Good morning, and good afternoon, everyone. Welcome to Euro Manganese's first quarter 2024 conference call. We've got a few people still joining, so we'll give it about 30 seconds or so before we get started. Please note this webcast is being recorded, and a replay will be available on our website in due course. The slides that we use today can be downloaded from the website, and after the presentation, there'll be a question and answer period. If you'd like to ask a question, please use the Q&A function at the bottom of your screen. You can ask a question at any point during the presentation, and we'll cover it during the Q&A period. We also welcome your questions post the call, so please feel free to reach out to Matt, Martina, Martina, or myself.
Before we begin, note this presentation does involve forward-looking statements. Please refer to our cautionary statements here and the risk factors in our annual information form. Our management discussion and analysis and financial statements as at fiscal Q1, ending December 31, 2023, were filed on February 14, 2024. All of these materials are available on our website, SEDAR+, and the ASX. Over to you, Matt.
Good morning, and good afternoon to everyone. Thank you for joining us to review developments during Euro Manganese's first fiscal quarter. Martina Blahova, our Chief Financial Officer, is unable to attend today's conference call, so I will first take you through financial highlights for the quarter and the company's financial position. Then I will run through key developments during the quarter and how we performed against our key catalysts. I'll also go through upcoming catalysts for the year ahead. We'll wrap up with a question and answer session. Just a reminder that our fiscal year end is thirtieth of September, so our Q1 references the period September through December 2023. We also report in Canadian dollars. I will briefly comment on our cash position at the end of the quarter. We started the quarter with CAD 7.6 million in cash.
CAD 0.4 million was spent to advance the commissioning of the demonstration plant, which is nearing completion. CAD 2.3 million was spent on operational expenditures, which included the advancement of the Chvaletice permitting and other corporate costs. Net proceeds from the Orion convertible loan were CAD 2.3 million. We closed the acquisition of EP Chvaletice for CAD 3.3 million. We also made land acquisitions and lease payments of CAD 0.4 million. Therefore, we closed the quarter with CAD 24.3 million in the bank. The net proceeds of the first $20 million US tranche of the Orion convertible loan facility, which closed during the quarter, are expected to provide sufficient funding to complete project permitting, demonstration plant commissioning, and batch operation, and acquisition of certain remaining land parcels required for the project.
We also expect to be able to initiate the FEED phase of the EPCM contract and certain site preparation works, as well as fund general and administrative expenses. Here's an overview of key highlights during the quarter and to date. Most noteworthy is the closing of the $20 million initial tranche of funds under the previously announced $100 million in non-dilutive financing package with Orion Resource Partners. In November, we successfully produced on-spec, high-purity manganese sulfate from our demonstration plant in the Czech Republic. This is an important achievement in de-risking our flow sheet and further advancing our offtake discussions with customers. Also, in the quarter, we secured a definitive lease agreement with CEZ, which, together with previously announced land access agreements and the CEZ lease agreement, now provides us with access to approximately 85% of the manganese reserves in the Kralovice tailings area.
We continue to make progress with our offtake negotiations and now have close to 200% of our forecast production under discussion with potential customers. A key development subsequent to the quarter was the advancement of our debt financing process with the European Investment Bank to appraisal status. I'll provide more details on that in the coming slides. As I mentioned earlier, in November 2023, we announced a $100 million funding package with Orion. This financing agreement is a tremendous endorsement of the importance of the Chvaletice Project and of our ability to deliver this project to the highest of standards.
To reiterate, the $100 million is split into two $50 million components: a $50 million loan facility with a 12% interest rate, convertible into a 1.29%-1.65% royalty on project revenues, and a $50 million in exchange for a 1.93%-2.47% royalty on project revenues following a final investment decision. The $50 million convertible loan to royalty facility is split further into two tranches. $20 million upon closing, which was received at the end of November 2023, and $30 million upon meeting certain commercial milestones. All aspects of the funding package were structured to meet project finance bankability requirements and will sit alongside and reduce the project finance, debt, and equity required for the full project financing.
Furthermore, the tranche structure minimizes the cost of funds and ultimately facilitates a pathway to a final investment decision. During the quarter, we produced on-spec, high-purity manganese sulfate monohydrate, which further de-risks our process flow sheet. Two independent external laboratories confirmed samples sent for testing met the demonstration plant target specifications for high-purity manganese sulfate monohydrate with low levels of impurities. The team is gaining valuable insights from operation of the demonstration plant, which are leading to further engineering and operational process improvements, which we can incorporate into our final plant design. The revised environmental and social impact assessment was submitted to the Czech Ministry of Environment in September 2023. We passed through the public commentary period during the quarter, and no comments were received either from the public, NGOs or municipalities. From our ongoing discussions with the ministry, we continue to expect approval imminently.
Upon ESIA approval, we will be able to proceed with submission of the remaining land planning permit and construction permit documentation, which will come from our FEED program with Wood. We made significant advancements on both land access and land rezoning for the Chvaletice Project during Q1. As we outlined last quarter, we concluded a definitive lease agreement with CEZ, which provides us with access to approximately 60% of the manganese reserves in the historic tailings area. Together with the previously announced land access agreements and the CEZ lease agreement, the company has secured access to approximately 85% of total project reserves. Negotiations are progressing on the final 15%. We recently completed the land acquisition for an initial residue storage facility within the overall project, the protected deposit area.
