.
Supply Chain Dynamics: Manganese Production
Currently, HPMSM is the dominant form of manganese used in Li-ion batteries. However, other forms of
manganese are increasingly in demand for advanced chemistries. As a result, HPEMM is becoming a more
favorable precursor for producing diverse manganese salts due to its cost-effectiveness. These developments
could help manufacturers reduce costs and enhance flexibility in battery production.
In January 2023, the Company signed a non-binding term sheet with Verkor, a low-carbon battery manufacturer
in Grenoble, France, for the supply of HPMSM from its project. By the end of fiscal 2024, three additional term
sheets were signed with battery and industrial customers for the supply of HPMSM, HPEMM, and an
operational by-product.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 15
6. Review of Operations (continued)
Offtake discussions are ongoing with stakeholders across the supply chain, including automotive OEMs, battery
manufacturers, and CAM/pCAM producers, as well as for non-battery industrial applications.
The Company aims to secure offtake contracts for 80%-90% of its production capacity to support project
financing and remains well-positioned to capitalize on the growing demand for manganese in the evolving
battery market.
The European Critical Raw Materials Act ("CRMA"), published by the European Commission, came into force
on May 23, 2024. The CRMA classifies battery-grade manganese as a strategic raw material and outlines
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 set
targets that, by 2030, 10% should be mined, 45% processed and 25% recycled within the EU, and no more than
65% of any strategic raw materials come from a single third country. The Chvaletice Manganese Project
expects to deliver almost 50,000 tonnes of HPEMM per year when in full production, meeting approximately
15-20% of European demand and helping the EU reduce its import reliance on this strategic raw material.
In addition, in early May 2024, the US Department of Treasury published the final rules for the Inflation
Reduction Act on how manufacturers may satisfy the critical mineral and battery component requirements of the
clean vehicle tax credit. Specifically, the rules clarify that an eligible clean vehicle may not contain any critical
minerals that were extracted, processed, or recycled by a foreign entity of concern (with the exception of
graphite). Additionally, manufacturing companies will have the obligation to undertake full traceability of the
supply chain to ensure there is no involvement of a foreign entity of concern at any stage.
On December 11, 2024 NATO published a list of 12 defense critical raw materials, including manganese,
essential for the Allied defense industry. These materials are integral to the manufacture of advanced defense
systems and equipment.
Strategic Project status under CRMA, Potential Grants and Subsidies
The Company submitted the EU CRMA Strategic Project application in August 2024. The CRMA Board approval
expects to announce the list of Strategic Projects in March 2025. The benefits of being a Strategic Project
include:
i.
Strategic Project status under the CRMA allows project promoters to gain access to financing for
completion of the project financing, taking into account private and public sources of funding with
relevant national promotional banks, the EIB, EBRD and private financial institutions. Strategic Projects
may receive preferential financing terms.
ii.
The status of a Strategic Project also ensures the possibility for regional and national authorities to
make use of funding from the European Development Fund and Cohesion Fund to support the relevant
project, in line with the new Strategic Technologies for Europe Platform regulations. These funds are
administered by regional and national authorities and the European Commission makes sure that the
projects are successfully concluded.
iii.
Strategic Projects in the EU could benefit from a preset time frame for permitting.
The Company has engaged with the Investment and Business Development Agency of the Czech Republic,
CzechInvest, who manage the process of Czech Government investment incentives. Initial discussions indicate
the Chvaletice Manganese Project would qualify as production of strategic products and may benefit from both
corporate income tax relief and cash grants.
The Company is also preparing for an application to the EU Innovation Fund’s call for proposals, which was
announced on December 3, 2024. The EU Innovation Fund is one of the world’s largest funding programmes for
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 16
the demonstration of innovative low-carbon technologies, which is funded by the EU Emissions Trading System
(ETS). The money raised via the ETS is reinvested into the Innovation Fund.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 17
6. Review of Operations (continued)
Bécancour Project
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, which is inclusive of both the land purchase price of $6,046,500 plus option infrastructure of
$3,124,500 for an all in cost per hectare of $61.14/Ha. As at September 30, 2024, the Company has made 21
payments aggregating $962,955.
The option agreement expired on September 30, 2024, and has since been granted a 1 year extension to
September 30, 2025. The land parcel of interest has also changed to a smaller 8.36-hectare section, Lot 3A, for
which the total purchase price (inclusive of optional infrastructure) is $5,111,304. The Company completed due
diligence on Lot 3A in September 2024.
