AVZ Minerals (ASX: AVZ) has initiated talks with its new Chinese investor Yibin Tianyi Lithium Industry Co on a binding offtake deal for lithium products from its Manono project in the Democratic Republic of Congo.
The discussions follow Yibin Tianyi’s $14.1 million share placement in the lithium explorer, announced in November and approved by AVZ shareholders in early January.
The Chinese lithium chemical producer’s investment in AVZ effectively gives it a 12% stake in the company.
Under the subscription deal, the pair agreed to negotiate and execute a binding offtake agreement for the Manono lithium and tin project, where a definitive feasibility study is close to completion.
The discussions commenced as AVZ’s senior management visited Yibin Tianyi’s lithium chemical plant in China.
The plant, which is targeting production of up to 25,000 tonnes of lithium hydroxide per annum, is currently under construction and anticipated to start production by June.
Yibin Tianyi has planned stage expansions to further increase lithium hydroxide production to about 100,000tpa.
AVZ managing director Nigel Ferguson said Yibin Tianyi’s ambition to become one of the largest hydroxide suppliers in China “certainly compliments AVZ’s vision of developing the largest hard rock lithium deposit in the world”.
“The conditions precedent are progressing well and we expect all matters to be satisfied, including regulatory approvals, by the end of this month,” he said.
Yibin Tianyi is 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.
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.
At the end of December, AVZ provided an operational update stating that the definitive feasibility study was 82% complete and on track to be delivered in the first quarter of 2020.
Current work includes the dewatering of the Roche Dure pit and the continuation of transport studies, with new rail and road options being evaluated.
AVZ shares had climbed 13.95% to $0.049 on the news by early afternoon trade.