Announcement PDF DATE 7th May 2024 FEASIBILITY STUDY CONFIRMS POTENTIAL FOR LOW-COST, HIGH-PURITY MANGANESE PRODUCTION HIGHLIGHTS CHINA-BASED HIGH-PURITY MANGANESE PROJECT FEASIBILITY STUDY RESULTS • Study results demonstrate the opportunity for Firebird to become a low-cost producer of high-purity manganese sulphate • Significant cost, development and operational advantages gained by building a plant and establishing operations in China • Feasibility Study incorporated conservative cost estimates and the lowest selling sulphate price compared with peers • Key results include: o Projected CAPEX of US$ 83.5 million – refer to pages 14, 15 and 17 of the Feasibility Study o Projected Working Capital of US$ 10.6 million - refer to pages 14 and 15 of the Feasibility Study o Chinese circular industry and plant location within the Jinshi High-Tech Industrial Park provides localised key reagents and inputs that drive a low OPEX of approximately US$609/mt for production of battery grade manganese sulphate o Plant Capacity for Battery Grade Manganese Sulphate (MnSO4) of 50kt/a & Manganese Tetra Oxide (Mn3O4) 10kt/or equivalent MnSO4 of 72.5kt/a • Firebird aims to become a low-cost producer of battery grade high-purity manganese at a time when the Lithium Manganese Iron Phosphate (LMFP) battery market is forecast to experience significant growth in coming years DEVELOPMENT PROGRESS UPDATE • Strong progress and support from the Jinshi Government and tier-one banks for the development and construction of the Company’s Battery-Grade Manganese Sulphate Plant • Advanced discussions with Chinese Banks regarding attractive financing options, with the Company expecting to provide an update in the coming weeks • Positive formal advice from Jinshi Government and relevant departments regarding the process to repatriate profits generated from operations • European customer site visits and offtake discussions commenced with initial positive feedback • Third party manganese ore offtake discussions for the Study progressing well • Permitting and design completion expected by late Q3 2024 • Final Investment Decision expected in H2 2024, with a 12-15 month construction • Flagship Oakover Project continues to be an integral part of Firebird’s long term manganese battery materials strategy and development at the site is ongoing Cautionary Statement The Feasibility Study referred to in this announcement is a Technical Feasibility of the establishment of the Battery Grade Manganese Sulphate Project Stage 1 Processing Plant in China (the Plant). The Feasibility Study is based on the material assumptions contained in the Feasibility Study document accompanying this announcement. These include assumptions about the availability of funding. While the Company considers all of the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the Feasibility Study will be achieved. Investors should note that there is no certainty that the Company will be able to raise the amount of funding to develop the Plant when needed. It is also possible that such funding may only be available on terms that may be dilutive to or otherwise affect the value of Company’s existing shares. It is also possible that the Company could pursue other ‘value realisation’ strategies such as a sale, partial sale or joint venture of the Plant. If it does, this could materially reduce the Company’s proportionate ownership of the Plant. Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Feasibility Study. Firebird Metals Limited (ASX: FRB, “Firebird” or “the Company”) is pleased to announce excellent results from the Company’s Battery Grade Manganese Sulphate Feasibility Study (“Feasibility Study” or “Study”) for stage one of production in China, which will utilise third party manganese ore to produce high-purity manganese sulphate. The Company’s long-term strategy is to develop into a low-cost manganese producer and provide security of supply across both traditional outputs and new materials being used in fast-growing energy storage industries. Completion of the Feasibility Study follows the announcement by Firebird in September 2023 of the Company’s China-based Lithium Manganese Iron Phosphate (“LMFP”) growth strategy, aimed at establishing the Company as a low-cost producer of battery-grade MnSO4 (high-purity manganese sulphate) and Mn3O4 (high purity manganese tetra oxide). Both products are key cathode materials in LMFP batteries for electric vehicles. LMFP is considered a key future cathode for electric vehicle (“EV”) batteries and is a significant upgrade from the Lithium Iron Phosphate (LFP) cathode, which is currently he most popular EV battery cathode. Adding high purity manganese sulphate (MnSO4) to LFP, creates LMFP, delivering significant operational and safety benefits to a battery, including: • • • a higher thermal runaway temperature than nickel-based batteries costs approximately 30% lower than nickel-based batteries