AVZ Minerals Ltd (ASX:AVZ) (OTCMKTS:AZZVF) (FRA:3A2) is taking its flagship Manono Lithium and Tin Project in the Democratic Republic of Congo towards a final investment decision by the year-end.
The company recently completed a A$40 million placement from institutional and professional investors, providing AVZ with the necessary funds to increase its equity interest in the Manono project to 75%.
Notably, AVZ’s proved and probable ore reserves at Roche Dure are now estimated at 131.7 million tonnes, an increase of 41.6% from the 93 million tonnes reported in the definitive feasibility study (DFS) conducted in April 2020.
AVZ has also completed the front end engineering design (FEED), process plant design and site geotechnical investigation studies, confirming the capital expenditures (CAPEX) and operational expenditures (OPEX) for the optimised DFS update.
Furthermore, the optimised DFS financial model is progressing well based on key technical input from Roche Dure pit optimisation and FEED studies.
Global interest in the green battery minerals sector
AVZ managing director Nigel Ferguson said: “The company has been extremely busy progressing the Project and is diligently executing its strategy to deliver a Final Investment Decision (FID) during the second half of this year, pending the award of a Mining Licence by the DRC Government, whom we are actively engaged with and discussions are progressing well.
“The current global interest in the green battery minerals sector, particularly hard rock lithium projects, bode well for all of our stakeholders to capitalise on the foresight and significant investment AVZ first committed to some 5 years ago, to unlock the potential identified in the Manono Project.”
Further drilling results awaited
AVZ’s optimised study demonstrated that the average lithium grade increased by 3.1% from 1.58% to 1.63% lithium oxide although the tin grade remained the same at around 990 ppm.
However, the increased ore volumes saw the total tin contained metal increasing by 41% from April 2020.
The company is awaiting assay results from the short reconnaissance drilling program undertaken at the Carriere de l’Este ore body earlier this year, which are expected to be released soon.
FEED study
AVZ has completed its FEED study providing 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.
The study has improved the confidence level in capital and operational costs of the project to an association for the advancement of cost engineering international (AACEI) Class 2 from the DFS version which was a Class 3 level of estimation for inclusion in the optimised DFS update.
The work conducted includes process plant area geotechnical study, with the information used in the FEED study to conduct the design of the plant foundation requirements and the bulk quantities of materials to do so
In addition, designs for the integrated waste landform has now been completed and the bill of quantities is included in the Capex.
Managing director comment on investor interest
Ferguson said: “The success of this raising is an indication of the high level of global interest currently focussed on the green battery minerals sector.
“The investment appetite witnessed in lithium extraction projects globally is evidence of the buoyant market outlook for lithium, from which AVZ is exceptionally well positioned to capitalise on following our efforts to date in unlocking the potential from the Manono Project.
“The liquidity injection and transition to a larger and highly supportive non-retail shareholder base, will greatly assist AVZ’s discussions with potential financiers, providing the Company with a solid foundation from which to negotiate favourable terms.”
Licence update
The Mpiana Mwanga Hydro-Electric Power Plant (HEPP) agreement, collaboration agreement and its proposed Manono Special Economic Zone (MSEZ) have been delayed due to changes that have occurred in the new DRC Government, sworn in earlier this year.
AVZ continues to enjoy a supportive, collaborative, and cooperative working relationship with the newly appointed DRC Government officials and is confident of receiving all required licences, agreements and a favourable announcement surrounding the MSEZ.
The company remains confident that it will receive a favourable decision awarding the mining licence based on the body of work proving the robust economics of the project, although the timing of a decision remains exclusively at the discretion of the DRC Government.
It is worth noting that the DRC government via its entity Cominiere holds 25% of the Manono Project.
Updated financial model
AVZ is now updating its financial model for the Manono Project, including a review of available options to maximise the value derived from the first stage of the project as per the DFS announced on 21 April 2021.
Furthermore, the company is discussing with several reputable global financial institutions regarding a possible appointment as a mandated, strategic corporate finance advisor to assist with the debt and equity financing of the project.
Pre-feasibility study awarded
AVZ has awarded a pre-feasibility study (PFS) to Noram Engineering and Constructors to produce lithium hydroxide from PLS feedstock.
The company has identified a shortlist of engineering firms to complete the outside battery limits scope of engineering design, in conjunction with the inside battery limit technical work to be undertaken by Noram.
The information from the PFS will assist to identify the preferred global location for a lithium hydroxide conversion facility fed with the product from Manono.
Early-stage discussions are underway with interested parties in various jurisdictions, wishing to partner with AVZ in the development of a lithium hydroxide conversion facility.
- Ephrems Joseph