Euro Manganese Inc. (Vancouver, B.C., Canada) has awarded the Engineering, Procurement, and Construction Management (EPCM) contract for its Chvaletice Manganese Project in the Czech Republic to Wood Australia Pty Ltd.
The Company has selected Wood as its EPCM partner following a rigorous selection process. Five high quality bids were submitted by international EPCM firms in late 2022. Two firms were shortlisted in early 2023 based on cost of service as well as their proposed project schedule, technical and engineering capability, EU experience, team skillset, and overall execution strategy. The Company selected Wood as the preferred contractor in April 2023 and has now concluded the contract negotiations and received Board approval to award the contract to Wood.
The contract is cost reimbursable and is structured in two phases (outlined below), with an approval stage gate between each phase as well as after the gap analysis in Phase 1. Completion of Phase 1 is anticipated to take approximately 12 months, with a Final Investment Decision (“FID”) to be made prior to commencement of Phase 2. Receipt of FID from the Board requires securing outstanding permits and project finance (debt and equity).
The FEED phase includes an initial two-month gap analysis and in-depth review of the Definitive Feasibility Study (“DFS”) deliverables, including the testwork and flowsheet development conducted by the Company over the last 7 years.
Following completion of the gap analysis, other key deliverables to be derived over the remaining 10 months during Phase 1 include: completion of value engineering; identification of long-lead time equipment; vendor engagement, selection and firm pricing for major equipment items and packages; total installed capital cost estimate to AACE Class 3 estimate accuracy (+/- 10%); project implementation strategy; a baseline schedule for the EPCM phase; and preparation of construction permit documentation.
Upon making the Final Investment Decision, the Company will enter into the EPCM phase of the contract once conditions precedent are satisfied. Wood will provide overall project and construction management services throughout the EPCM phase of the project, which includes detailed design, procurement, construction, and commissioning.
The key outstanding permits for the Chvaletice Project include: the Environmental Social Impact Assessment (“ESIA”) approval, followed by the Land Planning Permit, and then the Construction Permit.
The Czech Ministry of Environment received comments from 14 relevant authorities on the ESIA, which was submitted in December 2022. All but one of the authorities approved the relevant studies, signalling a positive perception of the Project by regulators. The Ministry has returned the ESIA to the Company to address comments from the authority yet to approve the ESIA, related to noise abatement. The Company expects to address these comments without an effect on the timeline to FID.
While the Chvaletice Project’s anticipated noise levels are within legislative limits for an industrial project, as neighbouring operations adjacent to the Project site have existing noise emissions, the cumulative effect marginally exceeds permitted noise levels at the measurement points, located at the closest residential areas.
The revision of the noise study within the ESIA has also been requested to consider new noise legislation related to traffic noise coming into force in July 2023. The details of this new legislation were released after the Project ESIA was completed and submitted.
The necessary work to address the comments related to noise have already begun, and the revised ESIA is expected to be submitted in August 2023, when the ESIA process can then continue. The Company anticipates the issuance of a positive decision on the revised ESIA before the end of 2023.
Upon approval of the ESIA, the Land Planning Permit can be submitted. The documentation for this application is substantially complete and will be finalised upon receipt of the conditions in the approved ESIA. The Land Planning Permit approval timeline is typically three months once submitted, resulting in an anticipated approval by mid Q2 2024.
As highlighted above, the Construction Permit documentation is a deliverable of the FEED phase and is expected to be submitted at the end of Q2 2024. The permit approval timeline for the Construction Permit is three months, resulting in an anticipated approval by Q3 2024.