enhanced voltage platform and 15-20% increase in energy density The Chinese chemical project design and engineering process differs from western processes. A Feasibility Study is completed first and forms the basis of engineering design, government permitting and financing activities. The Feasibility Study contains a large portion of compliance and project economics assessment. The Feasibility Study was completed by Hunan Chemical Engineering Design Institute Co., Ltd (“HCEDI”) and in line with stringent Chinese regulations. Importantly, HCDEI have completed several similar studies for the Chinese Manganese Sulphate industry. HCEDI is the leading MnSO4 project design institute globally and Firebird’s in-country technical team have previously worked closely with HCEDI on several projects. Results from the China-based high-purity manganese project Feasibility Study validates Firebird’s LMFP battery strategy to produce battery grade manganese sulphate in China. These results have continued to build upon the solid platform for Firebird to successfully deliver on its vision to become a global leader in the manganese industry, combining mining and downstream processing with a dedication to the advancement of the Li-ion battery sector. The company is working closely with HCEDI on preliminary plant design which is 50% complete. At the same time, equipment supplier engagement and due diligence of supplier’s manufacturing process and supplier’s customer experience are vital in the development and operational process in China. Through this process, the Company has identified that further efficiencies can be achieved and has applied for two patents on energy saving (calcining process & product drying), which will further improve the impressive economics of the Project. The ongoing development of the Flagship Oakover Project, located in Western Australia, remains a critical pillar of Firebird’s manganese battery materials strategy. Since listing in 2021, Firebird has delivered significant and rapid progress at Oakover, with key development and environment studies progressing as planned. It is intended that, once Oakover is in production, ore from the Project will be used to feed the Company’s Battery Grade Manganese Sulphate plant in China. Firebird Managing Director Mr Peter Allen commented: “We are extremely pleased to deliver another key milestone in our pursuit of becoming a low-cost, near-term high-purity manganese producer. The rapid progress made from a development and in-country standpoint since announcing our China-based strategy in September 2023 is a testament to the hard work of our team and places the Company in a very exciting position moving forward. “The results from our Battery Grade Manganese Sulphate Feasibility Study for stage one of production highlight the compelling opportunity we have in front of us to become a key high-purity manganese producer and validates our decision to work towards building a Battery Grade Manganese Sulphate Plant and establish operations in China. “We have already seen significant cost, development and operational advantages that can be gained by building a plant in China and, most importantly, the Company has been buoyed by the incredible level of support and interest received from key government agencies and tier-one banks in assisting us establish operations in China. With their support, Firebird is well-positioned to deliver on key remaining development and financing milestones to meet our objective of commencing operations in China in Q4 CY2025. This support also extends to ongoing discussions regarding third-party manganese offtake for stage one, which will expedite our production capabilities and pave the way for a cash flowpositive business. “What excites the team the most is we are executing our strategy at the right time. LMFP batteries are forecast for the largest growth of all the manganese-based batteries, due to the fact it meets the key criteria of car manufacturers which is cost competitiveness, safety and good range. We believe we are seeing a new era of Li-ion batteries with the commercialisation of LMFP and we are well-positioned to benefit greatly from this rising demand.” This announce has been approved for release by the Board. For further information contact: Mr Peter Allen Managing Director +61 8 6245 9818 admin@firebirdmetals.com.au Cameron Gilenko Citadel-MAGNUS 0466 984 953 FEASIBILITY STUDY & PROGRESS UPDATE BATTERY GRADE MNSO4 (50kt) & MN3O4 (10kt) STAGE 1 PROJECT MAY 2024 FIREBIRD METALS LIMITED UNIT 38, 460 STIRLING HIGHWAY PEPPERMINT GROVE, WA 6011 ABN 24 610 035 535 ASX FRB firebirdmetals.com.au Contents Firebird’s Vision - next phase of strategic growth............................................................................... 3 Introduction - Feasibility Study........................................................................................................... 