K.Hill Project Feasibility Study

In 2022, Giyani announced the results of the feasibility study for the K.Hill battery‑grade manganese project in Botswana. The FS has been prepared by SRK, as lead, on an integrated mining and processing operation for the onsite production of HPMSM directly from manganese oxide.

The project is based upon K.Hill’s total Indicated Resource of 2.1 Mt which has been converted into 2.0 Mt of Probable Reserves. The remaining Inferred Resource of 3.1 Mt for K.Hill, is in the process of evaluation to be upgraded into the Indicated Resource category. New Mineral Resource Estimates for K.Hill and the nearby Otse manganese oxide prospect are currently targeted for completion in H1 2023 and provides the potential to expand the Project in future years and extend the mine life significantly.

0
Post Tax
NPV8
0
Post Tax
IRR
0
Initial Capex incl
contingency of US$32M
0
Payback from first
production

Highlights

Robust economic returns:

A post‑tax NPV, at an 8% discount rate, of US$481M (C$649M) and a post‑tax IRR of 28%.

Low capital intensity for what will be one of the largest HPMSM projects in the world

Estimated initial capital expenditure of US$281M (C$379M), including contingency of US$32M (C$43M), for a fully integrated battery raw materials project.

Strong free cash flow

Net free cash flow over the life of the Project is estimated at US$1,093M (C$1,476M), equivalent to US$99M (C$134M) per year with first commercial production in 2025.

Significant geological upside offers potential to expand Project and extend mine life

Exploration work to upgrade the 3.1 Mt of Inferred Resources in the K.Hill southerly extension is progressing and the addition of these resources and the Otse prospect provides the potential to expand the Project in future years and extend the mine life significantly

Operational advantage of higher grade ore and conventional mining

K.Hill's Probable Reserve grade of 18.9% MnO is the highest among its listed battery‑grade manganese peers and underpins a scalable operation with an initial throughput of 200kt ore production per annum, offering potential future production capacity expansion.

LI Battery demand expected to increase significantly

CPM Group, an independent research and consultancy company, projects demand for HPMSM in LI Batteries to grow by nearly 30 times between 2021 and 2036.

Pathway to becoming a low carbon producer

Giyani’s HPMSM production process directly from manganese oxide ore does not require power‑intensive calcining or electrorefining and the planned integration of 4.5 MW of solar power contributes to a very competitive Scope 1 and 2 emissions footprint of only 1.4 kg of carbon dioxide equivalent per kilogram of HPMSM (see Giyani News Release of September 29, 2022).

Strong ESG credentials

The Project’s development strategy has been formulated around the mitigation hierarchy of “avoid‑minimize‑mitigate” with initiatives such as renewable energy integration, water self‑sufficiency and dry stack tailings management to be included in the ESIA, currently estimated to be completed and submitted to the authorities in Botswana in Q1 2023.

Optimization work opens opportunities for enhancing Project value

In addition to potential life-of-project extensions through further exploration success, work is ongoing to lower operating costs, particularly related to certain consumables affected by supply chain disruption and global inflation.

Project Overview

Metrics Units Results
Project summary
Type of mine ‑ Conventional open pit mine
Type of production facility ‑ HPMSM hydrometallurgical processing facility
Life of the Project years 11.0
Net realized price assumption
Average realized HPMSM price (Yrs 1 – 5) $/t 3,373
Flat realized price HPMSM price (Yrs 6 – 11) $/t 3,918
Production Annual LOP
Total ore mined dry kt 226 2,032
Run-of-mine manganese grade % MnO 18.9 18.9
Metallurgical recovery % 88.5% 88.5%
Total recovered manganese metal kt MnO 31 339
Total HPMSM produced kt 73 808
Project cash flow Average annual LOP
Revenue from HPMSM $M 272 2,993
Total operating costs (incl. royalty) $M 125 1,369
Total EBITDA $M 148 1,624
Initial capital expenditure excl. contingency $M ‑ 249
Contingency on initial capital $M - 32
Total initial capital expenditure incl. contingency $M - 281
Sustaining capital expenditure incl. contingency $M - 21
Closure costs $M ‑ 5
Total LOP capital expenditure incl. contingency $M ‑ 307
Project economics Pre-tax Post-tax
NPV (8% real discount rate) $M 603 481
IRR % 32.0 28.3
Payback period from start of processing years 3.3 3.6
Cumulative cash flow, undiscounted $M 1,317 1,093
Footnotes:

All financial figures above are quoted in US dollars

Net realized prices for HPMSM at mine gate, assuming 50% of sales to the European Union and 50% sales to North America.