AVZ Minerals Ltd (ASX:AVZ) has progressed its transaction with Suzhou Cath Energy-Technologies (CATH), with CATH paying the break fee of US$20 million to an escrow account.
The transaction implementation agreement (TIA) will see CATH, a private investment entity, earn a 24% equity interest in a multi-faceted joint venture to develop Manono Lithium and Tin Project in the DRC.
CATH will pay US$240 million cash for this interest and a further amount to fund their pro-rata portion of funding for the development of Manono.
Proceeds from the transaction will fund the majority of project development capital.
The completion of the transaction is subject to the satisfaction or waiver of several conditions precedent before November 30 2021, which the parties are co-operatively working toward.
Mining Licence progressing well
All documents in relation to the Mining Licence were submitted to the relevant authorities within the DRC government in May 2021.
The process for the award of the Mining Licence is focused around four key elements:
I. Environmental approvals;
II. Proof of financial capability;
III. Favourable cadastral opinion; and
IV. Favourable technical opinion.
AVZ has received favourable outcomes for points I – III, with positive feedback received from the Department of Mines in relation to the final point concerning the technical opinion on the DFS.
Following the expected receipt of the favourable technical opinion, the Minister of Mines has 30 days to then award the Mining Licence.
A meeting of Council of Ministers is expected to be held shortly to deliberate on the award of the Mpiana Mwanga HEPP Agreement and Prime Ministerial Decree for the Collaboration Development Agreement.
Bankable feasibility study
AVZ will release a bankable feasibility study (BFS) following the anticipated granting of the Mining Licence.
The company has made the decision to issue a BFS rather than an updated definitive feasibility study (DFS) as the financial institutions require submission of a bankable level study which requires the award of the Mining Licence.
AVZ is also progressing a possible expansion scenario study.
The evaluation of the expansion scenario is a key term of the TIA with CATH and, following its completion, will be considered by the board.
Project debt funding update
AVZ is confident that it will be able to shortly announce the appointment of a Mandated Lead Arranger (MLA) to lead the syndicated debt funding facility for the Manono Project.
Subject to closing the deal with CATH, more than 50% of project funding is secured enabling a Final Investment Decision (FID).
The FID will kickstart project construction and ensure sufficient equity capital to fund the first 6 – 8 months of project construction capital, with financial close for debt financing expected in Q2 2022.
The deal with CATH has significantly de-risked the project from a debt financiers’ perspective and introduces additional appetite for the Manono Project debt financing requirements.
DRC Business Forum
AVZ has been invited to participate in the DRC Business Forum scheduled to be held in Kinshasa on 8-9 November 2021.
Stakeholders from around the globe have been invited with the aim of developing a battery minerals industry in Africa.
AVZ is keen to support this initiative and assume a critical position in the development of the battery mineral industry in Africa.