Giyani Metals Corp. (TSXV:EMM, GR:A2DUU8)
("
Giyani" or the "
Company"),
developer of the K.Hill battery-grade manganese project in Botswana
(“
K.Hill” or the “
Project”), is
pleased to announce a new Preliminary Economic Assessment
(“
PEA”) for K.Hill following the release of the
significantly increased Mineral Resource Estimate
(“
MRE”), announced on July 13, 2023.
The PEA has a base case scenario (“Base
Case”) considering a single production line to process
K.Hill manganese oxide (“MnO”) material on-site to
produce high-purity manganese sulphate monohydrate
(“HPMSM”), with feed capacity of 200,000 tonnes
per annum (“tpa”) over a 57-year life-of-project
(“LOP”). An upside case scenario (“Upside
Case”) is also evaluated, assuming an additional
production line from Year 5 of operations taking total feed
capacity to 400,000 tpa.
The PEA was prepared by CSA Global South Africa,
an ERM Group company (“CSA Global”) in accordance
with National Instrument 43-101 Standards of Disclosure for Mineral
Projects ("NI 43-101").
Highlights
- Base Case
post-tax net present value using an 8% discount rate
(“NPV8%”) of US$983 million
(C$1.3 billion) and post-tax internal rate of return
(“IRR”) of 29.4%.
- Updated MRE
allows for high-grade mine scheduling and an average plant feed
grade of 19.1% MnO in the first 5 years of production, with an
average grade of 17.3% for the first 25 years of production.
- Base Case LOP is
57 years with total production of 3.6 million tonnes
(“Mt”) of HPMSM.
- Upside Case
post-tax NPV8% of US$1.6 billion (C$2.1 billion) and post-tax IRR
of 33.5% over a 25-year LOP.
- Total initial
capital expenditure of US$284 million, with an additional US$208
million of expansion capital required in Year 4 of the Upside
Case.
Danny Keating,
President and CEO of the Company, commented:
“The recently updated MRE and PEA redefine
K.Hill as an exceptionally high value, long-life project capable of
supplying high quality, low carbon HPMSM to lithium-ion battery
customers for more than 50 years.
With the operating parameters of the process
plant already defined, the PEA demonstrates the economic value of
the larger project life offered by the updated MRE and potential
upside scale of operations. These are material improvements and
provide the solid basis to commence a new and optimized feasibility
study (“Optimized Feasibility Study”) to be
completed in 2024, capturing all the learnings and results from the
demonstration plant (“Demo Plant”) and the results
and feedback from off-taker analysis of the HPMSM production. We
believe K.Hill has the capacity to move materially down the cost
curve as we refine our operating and procurement strategy,
including possible over-the-fence production of key reagents by
third parties.
In parallel with our activities on the PEA, we
remain focused on our core objectives. The construction of the Demo
Plant continues in Johannesburg, and we remain in regular contact
with the Botswana Department of Environmental Affairs
(“DEA”) for approval of our Environmental Impact
Statement (“EIS”) submission, which is required
for the Mining Licence application.
The PEA is an important step forward to
demonstrate K.Hill’s strategic importance to off-takers. It
prepares a solid platform for commencing our Optimized Feasibility
Study and reflects the Company’s value potential to our
shareholders and investors.”
PEA Operational and Economic
Highlights
The PEA has been prepared in accordance with NI
43-101 for the disclosure of material information to meet the
requirements of a PEA level of study and disclosure as defined in
the regulations and supporting reference documents. The effective
date of the report is July 13, 2023.
A summary of the key parameters of the Base Case
is presented below. Unless otherwise stated, all financial figures
are quoted in US dollars.
