AVZ Minerals receives Chinese backing to advance Manono lithium project

AVZ Minerals (ASX: AVZ) has welcomed a new strategic investment from China’s Yibin Tianyi Lithium Industry Co that will enable early development works to start at its world-class Manono lithium and tin project in the Democratic Republic of Congo.

The lithium explorer emerged from a trading halt this morning to announce Yibin Tianyi’s plans to take up a 12% stake in the company, through the issue of 314.3 million shares at $0.045 each, for a total investment of $14.1 million.

Under the deal, the two companies will also negotiate and execute a binding offtake agreement for the products from the Manono project.

AVZ managing director Nigel Ferguson said the funds raised from the placement will enable the company to acquire an additional 5% stake in the joint venture operating company of Manono, Dathcom Mining SA. This will increase AVZ’s total interest in the project to 65%.

In addition, he said the placement will allow early development works to be undertaken at the project while the definitive feasibility study is being completed.

Yibin Tianyi is an emerging lithium chemical producer backed by China’s largest electric vehicle battery manufacturer Contemporary Amperex Technology (CATL) and fellow Schenzhen-listed company Suzhou TA&A Ultra Clean Technology Co.

It is currently constructing a phase one lithium chemical plant in Yibin, a city in the south-eastern part of China’s Sichuan province. The plant is expected to be completed by the second quarter of 2020, with a second phase expansion anticipated for completion by 2023-2024.

“Yibin Tianyi’s intention to invest in AVZ and enter into a binding offtake arrangement underpins the tier one quality of our Manono project,” Mr Ferguson said.

“Their intention to become one of the largest global lithium chemical producers certainly complements our vision of developing the largest hard rock lithium deposit in the world,” he added.

Current work at Manono

AVZ’s Manono lithium and tin project in southern DRC is the largest lithium project with the highest grade owned by an ASX-listed company to date.

It has a measured, indicated and inferred resource totalling 400 million tonnes at 1.65% lithium oxide, 715 parts per million tin and 34ppm tantalum.

Earlier this month, AVZ appointed EmiAfrica to conduct environmental and social impact studies at the project.

These studies form part of the formal process to obtain mining permits.

AVZ shares were sitting 9.3% higher at $0.047 by afternoon trade.