AVZ Minerals Ltd (ASX:AVZ) (FRA:3A2) (OTCMKTS:AZZVF) has several project milestones in its pipeline which will be ticked off shortly at the Manono Lithium and Tin Project in the Democratic Republic of Congo (DRC) as it moves rapidly towards production.
These include a DRC Government decision expected around the Manono Special Economic Zone by the end of this month and a Final Investment Decision (FID) on the project by the end of June or early July.
The company has also received notification that its feasibility study for the Mpiana Mwanga HydroElectric Power Plant (MM HEPP) has been validated by the Ministry of Hydraulic Resources and Electricity.
AVZ Power SAU, a 100%-owned subsidiary of AVZ International, is assessing the specified technical and administrative recommendations, before advancing to the next stage of negotiations with the Ministry of Hydraulic Resources and Electricity during the coming months.
Once concluded it is anticipated that AVZ Power will be awarded a 20-year, renewable, contract to manage and operate the MM HEPP.
Manono Special Economic Zone (MSEZ)
AVZ is updating its MSEZ technical, development, environmental and financial documentation with additional information, as requested by the DRC Government.
These documents will be submitted shortly with a decision on the granting of the MSEZ expected by the end of May 2021.
The official inter-ministerial decree and collaboration documents, which cover the development of infrastructures and natural resources is expected to deliver the Manono mine, the anchor tenant for the MSEZ, and all of the prospective MSEZ tenants, a favourable fiscal regime.
“Buoyant market conditions continue”
Managing director Nigel Ferguson said: “Buoyant market conditions continue with both spodumene concentrate and lithium chemical prices strengthening on the back of rising electric vehicle demand, just as international government policies advance the reduction of carbon emissions whilst securing strategic supply chains that feed domestic EV industries across the globe.
“As previously announced, AVZ reached a significant milestone in March 2021 with more than 80% of our annual Manono Lithium and Tin Project’s spodumene concentrate production now committed under long-term binding offtake agreements.
“These three offtake agreements contain formula pricing that references a basket of lithium chemical prices and underpinning floor price.
“Based on prevailing reference prices, the offtake formula pricing is expected to deliver a pleasing return to AVZ.
“The finalisation of the three binding offtake agreements also satisfies a critical condition precedent for the Manono Project’s prospective financiers and with buoyant market conditions expected to continue, the company is in a strong position to selectively discuss further strategic offtake and downstream processing opportunities with a particular focus on new and emerging market penetration.”
New DRC Government cabinet
A new Government Cabinet of the Democratic Republic of Congo was appointed earlier this month by Prime Minister Jean-Michel Sama Lukonde.
AVZ is engaging with several new Ministers, including Minister of Mines Antoinette N’Samba Kalambay, Minister of State and Minister of Portfolio Adele Kayinda, Deputy Prime Minister in charge of Environmental and Sustainable Development Eve Bazaiba and Minister for Hydraulic Resources and Electricity Mwenze Mukaleng Olivier.
The company is working with the newly appointed government cabinet to progress the development of the Manono Project within the framework of the proposed MSEZ.
Front End Engineering Design (FEED) Study
The FEED Study is 70% complete with several significant deliverables already completed including the block flow and process flow diagrams, mechanical equipment selection and sizing, the overall mechanical equipment list, the electrical load list and plant general arrangement drawings, including a 3D model which is around 80% completed.
Work is also well advanced around completing the capital and operational costs of the project to an AACEI International Class 2 level of estimation.
Project financing
In parallel with finalising the updated DFS, the company has been actively engaging with various commercial banks, finance brokers, private equity investors and non-commercial lenders such as Pan-African Development Finance Institutions (DFIs) to secure funding for the development of the Manono Project.
The company is making good progress through the 'Know Your Customer' and 'Conditions Precedent' stages with the Pan African DFI’s and is confident of negotiating project funding on reasonable terms and conditions.
Geotechnical and other studies
The hydrogeological study has recently been completed by Knight Piesold and resulted in a water model suitable for BFS level and for inclusion in the Manono Process Plant Environmental and Social Impact Assessment (ESIA) application, which will be submitted for approval by the Agence Congolaise Environmental (ACE).
Both the ESIA once approved by ACE, and the DFS study (which has already been incorporated into the template required by the government for the conversion to a mining licence), are required to be included in the application as part of the process for the granting of a 25-year renewable Permit Exploitation.
CSA Global Johannesburg has been engaged to review the Mineral Resource Estimate and pit shell designs based on the recent Roche Dure pit floor ‘wedge’ drilling results.
The Roche Dure pit optimisation redesign will begin once the Mineral Resource Estimate is completed.