Metrics |
Units |
Base Case |
Project Economics |
NPV at 8% discount rate |
US$M |
983 |
IRR |
% |
29.4% |
Cumulative cash flow, undiscounted |
US$M |
5,257 |
Project Production |
|
|
Year 1-5 |
Year 1-25 |
LOP |
Total mineralized material mined |
Mt |
2.3 |
5.8 |
11.1 |
Average plant throughput rate |
ktpa |
170 |
194 |
195 |
Average plant feed grade |
% MnO |
19.1% |
17.3% |
15.2% |
Total HPMSM produced |
kt |
340 |
1,766 |
3,560 |
LOP |
Years |
57 |
Net Pricing Assumptions |
Average realized HPMSM price (Yr 1 – 5) |
US$/t |
3,553 |
Average realized HPMSM price (Yr 6 onwards) |
US$/t |
3,780 |
Capital Expenditure |
Total initial capital expenditure (incl. contingency) |
US$M |
284 |
Total sustaining capital |
US$M |
18 |
142 |
288 |
Project Cash Flows |
Total revenue |
US$M |
1,215 |
6,621 |
13,388 |
Total operating costs (incl. royalty) |
US$M |
576 |
2,914 |
6,489 |
Total EBITDA |
US$M |
640 |
3,707 |
6,900 |
Notes: See Project Summary
An Upside Case for K. Hill has also been
considered, with an additional production line from Year 5 of
operations taking total feed capacity to 400,000 tpa. The Upside
Case requires US$208 million of additional capital for the
expansion, part of which can be supported from Project free cash
flow.
The result is an Upside Case post-tax NPV8% of
US$1.6 billion (C$2.1 billion) and post-tax IRR of 33.5%.
The Base and Upside Cases reflect the
optionality available to the Company to meet the long-term supply
needs of lithium-ion battery off-takers as well as the ability to
expand and maintain or grow market share as demand for HPMSM
increases. With more stringent regulations in North America and
Europe regarding sourcing of EV battery metals, Giyani’s aim is to
be the leading global supplier of non-China sourced HPMSM.
Project Summary
K.Hill, which is 100% owned by Giyani’s wholly
owned Botswana subsidiary Menzi Battery Metals (Pty) Limited
(“Menzi”), has been assessed as an integrated
mining and processing operation for the on-site production of HPMSM
directly from manganese oxide material mined at K.Hill.
On July 13, 2023, the Company announced an
updated MRE issued by CSA Global for the Project. The MRE reflected
a 310% increase in Indicated Mineral Resources and a 97% increase
in Inferred Mineral Resources. This significant increase offers the
Company greater flexibility in its mine planning and grade
scheduling to optimise the feed grade to the plant, as well as
extending the operating life of the Project.
The K.Hill orebody will be extracted from an
open-pit using conventional truck-and-shovel mining methods and the
PEA assumes a contractor mining execution strategy. In order to
optimise the feed to the plant, material mined will managed through
dedicated high/medium/low grade stockpiles, ensuring security of
supply to the plant at the highest available grade.
The mining schedule in the PEA has focused on
early extraction of high-grade material. The increased resources
defined in the MRE offers greater operational flexibility for
maintaining higher grade feed to the plant to generate strong early
cashflows, while delivering a LOP that is significant for
off-takers and customers.
The Base Case assumes a processing plant
designed with a throughput capacity of 200,000 tpa and a two-year
ramp-up schedule to meet the target recovery, reflecting the
sophisticated nature of the K.Hill processing plant. The plant will
produce HPMSM from K.Hill manganese oxide material using a
hydrometallurgical process which does not require any
carbon-intensive calcination or electrowinning. Under the Upside
Case, a second 200,000 tpa production line will be constructed in
Year 4 of the K.Hill operation and commissioned in Year 5.
CPM Group LLC (“CPM”), an
independent research and consultancy company based in New York and
specialist in analysis of the high-purity manganese market, was
engaged in 2022 to complete a HPMSM products market outlook study.
The PEA has used CPM’s forecast HPMSM prices, realized at the
Project’s gate and net of transportation costs and applicable
tariffs, with 50% of sales to the EU (Berlin) and 50% of sales to
North America (Detroit). For the purposes of the PEA and valuation,
a long-term average price of US$3,780/t HPMSM has been used from
2030.
Metallurgical processing reagents and raw
materials constitute the largest component of processing
expenditure based on the plant design criteria and flowsheet to
produce HPMSM. During 2021 and early 2022, Covid-19 related
disruptions led to an unprecedented rise in international freight
rates, which elevated prices for the procurement of reagents. These
rates have continued to normalize since then towards pre-Covid
levels and updated reagent and raw materials prices have been
incorporated into the PEA to reflect international freight market
conditions as of June 2023.
