Euro Manganese has restructured its financing arrangement with Orion Resource Partners for the Chvaletice high-purity manganese project in the Czech Republic, converting a costly development-stage debt facility into a long-term project royalty agreement.
The amended agreement, announced on 10 July 2026, removes a significant repayment obligation from Euro Manganese’s balance sheet and changes the financial structure of one of Europe’s most important planned battery-grade manganese projects. While the restructuring improves short-term financial flexibility, it does not provide the construction funding required to build the commercial-scale operation.
US$23.5 Million Orion Loan Converted into Revenue Royalty
Under the revised agreement, and subject to Euro Manganese completing an agreed equity financing requirement, the outstanding Orion loan and accumulated interest of US$23.53 million as of 31 March 2026 will automatically convert into a royalty linked to project revenue. The conversion eliminates the need to repay the existing loan facility and removes exposure to a development-stage debt obligation whose interest rate had increased from 12% to 14%.
Instead of carrying a fixed liability, Euro Manganese will provide Orion with a continuing economic interest in future project revenues. The new royalty is expected to represent approximately 2.29% to 2.46% of Chvaletice revenue, with the exact percentage determined by realised prices for the project’s high-purity manganese products. The royalty will remain in place throughout the estimated 26-year operating life of the project.
Financing Changes Reduce Near-Term Pressure
The restructuring addresses one of Euro Manganese’s key financial challenges by removing a potentially disruptive debt repayment deadline during the development phase. For a company advancing a large-scale critical minerals project, replacing high-cost debt with a revenue-based obligation can provide greater flexibility while the project moves toward construction financing.
The agreement also cancels the remaining US$70 million undrawn portion of Orion’s original financing package. This means Orion will no longer provide the unused debt capacity originally contemplated under the previous arrangement.
Orion Retains Production Option and Strategic Exposure
Although the debt facility is being converted into a royalty, Orion will retain strategic exposure to the Chvaletice project through an offtake option. The investment group will have the right to purchase approximately 20% to 22.5% of project production for a period of 10 years following first delivery.
In addition, Orion’s existing project security will be subordinated to future senior project-finance debt. This change could improve the project’s ability to attract traditional lenders by allowing senior financing providers to obtain stronger priority security positions.
Chvaletice Targets European Battery Manganese Supply
The Chvaletice project is designed to process historical mine tailings from a former manganese operation in the Czech Republic.
The planned facility would produce:
- high-purity electrolytic manganese metal (HPEMM),
- high-purity manganese sulphate monohydrate (HPMSM).
These products are essential inputs for lithium-ion battery manufacturing, particularly as automakers and battery producers seek more secure supplies of critical raw materials. Euro Manganese has positioned Chvaletice as a potential source of Europe’s first significant domestic production of battery-grade high-purity manganese. The project’s location within the European Union could provide strategic advantages as governments attempt to reduce reliance on imported battery materials.
Royalty Structure Creates Long-Term Economic Trade-Off
While the restructuring improves liquidity, it also changes the way project value will be shared. Euro Manganese has effectively exchanged a fixed balance-sheet obligation for permanent project-level economic dilution. A revenue royalty is paid before operating profits, debt repayments and shareholder returns are calculated.
This means Orion’s total financial return could exceed the converted debt amount significantly if manganese prices rise or production volumes outperform the project’s assumptions. The long-term cost of the royalty will therefore depend on future market conditions, project performance and realised product pricing.
Construction Financing Remains the Critical Challenge
Despite the improved financing structure, Euro Manganese still requires substantial capital to develop Chvaletice into a producing operation. The restructuring does not represent a construction funding package and does not remove the need for additional financing arrangements.
Future development will depend on securing an appropriate combination of:
- senior project debt,
- equity investment,
- strategic partnerships,
- potential government support.
The company will also need to incorporate the royalty obligation and retained offtake option into future financial models, including debt-service calculations, lender security structures and downside price scenarios.
Strategic Position Strengthened but Execution Remains Key
The Orion agreement improves Euro Manganese’s immediate financial position by reducing debt pressure and creating a more flexible path toward project financing. Тhe ultimate success of Chvaletice will depend on whether the company can secure the capital required for construction and demonstrate that the project can operate competitively in the global manganese market.
As demand grows for battery raw materials, Chvaletice remains strategically important for Europe’s ambitions to establish a more resilient domestic supply chain for critical minerals. The revised financing structure provides additional time and flexibility, but the next major milestone will be converting project potential into a fully financed and operational manganese production facility.
