Element 25 finalises binding take-or-pay offtake terms with OM Holdings at Butcherbird Manganese Project

Element 25 Ltd (ASX:E25) (FRA:QFP) has finalised binding take-or-pay offtake agreements with OM Holdings Ltd's (ASX:OMH) wholly-owned subsidiary OM Materials (S) Pte Ltd, covering the manganese ore produced from the first stage of the Butcherbird project near Newman in Western Australia.  The agreements cover an initial five-year term, with a conditional provision to expand for an additional five years.  “Landmark moment” Managing director Justin Brown said: “This is a landmark moment for E25 as it advances the construction of the first stage of development of the world-class Butcherbird Project. “The arrangements with OMH underpin the early-stage project financials and place E25 in an enviable position to accelerate growth into battery-grade manganese sulphate and other high purity manganese products. “E25 regard this as the start of a long term mutually beneficial arrangement with OMH and looks forward to building on the progress to date.” Key terms of the definitive agreements include the following: OMS to take 100% of the manganese ore from the Project from Stage 1; An ore pricing mechanism, which is calculated as a discount against the Fast Markets published 44% manganese benchmark price (adjusted for FOB delivery terms); The parties have agreed the specification and pricing formula(e) for delivered ore between a manganese grade of 28%-35%; Parties have agreed on minimum and maximum levels/ratios of certain impurities including iron, silica, phosphorous and moisture. Certain pricing adjustments are provided for in the agreement, including both discounts and premia, the details of which are commercial in confidence; The term of the offtake agreement will be five years, with provision for an extension, subject to satisfactory performance by OMS measured against agreed KPI’s; Trade terms will include a provision in the first 24 months for payment to be made on delivery of parcel sizes as small as 1,000 tonne to Port Hedland, significantly reducing E25’s working capital requirements; Ore will be delivered on an FOB basis; and The offtake agreement includes conditions precedent in relation to board approvals, and the receipt of all necessary regulatory approvals for Stage 1 production.