The site of the Bécancour Project is strategically located adjacent to a cluster of planned CAM manufacturing
plants, including Ultium CAM (GM/Posco) and BASF. Québec also offers attractive government financial support
programs that may provide incentives for the construction of the Bécancour Project. 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 project, leveraging the
extensive process development and recent engineering work from the Chvaletice Project. The Bécancour
Project 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
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 favourable 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 project is a short build time, estimated by the study to be
approximately a two-year engineering/construction duration.
Minimal infrastructure improvements are required to build the Bécancour Project. 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 adjacent railway line. Onsite infrastructure includes roads, plant and administrative
buildings, power distribution and storage buildings for HPEMM feedstock and HPMSM product. Feedstock
optionality via a third-party metal supply was modeled. This may facilitate operation of the Bécancour Project,
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.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 18
6. Review of Operations (continued)
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 for which the Company has engaged AtkinsRealis (formerly SNC-Lavalin).
A number of general assumptions were used in the Scoping Study to assess the economics of constructing and
operating the proposed Bécancour 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 Project 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 Project are not
the same as terms defined by the CIM Definition Standards and used in NI 43-101.
In 2023, 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 Project 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 Project, especially during the evaluation and planning phases.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 19
7. Annual Financial Review
Years ended September 30,
2024
2023
2022
(expressed in thousands of Canadian dollars, except per share data)
$
$
$
Revenue
3,217
—
—
Cost of goods sold
(3,776)
—
—
Chvaletice Project evaluation
(8,340)
(5,339)
(5,671)
Other evaluation
(95)
(382)
(456)
Corporate and administrative
(6,397)
(6,922)
(7,330)
Gain on derivative instruments
316
—
—
Interest income
420
635
—
Finance expense
(3,582)
—
—
Income tax expense
(90)
—
—
Other comprehensive income (loss) for the year
34
—
—
Net loss for the year attributable to shareholders
(18,293)
(12,008)
(13,457)
Basic and diluted loss per share attributable to shareholders (1)
$0.05
$0.03
$0.03
As at September 30,
2024
2023
2022
$
$
$
Cash and cash equivalents
9,364
7,650
21,561
Total assets
40,468
29,953
39,896
Non-current financial liabilities
27,182
—
166
(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.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 20
7. Annual Financial Review (continued)
Year ended September 30, 2024, compared to the year ended September 30, 2023
The loss and comprehensive loss for the year ended September 30, 2024, of $18,293,340 compared to a loss
of $12,008,131 for the year ended September 30, 2023, represents an increase of $5,785,209 or 49%. Basic
and fully diluted loss per share in the current increased to $0.05 per common share from $0.03. An overview of
the project evaluation and other expenses, and an explanation of the significant variances is as follows:
Year ended September 30,
2024
2023
(expressed in thousands of Canadian dollars, except per share data)
$
$
Revenue
3,217
—
Cost of goods sold
(3,776)
—
Gross loss
(559)
—
Operating Expenses
Chvaletice Project evaluation
(8,340)
(5,339)
Other evaluation
(95)
(382)
Corporate and administrative
(6,397)
(6,922)
Gain on derivative instruments
316
—
Operating loss
(15,075)
(12,643)
Interest income
420
635
Loss before financing and income tax
(14,655)
(12,008)
Finance expense
(3,582)
—
Loss before income taxes
(18,237)
(12,008)
Income tax expense
(90)
—
Loss for the year
(18,327)
(12,008)
Other comprehensive income (loss) for the year
34
—
Loss and comprehensive loss for the year
(18,293)
(12,008)
Basic and diluted loss per common share
$0.05
$0.03
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 21
7. Annual Financial Review (continued)
Revenue for the year ended September 30, 2024 and 2023, was $3,217,089 and nil, respectively. Revenue was
generated from the sale and servicing of specialty steel products generated from EPCS which was acquired in
the quarter ended December 2023. Gross losses for the year ended September 30, 2024 and 2023, were
$558,500 and nil, respectively. The gross loss is mainly due to the depreciation on assets acquired on the
acquisition of EPCS. The steel fabrication business is cash flow positive however the EPCS building and
equipment acquired has an estimated life of 2 years as they must be demolished to make way for the
construction of the Project.