4 Ore Supply Feed.................................................................................................................................. 5 Process............................................................................................................................................... 7 R&D Centre and Pilot Plant..................................................................................................................11 Project Location................................................................................................................................ 12 Study Pricing and Financials..............................................................................................................14 Permitting.......................................................................................................................................... 16 Project Funding.................................................................................................................................. 17 Manganese Market............................................................................................................................. 18 Environment, Social and Governance (ESG)....................................................................................... 20 Sources............................................................................................................................................. 21 Risks................................................................................................................................................. 22 Forward-looking Statements............................................................................................................ 23 Figures Figure 1: Company Vision................................................................................................................. 3 Figure 2: Chinese Gigafactory Snapshot, Source: Benchmark Mineral Intelligence:.......................... 4 Figure 3: Timeline to Production....................................................................................................... 6 Figure 4: Expected Production Volumes........................................................................................... 7 Figure 5: Simplified Process flow Diagram........................................................................................ 8 Figure 6: Plant layout........................................................................................................................ 9 Figure 7: Firebird’s key process competitive advantage..................................................................10 Figure 8: Pilot plant...........................................................................................................................11 Figure 9: Pilot plant...........................................................................................................................11 Figure 10: Firebird’s industrial land at Jinshi Chemical Park.............................................................. 12 Figure 11: Aerial view of Jinshi Chemical Park................................................................................... 13 Figure 12: Aerial view of Jinshi Chemical Park................................................................................... 13 Figure 13: Capital Estimates Summary..............................................................................................14 Figure 14: Project Opex – Financial Model.......................................................................................... 15 Figure 15: Key Financial Data............................................................................................................. 15 Figure 16: Manganese Market Snapshot............................................................................................ 18 Figure 17: Mn content (kg) per battery in each vehicle above (Source: Benchmark Mineral Intelligence).. 18 Figure 18: Chinese Battery Forecast by Benchmark Minerals............................................................ 19 Figure 19: LMFP demand forecast in China by Soochow Securities.................................................. 20 Figure 20: Key Inputs for China-based in-house Manganese Sulphate Study...................................... 