Black Canyon jumps 25% on positive scoping study for WA-based EV manganese project

Thu 18 Aug 22, 2:15pm (AEDT)
Generic image of EV using a public charging point
Source: Unsplash

Key Points

  • Scoping Study for Black Canyon’s EV battery manganese project overwhelmingly positive
  • $44m pre-production capex would be paid back in two years with $31m in annual revenue for the first four years
  • Pre-tax project value overall placed at $134m, rising demand for high-purity manganese in EV batteries expected to drive revenues

Black Canyon (ASX:BCA) has jumped 25% to 25.8c in mid-afternoon trades as the company publishes the positive results of a scoping study for its Manganese project in the Pilbara, WA. 

The project development, located 115km northeast of Newman, WA, and called Falagan Bore, has been significantly boosted as an operational reality with key results of the scoping study listing: 

  • 20 year mine life 

  • $134m pre-tax project value

  • $44m upfront pre-production capital expenditure

  • 2 year payback period for pre-prod capex

  • $31.1m annual revenue cashflow in first four years 

  • $67% pre-tax internal rate of return 

The project boasts an estimated life-of-mine production target of 36.1 million tonnes of ore at 11.7% manganese. 

The first three years of the project are expected to see free dig mining toward the creation of an open pit operation with a low amount of waste produced (‘strip ratio.’) 

As the project progresses across its 20 year mine life, the average strip ratio reflects 0.7:1 waste to ore. 

Those first three years are projected to see the company log over $90m in cashflow, according to the results of today’s scoping study. 

Ultimately, the company intends to produce a 33% manganese concentrate using conventional processing on-site. 

What is Black Canyon looking to do with that Manganese? Produce high purity manganese sulphate to enter the lucrative EV battery supply chain market

Manganese as a “forgotten” battery metal 

High Purity Manganese stabilises nickel in modern lithium ion EV batteries at lower costs than competitor materials. 

ASX-listed Manganese player Euro Manganese (ASX:EMN) expects demand for high purity manganese will increase in coming years as battery performance, and demand for EV batteries, continues to grow.

Euro Manganese highlighted earlier this year as part of an unrelated announcement that LG Chem, Volkswagen, Tesla, Renault and Panasonic are currently developing manganese-inclusive product designs. 

By 2030, EMN expects 60% of all EV batteries produced will require high purity manganese, research supported by BloombergNEF

Clear demonstration of value: management 

“The company recognises tremendous global growth in electrical vehicle demand within traditional cathode based batteries, and evolving battery chemistries such as [new models] including manganese,” Black Canyon ED Brendan Cummins said. 

“The addition of manganese into batteries increases energy density … [which] should translate into even higher demand for high purity manganese sulphate going forward.”

“Initial leaching test work is almost complete and a comprehensive scope examining leaching, purification and crystallisation of high purity manganese sulphate has been finalised and will be commencing soon.” 

Well placed for next stage of exploration

As for the results of the scoping study itself, ahead of the metallurgy study, management was clear on the implications. 

“Results clearly demonstrate significant value from a future mine development at Flanagan Bore,” Cummins said. 

Black Canyon finished the June quarter with just under $5m in cash, leaving it well-placed to continue exploration, and, further development studies. 

One year returns for Black Canyon shareholders are up 19.7%: the company has a market cap of $11m and is ranked 667 of 912 materials sector constituents. 

A look at Black Canyon's three month charts reveals the sharp upward reversal in interest prompted by the scoping study
A look at Black Canyon's three month charts reveals the sharp upward reversal in interest prompted by the scoping study


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Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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