Chvaletice Project evaluation for the year ended September 30, 2024 and 2023, were $8,339,900 and
$5,339,344, respectively. The increase over the comparative fiscal 2023 is mainly related to the increase in
marketing activities, supplies and rentals, depreciation and legal fees. The main variances include: a
$1,082,580 increase in marketing activities due to a focus on product marketing and consulting fees; an
increase of $623,443 in supplies and rentals mainly due to the inflationary increase of the land rental from the
Municipality of Chvaletice; $1,092,856 increase in depreciation as the demonstration plant started to be
depreciated effective July 1, 2024 as it was deemed to be ready for its intended use; and a $481,287 increase
in legal and professional fees mainly related to land access rights negotiations and documentation. The overall
increase in the Chvaletice Project evaluation was partially offset by a decrease of $145,139 in engineering costs
due to the completion of the final ESIA; a decrease of $96,538 in share-based compensation due to the partial
vesting of a share option grant in the comparative year; and a $50,437 decrease in travel due to fewer visits to
site.
Other evaluation costs for the year ended September 30, 2024 and 2023, were $94,964 and $381,697,
respectively. In the comparative year, 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 plant in Québec, Canada. The decrease of $286,733 in costs over the comparative year is mainly
attributable to limited activity at the project as further progress is subject to financing. Other evaluation in the
current year are net of $63,609 of grants from the National Research Council of Canada’s Industrial Research
Assistance Program ("IRAP") compared to $48,005 in 2023.
The $525,087 decrease in corporate and administrative for the year ended September 30, 2024, compared to
the same year in 2023, is mainly attributable to: a decrease of $505,719 in share-based compensation due to
partial vesting of a share option grant in the comparative year; a $167,875 decrease in conferences due to the
attendance of fewer conferences, campaigns, and promotional activities; a $138,553 decrease in legal and
professional expenses due to lower fees for consulting work compared to the previous period; a $131,386
decrease in remuneration due to fewer number of employees in the corporate office in Canada and lower short
term incentive rewards than in fiscal 2023; a $56,507 decrease in product sales and marketing due to lower
fees for marketing services; a $50,295 decrease in office, general and administrative costs due to decreased IT,
communications, and other administrative expenses; a $41,815 decrease in travel due to the attendance at
fewer conferences; and a $25,973 decrease in filing and compliance fees in the current year. The overall
decrease in administrative costs was partially offset by an increase of $61,133 in investor relations expenses
due to more campaigns and promotional activities in the current period. Additionally, the Company recorded a
foreign exchange loss of $134,367 in the current year compared to a foreign exchange gain of $370,724 in
2023. The Company recorded a decrease of $215,391 in interest earned on the Company's bank deposits and
an increase of $3,581,867 in finance expenses due to the interest expense incurred in relation to the Funding
Package.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 22
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 per share amounts:
As at the end of or for the
period ending
Jul to
Sep'24
Apr to
Jun'24
Jan to
Mar'24
Oct to
Dec'23
Jul to
Sep'23
Apr to
Jun'23
Jan to
Mar'23
Oct to
Dec'22
$
$
$
$
$
$
$
$
Cash and cash equivalents
9,364
13,201
20,099
24,293
7,650
10,896
13,805
18,305
Total assets
40,468
45,640
51,918
55,223
29,953
32,603
34,956
38,212
Working capital (1)
7,982
11,718
15,549
22,075
5,691
9,187
11,191
16,129
Current liabilities
2,972
3,247
5,922
4,758
2,852
2,333
3,008
2,758
Revenue
705
1,314
1,198
—
—
—
—
—
Cost of goods sold
(778)
(1,478)
(1,519)
—
—
—
—
—
Chvaletice Project evaluation
(2,462)
(1,826)
(2,813)
(1,109)
(1,853)
(604)
(1,722)
(1,018)
Other evaluation
(69)
(2)
27
(51)
(34)
(51)
(87)
(210)
Corporate and administrative
(1,109)
(1,604)
(2,050)
(1,386)
(1,221)
(1,178)
(2,073)
(1,321)
Loss for the period
(5,097)
(4,389)
(5,999)
(2,842)
(3,224)
(2,104)
(3,970)
(2,708)
Other comprehensive income
(loss) for the period
150
110
(226)
—
—
—
—
—
Loss and comprehensive loss for
the period
(4,448)
(4,279)
(6,225)
(2,842)
(3,224)
(2,104)
(3,970)
(2,708)
Basic and diluted loss per
common share
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
(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.
