AVZ Minerals rushed by investors with $40m raised in placement

AVZ Minerals ASX placement lithium tin Manono Project investors

Investors clearly like the sound of the Manono lithium and tin project in DR Congo owned by AVZ Minerals (ASX: AVZ) and now close to development. 

They ended up offering $10 million more than being sought by way of a placement, that extra amount being accepted by the company and lifting the cash infusion to $40 million.

However, the company has now decided to cancel plans for a shareholder purchase plan due to the heavily oversubscribed placement.

The placement was priced at $0.13 per share, a 18.8% discount to the previous closing price.

AVZ says the placement was well supported by “high quality” institutions in Australia and North America. Subscribers also included a European-based physical energy commodities merchant, the company said.

Cash will help meet three key targets

The raising will help AVZ progress the project in three key areas.

The company will raise its stake from 60% to 75% by exercising options to take out a minority shareholder at a cost of $20 million.

The enlarged balance sheet will also help the company negotiate project financing. 

Thirdly, AVZ will set up a working capital and contingency buffer during project development. 

The company says the purpose of the placement was to clear the way for working toward a final investment decision. 

Priorities for the second half will include the finalisation of the bankable feasibility study which AVZ says is “well advanced and tracking well”.

AVZ is also expecting the awarding of the mining licence to be issued by the DR Congo government. 

Placement an ‘important milestone’

Managing director Nigel Ferguson said the capital raising marks and important milestone in the company’s journey to develop the Manono project.

The historic Manono Mine was mined for its tin content between 1919 and 1982 but little prospecting has been done there since 1960, the year what was the Belgian Congo gained its independence from Brussels. 

“Increasing AVZ’s equity stake to 75% of the Manono project adds significant value to AVZ shareholders, including the possible option to attract strategic equity partners at the project level,” Mr Ferguson added. 

That would help de-risk and potentially accelerate the development of the mining operation.

In a new presentation, the company says it is investigating other opportunities. 

These include improved tin and tantalum recoveries, lower rail freight rates, producing sulphuric acid on site to cut costs, and downstream processing via a European lithium hydroxide plant.

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