AVZ Minerals to expand ownership of Manono, boosts project NPV exposure to US$1.7bn
Once the transaction is complete, AVZ Minerals will own 75% of Manono, which will increase its share of pre-tax project net present value from US$1.4 billion to US$1.7 billion.
AVZ Minerals (ASX: AVZ) revealed this morning it will boost its stake in its flagship Manono lithium and tin project to 75% for US$15.5 million.
The Manono project in the Democratic Republic of Congo hosts the world’s largest hard rock spodumene lithium resource.
Upping its interest in the project from 65% to 75% will increase AVZ’s share of pre-tax project net present value from US$1.4 billion to US$1.7 billion.
AVZ has already paid US$500,000 to joint venture partner Dathomir Mining SARLU, with the remaining US$15 million to be handed over at any time over the next 12 months – or as soon as AVZ secures a minimum of US$50 million in project financing.
Once this and an agreement last year have been finalised with Dathomir Mining SARLU, then AVZ will own 75% of the project through joint venture subsidiary Dathcom Mining SA.
AVZ managing director Nigel Ferguson noted that a recent definitive feasibility study on Manono had revealed the project was “very robust” with “strong financial metrics”.
“This additional equity in the Manono project will add significantly to the project’s bottom line and NPV and is critical to AVZ’s ongoing discussions with prospective financiers,” Mr Ferguson added.
Manono lithium and tin project
Once AVZ has locked in its 75% stake of Manono, the DRC Government will hold the remaining 25%.
A definitive feasibility study on Manono was revealed in April this year and estimated the project would generate almost US$3.8 billion (A$6 billion) in after tax profit over its 20 year mine life (on a 100% ownership basis).
The study calculates capital expenditure of US$565.5 million is required to develop the project with a post-tax payback period of 2.5 years.
This capital expenditure includes transport upgrades and rehabilitation of the nearby Mpiana Mwanga hydroelectric power plant.
At the end of June, Mr Ferguson revealed AVZ had issued US$300 million of pre-mining request for tenders.
These will be awarded once a final investment decision to progress the project has been made.
Mr Ferguson said the company was advancing finance and offtake negotiations, with entities from Europe, the Middle East and South Africa showing “strong interest”.
Manono has a reserve of 93 million tonnes at 1.58% lithium and 988 grams per tonne tin for 1.47Mt of contained lithium and 92,000t of tin.
The project’s resource totals 400Mt at 1.65% lithium and 715 parts per million tin, and 34ppm tantalum – resulting in 16.3Mt of contained lithium carbonate equivalent.
According to Roskill, the Manono resource accounts for one-fifth of the world’s spodumene lithium resources.