Summary of major variations in quarterly financial activities:
The variation in quarterly evaluation expenditures is mainly attributed to the following:
•
In the most recent three quarters, the Company's revenues and cost of goods sold represents the results of
EPCS which was acquired in the quarter ended December 2023. Cost of goods sold of EPCS were
significantly impacted by depreciation of assets revalued at acquisition.
•
In the four quarters from January to December 2023, the Company focused on awarding the EPCM
contract and initiating Phase 1 with the gap analysis work, as well as on the completion and submission of
the ESIA. The number of employees at the Project site has risen continuously in relation to the
demonstration plant site preparation and commissioning, which was completed in the quarter ended June
30, 2024. Expenses in the quarter ended March 31, 2024 increased due to marketing activities, consulting,
depreciation (as the demonstration plant was ready for its intended use) and legal fees.
•
In the nine quarters from July 2022 to September 2024, 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.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 23
8. Quarterly Financial Review (continued)
Fluctuations in the level of quarterly administrative expenditures is mainly attributed to the following:
•
Compared to the other periods, the quarter ended December 31, 2022, was impacted by an unrealized
foreign exchange gain relating to the revaluation of the EPCS Option and in the quarter ended March 31,
2023, corporate and 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. Short term incentives were also
paid during the quarter ended March 31, 2024.
•
The increase in expenses in the recent four quarters is also due to interest expense related to the Funding
Package.
•
In the six most recent quarters from April 2023 to September 2024, the interest income from bank deposits
partially offset administrative expenditures.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 24
8. Quarterly Financial Review (continued)
Three months ended September 30, 2024, compared to the three months ended September 30, 2023
The loss for the three months ended September 30, 2024, of $4,447,680 compared to a loss of $3,225,594 for
the three months ended September 30, 2023, represents an increase of $1,222,086 or 38%. 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,
2024
2023
(expressed in thousands of Canadian dollars, except per share data)
$
$
Revenue
705
—
Cost of goods sold
(778)
—
Gross loss
(73)
—
Operating Expenses
Chvaletice Project evaluation
(2,462)
(1,892)
Other evaluation
(69)
(34)
Corporate and administrative
(1,109)
(1,417)
Operating loss
(3,713)
(3,343)
Interest income
117
116
Loss before financing and income tax
(3,596)
(3,227)
Finance expense
(1,412)
—
Loss before income taxes
(5,008)
(3,227)
Income tax expense
(90)
—
Loss for the period
(5,098)
(3,227)
Other comprehensive income (loss) for the period
150
—
Comprehensive loss for the period
(4,948)
(3,227)
Basic and diluted loss per common share
$0.01
$0.01
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 25
8. Quarterly Financial Review (continued)
Revenue for the three months ended September 30, 2024 and 2023, was $705,140 and nil, respectively.
Revenue was generated from the sale of specialty steel products from EPCS which was acquired in the quarter
ended December 2023. Gross losses for the three months ended September 30, 2024 and 2023, were $73,107
and nil, respectively. The gross loss is due to high depreciation on assets revalued at acquisition of EPCS.
Chvaletice Project evaluation for the three months ended September 30, 2024 and 2023, were $2,461,666 and
$1,891,515, respectively. The increase over the comparative period in 2023 is mainly related to depreciation of
the demonstration plant during the 2024 quarter as it was the first period where it was ready for its intended use.
Other evaluation for the three months ended September 30, 2024 and 2023, were $68,740 and $33,721,
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 plant in
Québec, Canada. The increase of $35,019 in costs over the comparative period is mainly attributable to
increase in engineering expenses for due diligence work.
The $307,949 decrease in corporate and administrative expenses for the three months ended September 30,
2024, compared to the same period in 2023, is mainly attributable to: a decrease of $160,909 in share-based
compensation due to partial vesting of a share option grant in the comparative period; a $24,932 decrease in
travel due to the attendance of fewer conferences; a $23,700 decrease in remuneration due to fewer number of
employees in the corporate office in Canada; and a $20,386 decrease in product sales and marketing due to a
reduction of contractor services. The overall decrease in administrative costs was partially offset by an increase
of $140,654 in legal and professional expenses due to higher volume of consulting work compared to the
previous period; and an increase of $87,816 in investor relations due to more campaigns and promotional
activities in the current period. The Company recorded an increase of $1,411,565 in finance expenses due to
the interest expense incurred in relation to the Funding Package.
