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AVZ Minerals secures $15+ million from cornerstone investment and options underwriting deal

Published: 16:03 04 May 2020 AEST

AVZ Minerals Ltd - AVZ Minerals secures $15+ million from cornerstone investment and options underwriting deal
Yibin Tianyi will invest $10.6 million in AVZ Minerals for a 9% stake

AVZ Minerals Limited (ASX:AVZ) has secured an equity investment of $10,687,500 from Yibin Tianyi Lithium Industry Co., Ltd through the placement of shares at 4.5 cents each.

Upon completion of the placement, Yibin Tianyi will hold the equivalent of a 9% stake in AVZ.

AVZ managing director Nigel Ferguson said: “Upon completion, the Board is pleased to finally and officially welcome Yibin Tianyi as a shareholder.

“Yibin Tianyi has remained committed to becoming an investor in AVZ and its intention of becoming one of the largest hydroxide suppliers in China is complementary to our vision of bringing our world-class Manono Project into production.”

Binding offtake agreement

Under the new amended subscription agreement, Yibin Tianyi will not be entitled to an AVZ Board seat.

With the reduced investment amount (under 10%) and with no board seat, the placement is not subject to the approval of the Foreign Investment Review Board.

Yibin Tianyi and AVZ are continuing negotiations to execute a binding offtake agreement for lithium products from the Manono Lithium and Tin Project in the Democratic Republic of Congo (DRC).

$5.3 million underwriting agreement for options

In May 2017, as part of a capital raising, AVZ issued 300,000,000 options exercisable at 3 cents each at any time within a period of three years.

Since that date, about 122,377,618 options have been exercised by holders.

AVZ has now entered into an agreement with Canaccord Genuity to underwrite the exercise of any of the outstanding 177,622,382 options that are not exercised prior to their expiry on May 24, 2020.

The total amount to be potentially raised from this offer is about $5.3 million.

Ferguson added: “Funding from both the offer and placement strengthens AVZ’s balance sheet and together with existing cash, ensures that AVZ is well positioned with A$19.6 million, before costs, available to advance the development of its flagship Manono Project – one of the world’s largest and highest grade undeveloped hard rock lithium projects”

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