AVZ Minerals edges closer to Manono final investment decision

AVZ Minerals (ASX: AVZ) is getting closer to delivering a final investment decision on its Manono lithium and tin project with talks “progressing well” with the Democratic Republic of Congo government over the award of a mining licence.

The company plans to provide an optimised definitive feasibility study (DFS) model around the end of this month and while management believes the level of detail will be of a bankable feasibility study standard, it said potential financiers will not consider the project ‘bankable’ until the mining licence is granted.

AVZ managing director Nigel Ferguson said the company is actively engaged with the DRC government and is confident of receiving the required Manono mining licence, Mpiana Mwanga hydro-electric power plant agreement, collaboration agreement and a favourable announcement surrounding its proposed Manono Special Economic Zone.

“The company remains confident that it will receive a favourable decision awarding the mining licence based on the body of work completed by AVZ proving the robust economics of the project, although timing of a decision remains exclusively at the discretion of the DRC government,” AVZ stated.

Pending the award and meeting financing conditions precedent, the company hopes to announce its final investment decision on the project in the second half of 2021.

Recent cash injection

Meanwhile, the company has been busy progressing the Manono project which was recently supported by a heavily oversubscribed share placement.

Proceeds from the $40 million raising provided AVZ with the necessary funds to increase its stake in the project to 75% via the exercise of existing options over a 15% minority interest held by Dathomir. The DRC government holds the remaining 25% stake.

“The liquidity injection and transition to a larger and highly supportive non-retail shareholder base, will greatly assist AVZ’s discussions with potential financiers, providing the company with a solid foundation from which to negotiate favourable terms,” Mr Ferguson said.

Manono project progress

Earlier this month, AVZ delivered an updated Roche Dure mineral reserve statement which increased 41.6% to 131.7 million tonnes and required a mine redesign. This optimised study showed the average lithium grade improved by 3.1% to 1.63% lithium oxide although the tin grade remained the same at around 990 parts per million.

The company is awaiting assays from a short reconnaissance drilling program undertaken at the Carriere de l’Este orebody earlier this year.

“Carriere de l’Este is also likely to produce significant resources, given drilled indications to date and a program sufficient to allow drill out post-FID,” Mr Ferguson said.

AVZ reported the completion of front-end engineering design (FEED), process plant design and site geotechnical studies which have confirmed capital and operational expenditure for the optimised DFS due in the “coming weeks”.

Key technical input from the Roche Dure pit optimisation will also be included in the DFS update, which will be released following the board’s review and final sign off.

Financing talks

In parallel with finalising the updated DFS, AVZ has been actively engaging with various commercial banks, finance brokers, private equity investors and non-commercial lenders such as PanAfrican Development Finance Institutions (DFIs) to secure funding for the development of the project.

The Company is also considering the appointment of a mandated, strategic corporate finance advisor to assist with debt and equity financing.

Lithium hydroxide pre-feasibility study awarded

In addition, AVZ awarded a pre-feasibility study (PFS) to Noram Engineering and Constructors to convert primary lithium sulphate (PLS) feedstock into lithium hydroxide.

Noram will develop the lithium hydroxide monohydrate flow sheet using PLS feed according to a completed PLS reagent optimisation study.

AVZ has identified a short list of engineering firms to complete the outside battery limits scope of engineering design, in conjunction with the inside battery limit technical work to be undertaken by Noram.

AVZ said information from the PFS will assist to identify the preferred global location for a lithium hydroxide conversion facility fed with product from Manono.

The study is anticipated for completion in the first quarter of 2022 and is not expected to impact on any planned production at the project.