[Ferro-Alloys.com]ASX-listed OM Holdings has inked a non-binding memorandum of understanding (MoU) with fellow-listed Element 25 over the supply of manganese concentrate from the proposed Butcherbird manganese project, in Western Australia.

Under the MoU, the two companies would negotiate a formal offtake agreement over the coming months as part of the development of the Butcherbird project.

The MoU provides the framework for binding offtake of between 50% to 100% of the concentrate produced at the proposed mine, with a pricing mechanism based on agreed published benchmark prices, over an initial term of up to five years.

“E25 is very pleased to be able to report this important milestone in what we hope will be a long and mutually beneficial relationship. Discussions with OM Holdings and others have highlighted the demand for high quality reliable supply of manganese from Australia,” said E25 MD Justin Brown.

The MoU is effective for nine months from the date of signing, unless mutually extended.

A prefeasibility study into the Butcherbird project has estimated a base case annual production of 312 000 t/y of medium-grade lump manganese concentrate, grading between 30% to 35% manganese, over a mine life of 42 years.

The study estimated that a capital investment of A$14.5-million would be required to fund the project, along with A$9.2-million in working capital. The project is expected to generate average annual operating cash flows of A$32.1-million between years one and five of production.

• [Editor:tianyawei]