For the calculation of applicable local taxes,
the PEA assumes a dual-taxation structure for Menzi, split between
a mining company and a manufacturing company. The mining company
will mine and sell manganese oxide material to the manufacturing
operation and will be taxed according to the Botswana mining
company tax formula (minimum of 22% on operating income with a
maximum of 55%). A mining royalty of 3% will be applied to the
revenue on the sale of the manganese material to the manufacturing
operation. Income from the manufacturing company will be taxed at
the Botswana manufacturing tax rate of 15%, assuming a
manufacturing development order will be received from the Botswana
authorities.
The reader is advised that the PEA summarized in
this press release is preliminary in nature and is intended to
provide an initial, high-level review of the Project's economic
potential and design options. The PEA replaces and supersedes the
Company's previous 2022 Feasibility Study on the Project. The PEA
mine plan and economic model includes numerous assumptions and the
use of Inferred Resources. Inferred Resources are considered to be
too speculative geologically to have economic considerations
applied to them that would enable them to be categorized as Mineral
Reserves, and there is no certainty that the PEA will be realized.
Mineral Resources that are not Mineral Reserves do not have
demonstrated economic viability.
Project Execution and Optimized
Feasibility Study
The release of the updated MRE and new PEA for
K.Hill highlights the inherent value of the Project and the
importance of the continuing activities related to the development
of the commercial Project. The Company is progressing with various
critical workstreams to move the Project to a final investment
decision (“FID”), namely:
- Construction
and commissioning of the Demo Plant in Johannesburg, which will be
capable of producing up to 600 kg per day of dry HPMSM crystals for
shipment to off-takers for product qualification and contractual
negotiation.
- Advancing
discussions with the multiple Tier-1 off-takers who have expressed
interest in bringing K.Hill into their battery raw material supply
chains, a number of whom have already visited Giyani’s facilities.
These discussions will be enhanced by the increased LOP and
potential scale of production, which are key requirements for the
long-term outlook taken by off-takers.
- Finalization
and approval of the EIS following comments received from the DEA,
which will facilitate Environmental Authorisation of the Project
and open the door to an application for a 25-year mining
licence.
- Continuation of
discussions with the Special Economic Zone Authority of Botswana
with regards to establishing a Special Economic Zone around the
K.Hill processing plant, which, among other benefits, establishes a
corporation tax rate of 5% for the first 10 years of production and
10% thereafter. This regime has not been utilized within the
PEA.
- Review of
various optimization parameters including operating costs,
specifically related to consumption of key reagents, where the
Company is assessing options to reduce consumption of certain
higher value reagents and/or localize sourcing (over-the-fence
production) to limit transport costs and develop local business
opportunities.
The results of some of these workstreams will be
incorporated into an Optimized Feasibility Study based on the
updated MRE for K.Hill, which will form the basis for a future FID.
Work on the Optimized Feasibility Study is expected to commence in
Q4 2023.
Mineral Resources
The Mineral Resource Estimate complete by CSA
Global is presented for ease of reference.
K.Hill CSA Global MRE Statement as of
July 2023 (at a cut-off grade of 7.3% MnO)
Mineral Resource Classification |
Tonnage (Mt) |
Grade (% MnO) |
Contained MnO (Mt) |
Indicated |
8.6 |
15.2 |
1.3 |
Inferred |
6.1 |
14.1 |
0.9 |
Notes to MRE:
a) The Mineral
Resource has been classified and reported under the guidelines
defined by the Canadian Institute of Mining, Metallurgy and
Petroleum in their document “CIM Definition Standards for Mineral
Resources and Mineral Reserves” of May 2014. b) Mineral Resources
are not Mineral Reserves and have not demonstrated economic
viability.c) Mineral Resources are stated as in situ dry tonnes;
figures are reported in metric tonnes. d) Figures have been rounded
to the appropriate level of precision for the reporting of Mineral
Resources.e) Estimation has been completed within 6 different
mineralization domains.f) Mineral Resources are reported assuming
open pit mining methods.g) The Mineral Resource is reported within
a conceptual pit shell determined using a price of US$3,800/t HPMSM
(equivalent to US$9,054/t MnO), conceptual parameters and costs to
support assumptions relating to reasonable prospects for eventual
economic extraction.h) The Mineral Resource is reported at a
cut-off grade of 7.3% MnO.i) The estimate of Mineral Resources may
be materially affected by environmental, permitting, legal, title,
taxation, socio-political, marketing, or other relevant issues. CSA
Global is not aware of any environmental, permitting, legal, title,
taxation, socio-economic, marketing, political, or other any other
relevant factors affecting the MRE.j) HPMSM price quoted is based
on 2022 market data, which was available at the time of reporting
the Mineral Resource. Additional pricing information will be
available for input into subsequent technical studies, and this may
impact on the Mineral Resource reported.