21 2 FIREBIRD METALS LIMITED Firebird’s Vision - next phase of strategic growth Since listing in 2021, Firebird has delivered significant rapid progress at its flagship Oakover Project (“Oakover”) to evaluate mining and processing of the manganese ore and is now set to transition to the next stage of strategic growth. While the development of Oakover remains a crucial pathway for the Company, the opportunity to expedite the establishment of the Battery Grade Manganese Sulphate Project Stage 1 in China positions the Company uniquely to supply the rapidly expanding Chinese and rest of world battery market. The strategy has been established to develop Firebird into a near-term producer of battery-grade MnSO4 (high-purity manganese sulphate monohydrate) and manganese tetra oxide (Mn3O4), which is a key cathode material in LMFP (Lithium, Manganese, Iron and Phosphate) batteries for electric vehicles & energy storage. Demand for LMFP batteries and hence Battery Grade MnSO4 is forecast to grow rapidly, with many industry participants touting the batteries as superior to other technologies. This strategy is underpinned by extensive research completed by Firebird in China on the high-purity manganese sulphate market. Execution of the LMFP growth strategy is expected to place Firebird at the forefront of manganese sulphate production to meet the further downstream aspirations of becoming a cathode producer and this places the Company in a strong position to benefit from growing demand for LMFP batteries. Figure 1: Company Vision FEASIBILITY STUDY & PROGRESS UPDATE 3 Introduction - Feasibility Study The Company has completed a feasibility Study for Battery Grade Manganese Sulphate Project Stage 1. The Feasibility Study looks to develop a plant with a total equivalent capacity of 72,500 tpa battery grade manganese sulphate producing 50,000 tpa of Battery Grade Manganese Sulphate (MnSO4) and 10,000 tpa of manganese tetra oxide (Mn3O4) from 66,000 tpa manganese ore from a third-party supplier. The Company announced on 30 November 2023 that it had established a wholly owed subsidiary Hunan Firebird Battery Technology Co Ltd (“HFBT”). HFBT will own and operate the project. Last year, Firebird carried out extensive due diligence on possible factory locations within China, visiting 10 industrial park sites in different provinces. The Company has considered all facets when visiting these industrial parks, from availability of sulphuric acid, steam, key reagents, proximity to customers, transportation routes and factory residue consumers. On 13 December 2023 the Company announced its preferred location is the Jinshi High Tech Industries Development Zone, Jinshi, Hunan Province, China. Hunan is central to the Lithium-ion battery industry in the south of China. Benchmark Minerals Intelligence estimates that Hunan and the surrounding provinces accounted for 26% of worldwide Gigafactory capacity in 2023, which is estimated to be 27% by the end of this decade. Figure 2: Chinese Gigafactory Snapshot, Source: Benchmark Mineral Intelligence The Company will process ore through a proprietary process consisting of grinding, roast reduction, leaching, filtration, impurity removal, crystallisation and precipitation stages to produce key Battery Grade MnSO4 and Mn3O4 products. The Feasibility Study has been completed by Hunan Chemical Engineer Design Institute Co.,Ltd (“HCEDI”) to Chinese feasibility study standards. HCEDI have completed several similar studies for the Chinese Manganese Sulphate industry. The Chinese chemical project design and engineering process differs from Western process. A feasibility study report is completed first to be the basis of engineering design, government permitting & financing activities. It contains a large portion of compliance and project economics assessment. HCEDI is the leading MnSO4 project design institute in the world and Firebird’s technical team have worked with HCEDI closely in the past. With the completion of the Feasibility Study, the Company now focuses on Preliminary Engineering and civil work design, with more than 50% of the preliminary design work completed. The Company has engaged several high-quality equipment suppliers with equipment costs being fed into the design work and detailed estimates. 4 FIREBIRD METALS LIMITED Once completed, the design work will be reviewed by the relevant government department for preliminary permitting of the construction process. There are a total of 8 major permits required to commence construction, with the key permits being environmental, safety & energy. • The Environmental impact assessment report should be completed during April and will be put to Expert Panel review, full approval is expected before the end of the financial year. • The Safety report has been approved by the Expert Panel and changes in design have been incorporated to reflect the Panel’s review comments and permit is likely to be received at the end of April. • The Energy consumption report is being drafted and expected completion is mid-April. Expert Panel review and permitting is expected to be received before the end of June. The Company has received positive formal advice from the Jinshi Government and relevant government departments on the process to repatriate profits and capital received, with the only significant rule being that local taxes must be paid before repatriation of funds can occur. The Chinese development process summary is outlined in Figure 3: Timeline to Production (Indicative) on the following page. Ore Supply Feed