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Bryah Resources Ltd $7.3 million manganese farm-in agreement a “game-changer”, shares up

The company has also exercised its options to purchase the historical Horseshoe South Manganese Mine and manganese rights over adjoining ground.

Horseshoe South mine
DMS plant and manganese stockpiles at the Horseshoe South Mine

Bryah Resources Ltd (ASX:BYH) has executed a “game-changing” $7.3 million manganese farm-in agreement with OM Holdings Limited (ASX:OMH) covering manganese in the company’s Bryah Basin project.

A farm-in and joint venture agreement has been signed with OM (Manganese) Ltd (OMM), a wholly-owned subsidiary of OM Holdings, a regional leader in the manganese industry.

Shares are up almost 17% at midday to 7.6 cents.

OMH seeks new sources

Bryah’s managing director Neil Marston said: “The execution of this agreement with the highly regarded OMH Group is a game-changing event for Bryah and its shareholders.

“OMH Group has manganese mining expertise and is seeking new sources of manganese ore to replace its Bootu Creek production in the near future.”

Under the agreement OM can spend $3 million, including cash payments to Bryah totalling $500,000, to earn a 51% interest in the manganese mineral rights over a 660 square kilometre area.

At Bryah’s election, OM can increase its interest to 70% by spending a further $4.3 million.

Following the OM deal, Bryah has exercised its exclusive options to purchase the historical Horseshoe South Manganese Mine and manganese rights over a further 154 square kilometres of adjoining ground.

In May 2018 Bryah secured options to purchase the mine and manganese rights with the exercising coming ahead of the option expiry dates.

READ: Bryah Resources targets copper, gold and manganese in Bryah Basin

These tenements form a key part of the Bryah Basin Manganese Project with Horseshoe South being the largest historic manganese mine in the region.

This mine produced around 1 million tonnes of high-grade manganese ore from 1948-1969 and from 2008-2011.

It lies on a granted mining lease and re-starting mining operations should be straightforward.

These tenements are also subject to the farm-in and JV agreement between Bryah and OMM.

Bryah Basin tenements and geology plan.

READ: Bryah Resources identifies another large copper-gold anomaly at Bryah Basin project

Marston said: “Field work in 2018 confirmed the potential for shallow drilling to identify additional mineral resources on these tenements.

“With the exciting new manganese joint venture with OMM in place, we decided to exercise the options early and we look forward to start drilling at Horseshoe South and other areas next month.”

Consideration for purchasing the Horseshoe South Manganese Mine is $150,000 in cash and $150,000 in Bryah ordinary shares.

Purchasing the manganese mineral rights involves $20,000 in cash and $20,000 in Bryah shares.

OMM agreement payments

The OMM agreement includes:

  • $250,000 signing fee paid to Bryah on April 18, 2019;
  • $500,000 from OMM for project expenditure by June 30, 2019;
  • $250,000 exercise fee, payable to Bryah in July 2019;
  • $2 million from OMM for project expenditure by June 30, 2022, for OMM to earn a 51% JV interest
  • $1.8 million of additional project expenditure, at Bryah’s election, for OMM to earn a 60% JV interest; and
  • $2.5 million of additional project expenditure, at Bryah’s election, for OMM to earn a 70% JV interest.

Bryah is the project manager until OMM has earned a 51% JV interest and thereafter OMM may elect to be the project manager.

The JV applies to manganese mineral rights only, with Bryah retaining all other minerals.

Tenement location plan.

OM Holdings is a vertically integrated manganese and silicon specialist involved in mining, smelting and trading, with operations in Australia, China, Japan, Malaysia, Singapore and South Africa.

In Australia, the company operates the Bootu Creek manganese mine in the Northern Territory.

The Bryah Basin is host to the high-grade copper-gold mines at DeGrussa, discovered by Sandfire Resources NL (ASX:SFR) in 2009, and at Horseshoe Lights, which was mined until 1994.

This basin also has several historical and current manganese mines including the Horseshoe South mine.

Map of southern part of Horseshoe South Mine.

Marston said: “We are both strongly aligned to Bryah’s stated aim of moving from explorer to manganese ore producer in the near term.

“We understand the OMH Group want to maintain their own supply of quality manganese ore for their smelter in Sarawak, Malaysia, so by teaming up with them via this agreement we have substantially de-risked implementation of Bryah’s manganese production strategy.”

Drilling program

Stage I drilling of 3,000 metres will begin in the first week of May 2019.

Marston said: “In the last 12 months our exploration team at Bryah has conducted a significant amount of ground work ahead of the commencement of manganese drilling next month.

“The plan under the JV agreement is for us to drill test targets at the Horseshoe South Manganese Mine and the Brumby Creek and Devils Hill prospects, as well as some other untested sites as quickly as possible.

“We see excellent potential for shallow drilling to identify significant manganese resources in this largely unexplored land holding in the Bryah Basin.”

Manganese outlook

The partners are also upbeat about the outlook for manganese, which is the fourth most consumed metal behind iron, aluminium and copper.

More than 90% of demand comes from steelmaking and no suitable substitute for the metal exists, which means it cannot be recycled

Manganese is also used in batteries, chemicals and the aluminium industry.

The demand for manganese for use in new generation batteries for electric vehicles (EV) is expected to grow significantly as the uptake of EVs increases.

Marston added: “The prices of manganese ore remained robust throughout 2018 and the global outlook for manganese remains positive, as it is a critical and irreplaceable element in steel production.”

Quick facts: Bryah Resources Ltd

Price: 0.042 AUD

Market: ASX
Market Cap: $4.24 m

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