Element 25 (ASX:E25) has signed a binding long-term offtake agreement with a subsidiary of OM Holdings (ASX:OMH) for manganese concentrate produced at its Butcherbird mine in the Pilbara region of Western Australia.

Butcherbird is Australia's largest onshore manganese deposit and one of a limited number of manganese operations globally positioning to supply feedstock for battery-grade high purity manganese sulphate (HPMSM), a key precursor material for nickel-manganese-cobalt (NMC) lithium-ion battery cathodes used in electric vehicles.

The concentrate will serve as future feedstock for HPMSM production and supports Element 25's planned expansion at the Butcherbird operation, known as BBX.

Element 25 Managing Director Justin Brown said the agreement establishes a long-term sales channel for manganese concentrate from BBX, which is targeting an expanded production rate of 1.1 million tonnes per annum (Mtpa). He described the deal as a key milestone in advancing BBX towards development and financing.

"This agreement secures a high-quality, long-term offtake partner for manganese concentrate produced at our expanded Butcherbird Operations, extending our existing relationship with OMH and its subsidiary, OMM," Mr Brown said.

"OMH has established downstream smelting capability, providing a strong commercial foundation for the Butcherbird Project over the initial five years of operation, and potentially beyond that timeframe."

Brown told shareholders that securing a strong offtake partner represents a major step forward in de-risking the development pathway for the Butcherbird expansion, giving lenders and investors the confidence needed to support project financing.

"The structure of our agreement delivers revenue certainty while still preserving market exposure, ensuring we participate in upside conditions without compromising stability," Mr Brown said.

"Importantly, the agreement maintains our strategic flexibility, allowing Element 25 to continue advancing our value-add," he added.

The offtake contract follows Element 25's recently announced long-term mining services and ore haulage agreements with ReGroup Australia for BBX. The company has also been advancing downstream HPMSM partnerships, including a previously announced agreement with General Motors to supply battery-grade manganese sulphate monohydrate.

Element 25's expansion of Butcherbird is based on an updated January 2025 feasibility study and an updated ore reserve of 101.4 million tonnes (Mt) at 10.4% manganese, containing 10.54 Mt of manganese. The study supports an operational life of mine (LOM) exceeding 18 years at the planned throughput rate.

As remaining outstanding contracts for BBX approach finalisation, Element 25 forecasts mechanical completion and commissioning in Q1 CY2027.

OM Holdings is a long-established manganese alloy producer and operates manganese smelting facilities in Malaysia, positioning it as a downstream industrial customer for Butcherbird production. The agreement comes as governments including Australia, the United States, and the European Union have designated manganese a critical mineral, reflecting growing supply chain importance for both steelmaking and battery materials.

E25 shares were at 25 cents with a market capitalisation of $84.71 million prior to markets opening.