9. Liquidity and Capital Resources
As an early stage development company, it has no material operating revenues and is unable to self-finance its
operations. Further, there is no assurance that the evaluation and development 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.
During the year ended September 30, 2024, the Company incurred a net loss of $18,327,101 and used
$13,585,155 cash for operating activities and $6,907,927 for investing activities. As at September 30, 2024, the
Company's working capital (current assets less current liabilities) was $7,982,450 however the Company's
capital resources are not expected to provide sufficient working capital to fund its corporate and project
development costs for at least twelve months from the date of these financial statements. The Company has
deferred its interest payments with Orion from January 1, 2025, to provide additional liquidity however it is
anticipated that the Company will be required to obtain financing from the sale of equity and/ or another form of
financing. The ability of the Company to arrange such financing in the future will depend principally upon
prevailing market conditions and the performance of the Company. Such additional funding may not be
available when needed, if at all, or may not be available on terms favorable to the Company. These factors give
rise to material uncertainty that may cast significant doubt upon the Company's ability to continue as a going
concern. The consolidated financial statements do not reflect adjustments in the carrying values of the assets
and liabilities, the reported revenues and expenses and the balance sheet classifications used, that would be
necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the
normal course of operations. Such adjustments could be material.
The Company’s commitments at September 30, 2024, are shown in Section 12 of this MD&A.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 26
10.Off Balance Sheet Arrangements
As at September 30, 2024, 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 year ended September 30, 2024 and 2023, 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, 2024, 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.
Year ended September 30,
2024
2023
$
$
Salaries and fees
2,387,495
2,379,749
Share-based compensation
1,221,426
1,314,075
3,608,921
3,693,824
At September 30, 2024, amounts owing to directors and officers of the Company for salaries and directors' fees
amounted to $27,839 (2023 - $35,904). 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, 2024, for the reimbursement of office and travel related expenses were $5,221 (2023 - $3,010).
12.Contractual Commitments
As at September 30, 2024, the Company was committed to make the minimum annual cash payments, as
follows:
Payments due by period
Total
Less than
one year
1 - 2 years
$
$
$
Minimum rent payments
313,382
143,507
169,875
Operating expenditure commitments
535,330
534,440
890
Total contractual obligations
848,712
677,947
170,765
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.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 27
12.Contractual Commitments (continued)
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 a parcel of land that underlies the tailings to the Company until the earlier of a 40-year period or upon
remediation of the land. The agreement grants the Company access to a portion of the tailings surface area.
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 as of July 1, 2022. The first payment of 3.7 million Czech Koruna ($204,000) was made
in July 2022 and the second payment of $10.4 million Czech Koruna ($611,000) was made in October 2023.
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 18,
2024:
Number of securities
Issued and outstanding common shares
402,669,227
Share purchase options
21,957,454
14.Proposed Transactions
As at September 30, 2024, 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.
15.Events After the Reporting Period
There were no additional events after the reporting period other than the Orion amendment and the Bécancour
Option Agreement amendment as described in Section 2 of this MD&A.
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 Accounting
Standards. 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, 2024. The impact of
future accounting pronouncements is disclosed in Note 3.16 of the September 30, 2024 Financial Statements.
Significant 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 3.14 of the September 2024 Financial Statements.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 28
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 11 and 12, respectively, of the September 30, 2024 Financial
Statements.
18.Internal Controls over Financial Reporting and Disclosure Controls and Procedures
Management has established processes to provide them with sufficient knowledge to support representations
that they have exercised reasonable diligence that: (i) the consolidated financial statements for the year ended
September 30, 2024, 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; and (ii) the consolidated financial statements for the year ended September 30, 2024,
fairly present in all material respects the financial condition, results of operations and cash flow of the Company.
There was no change in the Company's internal controls over financial reporting that occurred during the year
ended September 30, 2024, that has materially affected, or is reasonably likely to materially affect, the
Company's internal controls over financial reporting.
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.
There was no change in the Company's disclosure controls and procedures that occurred during the September
30, 2024, that has materially affected, or is reasonably likely to materially affect, the Company's disclosure
controls and procedures.
