Stonegate Capital Partners Initiates Coverage on Manganese X Energy Corp. (TSXV: MN)

DALLAS, TX -- February 28th, 2023 --  Manganese X Energy Corp. (TSXV: MN): Stonegate Capital Partners initiates their coverage on Manganese X Energy Corp. The full report can be accessed by clicking on the following link: https://stonegateinc.com/reports/MN_V_Initiation.pdf

COMPANY DESCRIPTION

Manganese X Energy’s principal asset is the Battery Hill manganese project, with 55 claims totalling 1,228 hectares in Carlton County, west-central New Brunswick. The Company has published a positive Preliminary Economic Assessment (PEA) for the Battery Hill manganese deposit and recently initiated it’s high-purity manganese pilot plant program. Manganese X aims to become the first publicly traded mining company that offers high-purity EV compliant manganese in Canada and the U.S.

SUMMARY

• Positive NPV - The Company’s published PEA indicates a positive NPV and returns. The PEA report shows an after-tax NPV10% of US$486 million and an IRR of 25%. The project’s capital costs include US$350 million with a payback of 2.8 years and an average gross annual revenue of US$220 million over the first seven years.
• Strategic Location - The Company’s Battery Hill project is in one of the best mining jurisdictions in Canada, New Brunswick. The area is close to major shipping lanes to the United States and Europe and is well suited to cater to the top consumers of manganese in both regions. According to a thesis report, the area has one of the largest manganese resources in North America at approximately 194,000,000 tonnes.
• Large Resource - The Battery Hills project consists of three main historic manganese zones and at least two showings identified in historical exploration. The project’s mineral resources are estimated at 35.14 million tonnes of measured and indicated resources, grading at 6.39% manganese, plus another 27.72 million tonnes of inferred resources, grading at 6.46% manganese.
• Collaboration with Downstream Players - Manganese X has entered into non-disclosure agreements with EV battery cathode material producers.
• Innovative and Environmentally Friendly Process - The Company’s collaboration with Kemetco has resulted in a new process that eliminates selenium, a toxic pollutant in competitors’ HPMSM products, thereby improving the quality of downstream products such as lithium-ion batteries.
• Significant Market Opportunity - Lithium batteries offer many advantages compared to other battery types, such as better charge-discharge efficiency, improved battery life, higher energy density, maintenance, and durability. Manganese plays a critical role in stabilizing the structure of nickel, manganese, and cobalt (NMC) cathode materials, thereby improving the performance of Lithium-Ion batteries. LFP (Lithium-Iron-Phosphate) batteries are the most common batteries in China and the LMFP (Lithium-Manganese-Iron-Phosphate) batteries have shown great promise, which is likely to lead to higher demand for manganese in batteries.
• Pilot Plant for EV Battery Project - The Company recently filed for a provisional patent pending on a groundbreaking metallurgical process for the battery grade high purity manganese MnSO4 (HPMSM). One of the primary goals of this pilot plant is to show that the Company's manganese feedstock from Battery Hill can produce HPMSM on a larger commercial scale. If the pilot run is successfully completed, Manganese X will become one of the very few companies in the world who can produce MnSO4 directly from their ore, a significant cost saving and carbon friendly measure, without having first to turn the product in to a metal called Electrolytic Manganese Metal (EMM).
• Valuation - When we look at current manganese producers at a similar stage of development, we find that most are trading at a median of 0.05x EV/NPV per their most recent assessments. This is compared to Manganese X which is currently trading at 0.02x. Given that a larger percentage of Manganese X’s resources are classified as indicated vs inferred we believe a range of 0.05x to 0.07x with a midpoint of 0.06x is reasonable, valuing MN at a slight premium to the comps. This leads to a current valuation range of $0.48-$0.66 with a midpoint of $0.57 per share. [See Page 8]