AVZ Minerals unveils DFS which estimates revenue of US$3.8b

Democratic Republic of Congo lithium explorer AVZ Minerals (ASX: AVZ) has unveiled the much-awaited definitive feasibility study for its Manono project, which is estimated to generate almost US$3.8 billion (A$6 billion) in after tax profit.

The US$3.8 billion net after tax profit is on a 100% basis over a 20 year mine life.

To develop the asset, capital costs are estimated at US$545.5 million with a post-tax payback period of 2.25 years.

The capital outlay includes transport upgrades and rehabilitation of the Mpiana Mwanga hydroelectric power plant.

Underpinning the proposed operation is 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.

In addition to the reserve is a resource of 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 analyst Roskill, this resource is almost double that of the leading lithium resource and contains more than one-fifth of the world’s spodumene resources.

The study proposed a 4.5Mt per annum operation based on the reserves using conventional open pit mining.

It is estimated 700,000tpa of spodumene concentrate and 46,000tpa of primary lithium sulphate.

Commenting on the definitive feasibility study AVZ managing director Nigel Ferguson said it “proves” Manono is a “very robust” project with “strong financial metrics”.

“The Manono project has a substantial ore body capable of extending the life of mine well past the current 20 years, as modelled.”

“It also has a robust workable transport solution for securing delivery of products to the export ports and a clear plan to work with the community for social development and environmental compliance.”

He added the company had based its forecasts on “conservative” estimates and interpretations and he expects there to be further upside to the project as value for its lithium products and demand increase.

Additionally, Mr Ferguson noted further upside potential is possible via further resource updates and cash flow from tin and tantalum credits.

“All these aspects support a highly positive outlook for the Manono project, and I look forward to updating the market soon with respect to offtake agreements, financing and decision to mine,” he said.

Advancing Manono

Following the release of the definitive feasibility study, the AVZ board has recommended the project progresses to construction.

As part of this, AVZ is in discussions with several debt and corporate advisors to secure debt and finance on competitive terms.

The company is also negotiating a potential offtake deal with Yibin Tianyi Lithium Industry Co and other possible buyers.

AVZ’s proposed timeline includes beginning early works next month with shipment of its first spodumene concentrate scheduled for January 2022.

By mid-morning, shares in AVZ were up almost 12% to $0.067.