About Giyani
Giyani’s mission is to become a sustainable,
low-carbon producer of battery materials for the electric vehicle
(“EV”) industry. The Company has developed a
hydrometallurgical process to produce high-purity manganese
sulphate monohydrate, a lithium-ion battery cathode precursor
material critical for EVs, directly from its manganese oxide
deposits in Botswana, wholly owned by its Botswana subsidiary Menzi
Battery Metals (Pty) Limited. The Company’s assets include K.Hill
and the Otse and Lobatse manganese prospects, each of which has
seen historical mining activities.
Additional information and corporate documents
may be found on www.sedarplus.ca and on the Giyani Metals Corp.
website at https://giyanimetals.com/.
Qualified Persons / NI 43-101
Disclosures
An NI 43-101 technical report including results
of the PEA and the MRE will be filed within 45 days of the release
by the Company dated July 13, 2023 first disclosing the MRE on
SEDAR+ at www.sedarplus.ca and made available on the Company’s
website at www.giyanimetals.com.
Mr. Howard Simpson BSc
Eng (Hons), BCom, FAusIMM- CP Mining (membership number 326398),
RPEQ, Mining Manager and Consulting Director at CSA Global is a
qualified person as defined by National Instrument 43-101. Mr.
Howard Simpson is responsible for the capital and operating cost as
well as economic analysis estimates in this news release. Mr.
Howard Simpson has reviewed and approved the scientific and
technical content contained in this press release.
Mr. Anton Geldenhuys
(MEng), a registered Professional Natural Scientist (SACNASP,
membership number 400313/04) of CSA Global is a qualified person as
defined by National Instrument 43-101. Mr. Anton Geldenhuys has
reviewed and approved the scientific and technical content
contained in this press release.
EUR ING Andrew Carter
BSc, CEng, MIMMM, MSAIMM, SME Head of Mining UK & Ireland for
Tetra Tech, is a QP under NI 43-101 and is responsible for the
metallurgical test work results, process engineering, process
operating costs and plant and infrastructure capital cost estimates
in this news release. Mr. Andrew Carter has reviewed and approved
the scientific and technical content contained in this press
release.
Neither CSA Global,
Tetra Tech nor the QPs of the PEA, has or have had previously any
material interest in Giyani or the mineral properties in which
Giyani has an interest. The relationship with Giyani is solely one
of professional association between the client and the independent
consultant. The PEA is prepared in return for professional fees
based upon agreed commercial rates and the payment of these fees is
in no way contingent on the results of the PEA or the contents of
this news release.
About CSA
Global
CSA Global is a geological and mining consulting
company that provides technical and expert services, training and
independent corporate advice to public and private mining
companies, and financial and legal group. CSA Global is an ERM
Group Company that has been providing services to its clients
across all mineral commodities and regions globally for over 35
years. Website: https://www.csaglobal.com
About Tetra
Tech
Tetra Tech is a leading provider of high-end
consulting and engineering services for projects globally. With
27,000 associates and 550 offices worldwide, Tetra Tech provides
clear solutions to complex problems in water, environment,
infrastructure, resource management, energy, and international
development. For more information about Tetra Tech, please visit
www.tetratech.com
On behalf of the Board of Directors of Giyani
Metals Corp.
Danny Keating, President and CEO
Contact:
Danny KeatingPresident
& Chief Executive Officerdkeating@giyanimetals.com
George DonneVP
Business Development+44 7866 591 897gdonne@giyanimetals.com
Neither the TSX Venture Exchange (the "TSXV")
nor its Regulation Services Provider (as that term is defined in
the policies of the TSXV) accepts responsibility for the adequacy
or accuracy of this news release.