Firebird’s long-term strategy is to use manganese concentrate from the Company’s Oakover Project which is located 85 km east of Newman in the Eastern Pilbara region of Western Australia. However for Stage 1 of the Battery Grade MnSO4 project the Company will buy third party ore to feed its plant. Future stages and potential western production of manganese sulphate is expected to be fed from the Company’s Flagship Oakover Project. The project requires approximately 66,000 tonnes of third-party ore and the Company is very confident in securing the required tonnage. Manganese ore is freely traded on international markets with China being the largest seaborne destination and China has the world largest secondary spot market. China imports in excess of 30 million tonnes per annum of manganese ore and spot trading stockpiles are kept at Chinese main ports. Since 2020, Chinese port stocks have ranged on a monthly basis from 3.9 million tonnes to 6.8 million tonnes, typically with an average of 5.6 million tonnes. The Company’s management has significant experience with sales of manganese ore in China and has significant network to source supply if required. The Company has advanced discussions with an existing substantial manganese ore mining company (approximate production of 7Mtpa) who regularly exports to China, who has provided samples for test work and visited the Company’s pilot plant in Jinshi. Formal discussions regarding offtake arrangements are ongoing, with the Company anticipating the finalisation of these discussions prior to a decision to commence construction. The Company advises that there are currently no executed supply agreements in place. It is envisioned in this Chinese Manganese Sulphate feasibility study to use third party ore as the principle feed for the Project as Oakover concentrate production is a several years away. The development status of concentrate production at the Oakover Project is currently at the Scoping Study level, references to any Oakover feed to be supplied into future Manganese Sulphate production are based on low accuracy level technical and economic assessments that are insufficient to support estimation of Ore resources. Further exploration and evaluation work and appropriate studies are required before the Company will be able to estimate any Ore Reserves or to provide any assurance of an economic development case for Oakover concentrate production. For a full cautionary statement regarding the Oakover Concentrate Scoping Study, refer to the Company’s ASX announcement dated 30/8/2023. FEASIBILITY STUDY & PROGRESS UPDATE 5 Figure 3: Timeline to Production (Indicative) 6 FIREBIRD METALS LIMITED Process The circuit will grind manganese concentrate prior to reductive roasting and being leached in Sulfuric Acid at an elevated temperature. Following additional reagent addition to remove major impurities, the slurry will be filtered to produce a pregnant leach solution (PLS). The leach residue will be washed and sold for use in the construction industry. The PLS will be purified further to remove trace amounts of base metals, producing a saleable sulphide precipitate. The solution will then be crystallised in a two-stage crystallisation process to produce Battery Grade MnSO4 which typically contains 32%Mn. The company has achieved Battery Grade MnSO4 result with Oakover ore previously, refer announcements dated 21/11/2023 “Excellent results generated from China-Based Battery Grade MnSO4 Scoping Study” The company intends to buy similar style mineralisation third party ore to Oakover as feed stock. The details of the reagents used are commercially sensitive and of a confidential nature. Mn3O4 will be produced by taking solution streams from the MnSO4 crystallisation circuit and processing it through a separate circuit using oxidative synthesis with the addition of further reagents to produce a Mn3O4 product. Mn3O4 has a typical Mn content of 71.5% Mn. Sodium Sulphate is produced as a waste product that is sold into the detergent and glassmaking industries. Expected annual production tonnages from the plant are as follows Saleable Products Unit Quantity Comments 1 Battery Grade manganese sulphate t/a 50,000 Main-product 2 Manganese tetra oxide t/a 10,000 Main-product 3 Sodium sulphate t/a 15,000 By-product 4 Nickel sulphide t/a 300 By-product 5 Cobalt sulphide t/a 300 By-product Figure 4: Expected Production Volumes The Company’s flow sheet has been designed based on real world production experience with significant input and refinement from the Company’s subsidiary HFBT Chief Operating Officer Mr Zhou and is largely based on processes that are proven in full scale production plants on similar feed materials. Mr Zhou Qiyun, is a graduate of the Hunan University of Chemical Engineering, with a major in Chemical Process Engineering. Mr Zhou’s career has spanned more than 20 years and has been largely focused on manganese sulphate