Euro Manganese has amended its financing agreement with Orion Resource Partners, replacing an outstanding US$23.53 million loan with a life-of-project revenue royalty linked to the Chvaletice high-purity manganese project in the Czech Republic. The revised agreement, announced on 9 July, applies to the company’s financing arrangements for the Chvaletice development and remains subject to Euro Manganese completing an agreed fundraising condition.
Debt Restructured Into Long-Term Revenue Royalty
Under the amended terms, the outstanding loan balance of US$23.53 million, including accrued interest calculated to 31 March 2026, will automatically convert into a royalty over the life of the project. The royalty will range between approximately 2.29% and 2.46% of project revenue, with the applicable rate determined by realised prices for Chvaletice’s high-purity manganese products. The estimated duration of the royalty is approximately 26 years.
As part of the restructuring, the undrawn US$70 million portion of Orion’s original financing package will be cancelled. The original facility carried an interest rate of 12%, which was subsequently increased to 14%.
Offtake Rights and Security Terms Remain in Place
Orion Resource Partners will retain an option to purchase between 20% and 22.5% of production from the Chvaletice project for a period of 10 years following first delivery. The offtake option will remain available until Euro Manganese has contracted approximately 60% of the project’s planned total offtake. Under the revised financing structure, Orion’s security will be subordinated to future senior project finance lenders.
Financing Structure Supports Ongoing Project Development
The debt conversion removes a near-term repayment obligation while preventing further accumulation of high-interest financing costs, improving Euro Manganese’s capacity to continue project permitting, engineering and fundraising activities. The revised agreement does not provide the construction funding required to develop the Chvaletice high-purity manganese project.
Instead of remaining on the balance sheet as debt, the financing obligation will be transferred to future project revenues through the royalty mechanism. Because the royalty is based on gross project revenue, payments will continue regardless of operating margins, and cumulative payments to Orion could exceed the US$23.53 million debt being converted if manganese prices are higher over the project’s operating life.
Implications for Future Project Financing
The restructuring highlights financing challenges facing development-stage European critical minerals projects, where extended permitting timelines and delayed final investment decisions can make double-digit bridge financing difficult to sustain before senior construction lenders become available.
The subordination of Orion’s security may support future project financing discussions. At the same time, the retained royalty and offtake rights will need to be incorporated into lender assessments of project cash flows, security structures, minimum coverage ratios and downside commodity price scenarios.
