Development continues to move along at AVZ Minerals’ (ASX: AVZ) high-grade Manono lithium-tin project in the Democratic Republic of Congo (DRC), with major project milestones being completed during the September quarter.
Last month, the company entered into a deal with Suzhou Cath Energy Technologies (or CATH) to fund the majority of Manono’s capital costs.
The Chinese company’s cornerstone investment will help advance the project’s development and give CATH a 24% stake.
CATH has since paid the US$20 million break fee required under the terms of the deal and it is being held in an escrow account.
The completion of the transaction is now subject to the satisfaction or waiver of several conditions precedent before 30 November.
AVZ said the deal with CATH has “significantly de-risked” Manono from a debt financing perspective and could introduce “additional appetite” from the market for further debt financing requirements.
Mining licence approvals
AVZ received “favourable outcomes” from the DRC’s Department of Mines for sections of its mining licence application during the period.
Environmental approvals, proof of financial capability and favourable cadastral opinion (referring to land parcel boundaries) were approved, while the final section relating to technical opinion on the project’s definitive feasibility study was given positive feedback.
Once final approvals have been received, the Minister for Mines will have 30 days to award the mining licence.
The country’s Council of Ministers is expected to meet to deliberate on the award of the Mpiana Mwanga hydro-electric power plant agreement and a Prime Ministerial decree for the project’s collaboration development agreement.
AVZ will issue a bankable feasibility study following the grant of the Manono mining licence.
Managing director Nigel Ferguson said he was confident AVZ would soon be able to appoint a Mandated Lead Arranger (MLA) to head the project’s syndicated debt funding facility.
More than 50% of the project’s funding has been secured (subject to closing the deal with CATH) and paves the way for a final investment decision which will kick-start project construction.
Manono equity holder and joint venture subsidiary Dathcom Mining SA will have a sufficient bank balance to fund the first eight months of construction capital, with financial close for debt financing expected in mid-2022.
Last year, AVZ boosted its stake in Manono by exercising an option to purchase joint venture partner Dathomir Mining SARLU’s minority shareholding of 15%.
The company now owns 75% of the project through Dathcom.