LMFP Market: Lithium Manganese Iron Phosphate (LMFP) batteries is forecast to become the dominant cathode for EV batteries. Benchmark Mineral Intelligence (BMI) forecast that 51% of all batteries will include manganese cathodes by 2030, with the actual proportion of Mn in the battery varying between 20% and 80%. Adding manganese to LFP batteries makes them safer, cheaper and provides more range. LMFP has a higher thermal run-away temperature than nickel-based batteries. LMFP are ~30% cheaper than nickel-based batteries as expensive metals such as cobalt or nickel are excluded. Finally, LMFP energy density is 15-20% higher than LFP, due to manganese higher voltage.
Chinese Largest Market: the Hunan Province is central to the lithium-ion battery industry in China. BMI estimates that Hunan and the surrounding provinces accounted for 26% of worldwide Gigafactory capacity in 2023 and is expected to maintain that position in the foreseeable future.
HPMSM Strategy: FRB is developing a processing facility in China to meet the growing demand of a high purity manganese sulphate monohydrate (MnSO4 or HPMSM) for LMFP batteries. The facility will be fed by third-party manganese concentrate from overseas or in time with Oakover concentrate. The facility will process ore through a proprietary process consisting of grinding, roast reduction, leaching, filtration, impurity removal, crystallisation and precipitation stages to produce battery grade manganese products.
Technological Advantage: for developing its facility, FRB is able to access commercially proven processes as well as the latest technologies patented in China to produce HPMSM such as 5th generation crystallisation and energy saving calcining both environmentally friendly and very efficient.
Government Support and Permitting: the strong Chinese government support translates into a fast permitting process will all permits expected before the end of FY2024 and local tax incentives for the first six years of operation.
Funding Support: FRB has already received some indicative financing offer from China Construction Bank for 50% of plant capex (US$83.5m) and 70% of working capital (US$10.6m) and China Chemical to defer payment, interest free of up to 20% of the plant construction and installation costs (US$35m).
Speed to Market: FID could take place in Q4 2024. Considering a 12-15-months built time, the HPMSM facility could be operational in late 2025/early 2026.
Circular Economy: the plant location in a chemical park represents a key competitive advantage with regards to permitting, costs, as well as environmental credentials. Permitting is fast tracked as the whole park has been assigned to chemical facilities. Every co-product or waste product from a chemical facility can become a key input of another chemical facility. This means that all the reagents required for the HPMSM plant are readily available within the chemical park itself, reducing both capital costs and operating costs.
Project Benchmarking: we have compared the key financial parameters of the development studies of peers including Element 25 (E25.ASX), Euro Manganese (EMN.TSXV), Giyani Metals Corp. (EMM.TSXV) and Jupiter Mines (JMS.ASX). Firebird Metals and its Hunan HPMSM project accumulate a number of enviable characteristics: Lowest capital expenditure; Lowest capital intensity; Life of project not limited by a mineral resource; Lowest operating cost; Highest profitability index (NPV/Capex) considering the Lowest HPMSM price assumption.
Increased Valuation Catalysts: the intense news flow continues with final permitting expected before end of June 2024 and detailed feasibility studies, engineering assessments and financing arrangements before year end.
FRB valuation: our sum of the parts valuation considers 40% of the Hunan Project NPV and only 5% of the Oakover Project NPV to derive a company valuation of A$177 million giving a price target of $0.64, with Hunan Project financing made of 60% debt with indicative offers received and 40% equity.