Limitations of Controls and Procedures
The Company's management, including the President and Chief Executive Officer and Chief Financial Officer,
believe that any internal controls over financial reporting and disclosure controls and procedures, no matter how
well designed, can have inherent limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance that the objectives of the control system are met.
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 Manganese Project, its proposed Bécancour Project 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.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 29
19.Forward-Looking Statements and Risks Notice (continued)
Forward looking information for the Chvaletice Manganese Project includes: statements regarding the
Company’s ability to obtain financing and progress FEED under the EPCM contract; the ability to make a
positive final investment decision; statements regarding the ability of the Company to obtain remaining surface
rights; the Company’s expectation that the Land Planning Permit will be obtained in the first/second calendar
quarter of 2025, the Construction Permit will be obtained calendar 2026, and the ability to obtain any other
regulatory approvals and permits; the continued operation of the demonstration plant; statements regarding the
Company's ability to achieve conditions precedent to access further funding from the Convertible Loan Facility
or Royalty Financing; the ability of the Company to obtain additional financing, support from European financial
institutions; the ability to obtain strategic project status under CRMA and any associated benefits, and the ability
to obtain any grants, subsidies, or funding from the EU, Czech state, or under any government program or
legislation. In addition, forward looking statements include: statements about 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 on favorable terms or at all; the state of the EV
industry; and the use of manganese in batteries.
Regarding the Bécancour Project, forward-looking statements include, but are not limited to: statements
concerning the Company’s plans for advancing the Bécancour Project 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 source feedstock, the Company’s ability to operate the
Bécancour Plant and associated production, the projected growth of the North American demand for high-purity
manganese products, any benefits of legislation, 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.
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.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 30
19.Forward-Looking Statements and Risks Notice (continued)
Factors that could cause actual results or events to differ materially from current expectations include, among
other things: insufficient working capital for the next twelve months which could result in delay, indefinite
postponement or curtailment of the Chvaletice Manganese Project or the ability of the Company to continue as
a going concern; lack of additional funding to continue operations as planned and failure to secure any grants,
subsidies or other benefits from government programs; the inability to develop adequate processing capacity
and production; the availability and cost of equipment, consumables, facilities, and suppliers necessary to
complete development; 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; risks and uncertainties related to the accuracy of
mineral resource and reserve estimates; the price of HPEMM and HPMSM; total costs of production;
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; the inability to access the next US$30 million of financing under the secured loan; unexpected
results or unsuccessful completion of the various stages of the EPCM contract; and changes in project
parameters as plans evolve . 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 increases; 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 the feasibility study or other technical studies or unexpected results;
risks and uncertainties related to limited feedstock supply options; and the inability to secure offtake
agreements.
Additional factors that could cause results or events to differ materially from current expectations include:
execution risk; 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; 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 market and
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, 2024, available on the Company's SEDAR+ profile at
www.sedarplus.ca.
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.
Euro Manganese Inc.
MD&A
Year Ended September 30, 2024 | 31
MINING TENEMENTS AND MINERAL RESOURCE / RESERVE STATEMENT
Mining Tenements Held by the Company and the Percentage Interest held in each Mining Tenement:
Tenement
License Status
Reference
Note
Interest
Acquired
During Year
Interest
Divested
During Year
Interest
Held at
Year-end
Trnávka I
Exploration
631/550/14-Hd
1
-
-
100%
Trnávka II
Exploration
MZP/2018/550/386-HD
2
-
-
100%
Preliminary Mining
Permit
Preliminary Mining
Permit
MZP/2021/550/768-HD
3
-
-
100%
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. s at September 30, 2024
there are no material changes to the Company’s Mineral Resource Estimate.
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.
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
In-situ Dry Bulk
Density
(t/m3)
Volume
(x1,000 m3)
Tonnage
(kt)
Grade Mn
(% total Mn)
Cell #1
Measured
1.52
6,577
10,029
7.95
Indicated
1.47
160
236
8.35
Cell #2
Measured
1.53
7,990
12,201
6.79
Indicated
1.55
123
189
7.22
Cell #3
Measured
1.45
2,942
4,265
7.35
Indicated
1.45
27
39
7.90
Total Measured
1.51
17,509
26,496
7.32
Total Indicated
1.50
309
464
7.85
Combined Measured + Indicated
1.51
17,818
26,960
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.
3.
Indicated Resources have lower confidence than Measured Resources.
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.
