Australia's Element 25 secures $32.6 mln in government debt to build out manganese mine

June 17 (Reuters) - Australian manganese producer Element 25 E25.AX said on Tuesday the Northern Australia Infrastructure Facility (NAIF) has agreed to provide a senior debt facility of up to A$50 million ($32.57 million) for the firm's Western Australia project.

Shares of the producer jumped as much as 10.3% to A$0.215 in early trade.

The funding comes as manganese is set for growing demand from the electric vehicle industry.

General Motors GM.N and battery partner LG Energy Solution 373220.KS said last month they are planning to start commercial production of lithium manganese-rich (LMR) battery chemistry at a U.S. facility starting in 2028. GM said the chemistry is lower cost than the nickel-rich cells used today, but will still give customers the range they want in future electric trucks and full-size SUVs.

NAIF will provide the funding for the company's Butcherbird Manganese Expansion Project located in the Pilbara region, while Element 25 continues to explore additional funding through other sources including offtake prepayment.

The facility will support the miner's plans to expand Butcherbird's production capacity to 1.1 million tonnes per annum of manganese oxide concentrate.

This will further enable the project to supply manganese concentrate feedstock for Element 25's planned battery grade, high purity manganese sulphate monohydrate processing (HPMSM) facility, which it plans to build in Louisiana, in the United States.

"Our feasibility studies have confirmed Butcherbird's pedigree as a long-life manganese concentrate production hub from its 274 million tonne resource, which is integral to our plans for HPMSM in the USA as well as potentially other locations around the world," said Element 25's managing director Justin Brown.

Element 25 is also considering other geographies, including Tokyo, to build processing hubs for the critical mineral that is set for growing demand from the electric vehicle sector, Brown added.

The firm said it is also in discussions with a number of potential financiers for the balance of the required project finance.

($1 = 1.5352 Australian dollars)