Forward Looking Information
This press release contains "forward-looking
information" within the meaning of applicable Canadian securities
legislation including without limitation: (i) all of the results of
the PEA; (ii) the construction and commissioning of the Demo Plant;
(iii) discussions with Tier 1 off-takers and any subsequent
off-take agreements; (iv) finalization and approval of the EIS; (v)
establishment of a Special Economic Zone around the K.Hill
processing plant; (vi) sourcing and consumption of reagents; (viii)
a final investment decision on the Project; and (ix) the timing and
completion of an Optimized Feasibility Study of the Project. All
statements in this news release, other than statements of
historical fact, that address events or developments that Giyani
expects to occur, are "forward-looking statements". Forward-looking
statements are statements that are not historical facts and are
generally, but not always, identified by the words "expects", "does
not expect", "plans", "anticipates", "does not anticipate",
"believes", "intends", "estimates", "projects", "potential",
"scheduled", "forecast", "budget" and similar expressions, or that
events or conditions "will", "would", "may", "could", "should" or
"might" occur.
All such forward-looking statements are based on
the opinions and estimates of the relevant management as of the
date such statements are made and are subject to certain
assumptions, important risk factors and uncertainties, many of
which are beyond Giyani's ability to control or predict.
Forward-looking statements are necessarily based on estimates and
assumptions that are inherently subject to known and unknown risks,
uncertainties and other factors that may cause actual results,
level of activity, performance or achievements to be materially
different from those expressed or implied by such forward-looking
statements. In the case of Giyani, these facts include their
anticipated operations in future periods, planned exploration and
development of its properties, and plans related to its business
and other matters that may occur in the future. This information
relates to analyses and other information that is based on
expectations of future performance and planned work programs.
Forward-looking information is subject to a
variety of known and unknown risks, uncertainties and other factors
which could cause actual events or results to differ from those
expressed or implied by the forward-looking information, including,
without limitation: inherent exploration hazards and risks; risks
related to exploration and development of natural resource
properties; uncertainty in Giyani's ability to obtain funding;
commodity price fluctuations; recent market events and conditions;
risks related to the uncertainty of mineral resource calculations
and the inclusion of inferred mineral resources in economic
estimation; risks in how the worldwide economic and social impact
of COVID-19 is managed; risks related to governmental regulations;
risks related to obtaining necessary licences and permits; risks
related to their business being subject to environmental laws and
regulations; risks related to their mineral properties being
subject to prior unregistered agreements, transfers, or claims and
other defects in title; risks relating to competition from larger
companies with greater financial and technical resources; risks
relating to the inability to meet financial obligations under
agreements to which they are a party; ability to recruit and retain
qualified personnel; and risks related to their directors and
officers becoming associated with other natural resource companies
which may give rise to conflicts of interests. This list is not
exhaustive of the factors that may affect Giyani's forward-looking
information. Should one or more of these risks and uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in the
forward-looking information or statements.
Giyani's forward-looking information is based on
the reasonable beliefs, expectations and opinions of their
respective management on the date the statements are made, and
Giyani does not assume any obligation to update forward looking
information if circumstances or management's beliefs, expectations
or opinions change, except as required by law. For the reasons set
forth above, investors should not place undue reliance on
forward-looking information. For a complete discussion with respect
to Giyani and risks associated with forward-looking information and
forward-looking statements, please refer to Giyani's most recent
Annual Information Form and Management Discussion and Analysis, all
of which are filed on SEDAR+ as www.sedarplus.ca.
This release also contains references to
estimates of mineral resources. The estimation of mineral resources
is inherently uncertain and involves subjective judgments about
many relevant factors. Mineral resources that are not mineral
reserves do not have demonstrated economic viability. The accuracy
of any such estimates is a function of the quantity and quality of
available data, and of the assumptions made and judgments used in
engineering and geological interpretation, which may prove to be
unreliable and depend, to a certain extent, upon the analysis of
drilling results and statistical inferences that may ultimately
prove to be inaccurate. Mineral resource estimates may have to be
re-estimated based on: (i) fluctuations in mineral prices; (ii)
results of drilling, (iii) metallurgical testing and other studies;
(iv) proposed mining operations, including dilution; (v) the
evaluation of mine plans subsequent to the date of any estimates;
and (vi) the possible failure to receive required permits,
approvals and licences or changes to existing mining licences.
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