Chvaletice Mineral Reserve Statement (effective July 14, 2022)
Historic Tailings Cell
In-situ Dry Bulk
Density
(t/m3)
Volume
(x1,000 m3)
Tonnage
(kt)
Grade Mn
(% total Mn)
Cell #1
Proven
1.51
6,651
10,132
7.83
Probable
1.52
141
208
8.24
Cell #2
Proven
1.53
7,929
12,106
6.91
Probable
1.54
119
183
7.35
Cell #3
Proven
1.46
2,744
3,979
7.49
Probable
1.46
25
36
7.98
Total Proven
1.50
17,325
26,217
7.35
Total Probable
1.51
284
427
7.84
Combined Proven + Probable
1.51
17,609
26,644
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. Mr.
Huang, and Mrs. Marks were consultants to the Company during the preparation of the technical report 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, were consultants to the Company during the preparation of the NI43-101 technical report
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’. Mr. 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.
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.
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 2024.
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
2024, 402,669,227 Shares (including CDIs) were issued and outstanding and held by 5,737 shareholders, one of which (CDS
& Co.) held 175,235,476 Shares on behalf of 27 nominee and depository entities. As of 18 December 2024, the number of
Shares issued and outstanding remained at 402,669,227 and there were 21,957,454 Shares issuable on the exercise of
incentive stock options held by twenty-six option holders.
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 2024, the distribution of shareholders was as follows:
Size of holding
Number of holders
Percentage
1 – 1,000
703
12.25%
1,000 – 5,000
2,216
38.63%
5,001 – 10,000
966
16.84%
10,001 – 100,000
1,575
27.45%
100,001 and over
277
4.83%
Total
5,737
100.00%
Holders with Less than a Marketable Parcel of the Company’s Main Class of Securities(1)
As of 30 November 2024, there were approximately 3,980 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$0.044.
Name of Corporate Secretary
Laurel Petryk is Chief Legal Officer 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
OTCQB Venture Market (“OTCQB”) 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.
Particulars of Unquoted Equity Securities (continued)
As of 30 November 2024, there were 35,066,150 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
Exercise Prices (CAD$)
Expiry Date
1,000,000
$0.08
16 May 2026
625,000
$0.10
06 April 2027
1,500,000
$0.11
22 September 2027
475,000
$0.11
14 December 2027
1,650,000
$0.20
21 February 2028
500,000
$0.20
20 March 2028
1,000,000
$0.25
15 August 2028
1,691,666
$0.28
14 February 2029
150,000
$0.25
14 May 2029
150,000
$0.25
12 August 2029
150,000
$0.25
06 April 2030
3,547,667
$0.11
11 September 2030
500,000
$0.125
22 September 2030
1,450,000
$0.61
30 March 2031
400,000
$0.59
22 June 2031
3,700,000
$0.58
20 December 2031
120,000
$0.4775
16 August 2032
250,000
$0.4775
20 February 2033
3,098,121
$0.4775
15 May 2033
Review of Operations and Activities for the Reporting Period
A review of operations of the consolidated entity for the reporting period ended 30 September 2024 is provided in
Management’s Discussion and Analysis included in this Annual Report immediately following the consolidated financial
statements for the same period.
Additional information on the Company, its directors and executive management, and risk factors faced by the Company
can be found in the Company’s Annual Information Form for the year ended 30 September 2024, dated 18 December 2024,
a copy of which is lodged with ASX (www.asx.com.au) and on SEDAR+ (at www.sedarplus.ca), both under the Company’s
profile.
Details of director and executive compensation will be included in the Management’s Information Circular for the Annual
General Meeting of shareholders.
Details of a Current On-market Buy-back
None.
Shares and Options Issued under the Stock Option Plan
The following table represents the number of Shares issued and the number of Options expired, forfeited and granted
under the Company’s Stock Option Plan for the reporting period ended 30 September 2024:
Date of Issue
Number of Securities
Issue Price (CAD$)
Description
31 January 2024
620,000 Options
0.4775
Forfeiture of Options
31 January 2024
350,000 Options
0.61
Forfeiture of Options
29-February-2024
338,315 Options
0.4775
Forfeiture of Options
31-July-2024
100,000 Options
0.58
Forfeiture of Options
31-July-2024
154,076 Options
0.4775
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.
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 2024, 175,235,476 shares were held through CDS in 27 participant accounts.
The Company is not readily able to determine the range of distribution for these 175,235,476 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.