This can be seen as the green triangle on the top right of this map on this slide. This allows the operation to commence mining and concurrently replace our project tailings in the residue storage facility. The residue storage facility will then extend into the previously mined area, and each section is filled, it will be remediated as the mining progresses through the resource. Also, in October, the rezoning of land for mining lease was completed. At the same time, rezoning of all required areas within the commercial plant site were reclassified for heavy industry. This concludes all rezoning requirements for the Chvaletice Project, a three-year process. We continue to generate significant interest in our high-purity manganese, and our offtake funnel has grown significantly. Tonnages under discussion are now almost twice our plant capacity.
With the new offtakers that have entered the funnel, we now have more than 30 parties at the top, with more than 70,000 tons of high-purity manganese sulfate per annum in aggregate under discussion. However, many of these new potential customers are yet to provide tonnages, so there is significant upside potential. A total of 12 parties are in the middle of the funnel, with a total interest having increased from 50,000 tons of high-purity manganese sulfate per annum to approximately 105,000 tons of high-purity manganese sulfate per annum. At the sharp end of the funnel, we have 10 parties in advanced stages of negotiations, one of which has signed a term sheet.... with a combined interest of over 150,000 tons of high-purity manganese sulfate per annum.
I would reiterate that these are initial tonnages from off-takers, and these potential customers have indicated a need for higher tonnages as the market grows and as manganese-rich chemistries evolve. We continue to see increased news flow of commercialization of manganese-rich chemistries, including NMC, nickel, manganese, cobalt, moving to more manganese, the addition of manganese in LFP to LMFP, and sodium ion, which also contains manganese. We are also seeing the demand for manganese grow as cobalt-free chemistries, e.g., NMX or LMNO, continue to evolve. Euro Manganese remains very well positioned to meet the increasing need for high-purity manganese and lithium-ion batteries. We have the only manganese resource in the EU and stand to benefit from increasing demands for a local, responsibly produced source of supply. We made significant progress on a number of our key catalysts in 2023.
With on-spec, high-purity electrolytic manganese metal and high-purity manganese sulfate monohydrate produced from our demonstration plant, we can now supply bulk samples required by potential off-take customers with our larger scale tests. Following our gap analysis, which was completed last quarter, Wood has now progressed to the FEED part of the EPCM contract. In January of this year, we appointed Mr. Tim Kindred as Project Director of the Chvaletice Manganese Project. Tim is a highly skilled project and operations leader in the mining and metals industry. His skills and capabilities in developing complex battery metal projects, together with his proven track record in delivering large-scale projects on time and on budget, will be extremely valuable for us as we progress both FEED and EPCM work, including the construction of the Chvaletice project. We welcome Tim to the Euro Manganese team.
As I outlined earlier, the Chvaletice Manganese Project has advanced to the formal appraisal stage with the European Investment Bank for debt financing. This underscores the EIB's commitment to support sustainable opportunities in the battery supply chain. Chvaletice remains the only sizable, proven, and probable reserve of manganese in the European Union and throughout and through the project, Euro Manganese will be uniquely positioned to provide a secure, traceable, and responsibly produced supply of high-purity manganese products to the European electric vehicle market. With the European Bank for Reconstruction and Development already a key shareholder and also having expressed interest in providing debt financing, this advancement is another key step towards securing the required debt component of the total project financing required. In 2024, we remain focused on advancing our flagship project in Europe.
Our key goals include progressing the remaining of the FEED phase of the EPCM contract, completing the remaining land access agreement, advancing project permitting, securing additional off-takes, term sheets, and contracts, commencing the project debt finance process, securing a strategic investor at the project level, and progressing the feasibility study for the Bécancour dissolution plant, subject to financing. To wrap up, I would like to express my gratitude for the team's effort and for the ongoing support of our shareholders, particularly in these tough markets, as well as the support of national and local governments, community members, partners, suppliers, and prospective customers. Thank you, everyone, for listening today. I'll now open it up to questions.
Thank you, Matt. Just a reminder to everyone, if you'd like to ask a question, please use the Q&A function along the bottom of your screen. We'll pause for a moment to gather questions. We've got one question, Matt: Could you elaborate a little on what the strategic investment might look like, and are you seeing interest from parties on that front?
Yeah. So for the strategic investment, our ambition is to secure an investment at project level for 10%-20% of the project. Ideally, this would be associated with an offtake, so someone in the battery supply chain that requires the material aligned to the amount of investment to the level of offtake, which would act as a natural hedge for that purchaser. We are broadening our net to, yeah, have discussions with other strategic related partners for that project level investment. And we are seeing interest and having engagement on these discussions, including hosting a site visit just last week for a potential investor. So, so yes, we are having good engagement, but that is the nature of the strategic investment we're looking at. It's at the project level.
Another question, Matt: Are you anticipating Verkor to firm up a binding offtake agreement in 2024?
Yes, we are. We're in discussions with them, and they are going through an internal alignment process across their offtake contracts, and our offtake contract is being wrapped up in that.
Just a reminder, if you'd like to ask a question, please use the Q&A function along the bottom of the screen. Matt, doesn't look like we're seeing any further questions, so pass it back to you for a wrap-up.
Yeah. So I just want to thank everyone for their attending this quarterly conference call, and we look forward to updating you on our progress in the Q2 call later on this quarter. Thank you.