AVZ Minerals (ASX: AVZ) has collared a second binding offtake agreement for the proposed spodumene concentrate production from its flagship Manono lithium-tin project in the Democratic Republic of Congo.
The company revealed it has secured a strategic, long-term offtake agreement with global battery materials producer Shenzhen Chengxin Lithium Group Co Ltd.
Chengxin has agreed to purchase up to 180,000 tonnes per annum of spodumene concentrate from Manono over an initial three-year term.
AVZ pointed out that Chengxin is on its way to becoming one of China’s largest lithium hydroxide producers. Chengxin will have initial capacity to generate 25,000tpa of lithium carbonate and a further 15,000tpa of lithium hydroxide.
However, planned expansions will see this increase to a combined 70,000tpa.
According to AVZ, once Chengxin’s expansion plans are implemented, it will require 560,000tpa of spodumene concentrate to meet internal demand.
Offtake contracts for more than half Manono spodumene concentrate
Following the first binding offtake agreement with Ganfeng Lithium late last year, AVZ has now locked-in contracts for more than 50% of its intended spodumene concentrate output.
AVZ managing director Nigel Ferguson said the company was “very pleased” to sign its second lithium offtake agreement.
“This agreement takes offtake commitments to more than 50% of the Manono project’s initial saleable spodumene concentrate production, which is a massive endorsement for our project.”
Mr Ferguson added the company was “well advanced” with its other offtake discussions related to its proposed lithium, tin and tantalum production from the project.
“These will be pursued diligently over the coming weeks and I look forward to updating the market once these agreements are finalised.”
At Manono, AVZ is initially looking to generate 700,000tpa of spodumene concentrate, plus by-products of tin, tantalum and potentially niobium.
Additionally, the company plans to upgrade some of the spodumene concentrate to a produce 46,000tpa of lithium sulphate.
A final investment decision to begin developing Manono is anticipated in the June quarter, with construction pencilled in to start in the September quarter.