processing. Furthermore, Mr Zhou is a specialist in Mechanical Vapor Recompression (“MVR”) and holds numerous patents in generational redesigns for MVR crystallisers. Mr Zhou has previously been a part-owner of a manganese sulphate plant in China and has consulted to numerous manganese sulphate plants for both process and crystallisation optimisation. The Firebird flowsheet builds on Mr Zhou’s extensive experience and expertise and has some significant advantages over flowsheets and technologies that are being used by peers in the Chinese MnSO4 industry as listed in Figure 7: Firebird’s key process competitive advantage. Trace element analyses for typical impurity elements on Battery Grade MnSO4 produced at the pilot plant from the third party ore was conducted to determine impurity levels in the crystals and levels of individual impurity elements listed in the Manganese Sulphate for Battery Materials Specification (HG/T 4823-2015) were within specified limits. FEASIBILITY STUDY & PROGRESS UPDATE 7 High-level Process Flow Diagram 50ktpa high purity MnSO4·H2O and 10ktpa high purity Mn3O4 Manganese Ore Grinding Reduction Roasting Leaching Filtration Impurity Removal Filtration Leach Residue First crystallization Ni /Co Sulphide Precipitate Second crystallization Centrifuging Drying and packing MnSO4·H2O Oxidative synthesis Centrifuging Drying and packing Mn3O4 MVR Evaporation Drying and packing Na2SO4 MVR Evaporation MVR Evaporation Water treatment Figure 5: Simplified Process flow Diagram 8 FIREBIRD METALS LIMITED Figure 6: Plant layout FEASIBILITY STUDY & PROGRESS UPDATE 9 Process FRB Advantage Competing Processes Ore Treatment FRB uses a calcining process that creates less leach residue and which is in demand for use in cement making. FRB’s residue produced at the R&D centre has been approved for use by two nearby cement plant. Around half of existing producers use pyrite in their process which creates more residue that is high in sulfur and requires further treatment prior to being used in cement plants. Impurity removal of Mg & Ca FRB’s technical team has more than 20 years experience in MnSO4 production and has developed a process to remove Mg & Ca without using hydrofluoric acid. Around half of existing & planned production is using hydrofluoric acid which results in 10-20% higher OPEX and leaves residual fluorine in the product. 5th Generation Crystallisation Reactor FRB’s patented 5th Gen Crystallisation Reactor is industry leading technology and used in commercial production. It has much lower energy consumption than alternatives. The use of this technology alone has put FRB’s production cost in the lowest quartile. Most competitors are using 2nd4th Gen crystallisation reactor or MVR crystallisation processes at a higher energy consumption and resultant higher cost. R&D Capabilities FRB’s vision & establishment of an R&D Centre enables our technical team to test and realise new ideas rapidly. FRB is in the process of applying for two patents both aiming to reduce energy consumption and cost through energy recovery technologies. Some competitors use FRB’s technologies and have engaged members of our technical team in the past as experts in cost reduction. Efficient Plant Design Mother liquor from production of Battery Grade MnSO4 is used in the production of Mn3O4. This achieves the best value creation from the purge stream and produces the best battery grade products. FRB’s design also leaves flexibility to increase Mn3O4 production or produce other Mn salts required in battery materials. Only one competitor uses a similar process. Majority of competitors use mother liquor to produce fertiliser grade MnSO4 or they use hydrofluoric acid to make Battery Grade MnSO4. EMM as alternate Using Mn ore as feed stock results in most feedstock for cost-effective production and products of MnSO4 & Mn3O4 the highest quality. EMM costs more, impurity removal is complex & not environmentally friendly. Mn3O4 particle shape difficult to control & attracts lower price than FRB Mn3O4. Technical Capabilities Before engagement by FRB, technical team members consulted to more than half of the existing High purity & Fertiliser grade MnSO4 plants on process design and equipment selection while improving the designs. In addition to having vast expertise on the high purity MnSO4 production process, FRB’s technical team has expertise in the design and installation of the key equipment used in FRB’s process, including MVRs, Crystallisers and Reactors. Figure 7: Firebird’s key process competitive advantage 10 FIREBIRD METALS LIMITED R&D Centre and Pilot Plant The Research & Development (“R&D”) Centre is strategically situated within the Jinshi High Tech Industries Development Zone, Jinshi, Hunan province, China to support the development of the project. The initial focus will be used to confirm the proposed flowsheet and process design using a combination bench scale and pilot plan