AVZ Minerals Ltd (ASX:AVZ) (OTCMKTS:AZZVF) (FRA:3A2) is geared up for a key year building on strong progress made in the December quarter of 2020 along its 'road to production' at the Manono Lithium and Tin Project in the DRC.
AVZ managing director Nigel Ferguson said: “The company made significant progress into its ‘road to production’ for the Manono Lithium and Tin Project.
“Our most significant milestone in the December quarter came just before Christmas when we signed our first lithium offtake agreement with GFL International, a subsidiary of China’s largest lithium compound producer, Ganfeng Lithium.”
First lithium offtake agreement
The company signed its first lithium offtake agreement with GFL International Co Limited, a subsidiary of Ganfeng Lithium Co Ltd, for an initial five-year term and with an option to extend for a further five years for SC6 from the Manono Project.
Under the terms of the GFL offtake agreement, annual supply will ramp up to 160,000 dry metric tonnes of spodumene concentrate from year three onwards.
GFL is a leading global battery metals producer that is continuing to expand both its lithium carbonate and lithium hydroxide production capacity.
Ferguson said: “The fact that GFL has agreed to take 30% of our Manono Project’s initial SC6 yearly tonnage is a massive endorsement for the project as we continue negotiations with other off-takers for our lithium and tin materials.”
During the second half of 2020, the company made progress to secure the required project debt financing to fund the major proportion of the Manono Project’s pre-production capital expenditure.
Discussions were held with several major commercial and non-commercial banks with many of the parties being granted access to the project data room.
Most interest is being shown by the Pan African Development Finance Institutions (DFIs), which is understandable due to the project’s central African location.
The company has received expressions of interest from a number of these DFIs and discussions are continuing with these and other financiers.
Securing the equity funding of the pre-production capital expenditure funding has attracted several interested industry participants and private equity investors, with discussions also ongoing.
Ferguson said: “In terms of the project’s funding arrangements, we have made significant progress during the last few months around securing project debt financing.
“We have also attracted several interested industry participants and private equity investors around our equity component of the required funding, with those discussions still ongoing.”
During the quarter, the company raised around $1.72 million through the exercise of 25 million options at 6 cents each and 4 million options at 5.7 cents each respectively.
The Manono Lithium and Tin Project is in the Democratic Republic of the Congo.
Pit floor drilling
During the quarter, the company began a 10-hole, 1700-metre diamond core drilling program around the Roche Dire pit floor ‘wedge’ to increase the potential to upgrade additional inferred resources to the indicated category.
The updated global geological resource is not expected to increase, but the current combined indicated and measured resource tonnage is expected to increase on a pro-rata basis.
Once the ‘wedge’ material directly under the pit floor is drilled and assay results returned, it is expected that some of this previously classified ‘waste rock’ may then report as ‘mineable ore’.
This new data will allow the existing mine design to be re-run and optimised and the re-run of the mine design will also allow for plant design optimisation studies to also be completed and incorporated into the new modelling.
Manono Special Economic Zone (MSEZ)
Notably, the company sponsored a two-day workshop which was attended by key Congolese Government agencies and legal counsel to progress planning around the creation of a Special Economic Zone in the Manono region.
The workshop was attended by senior Government officials from the offices of the Minister for Industry, Minister for Finance, Minister of Economy, National Agency for Industrial Promotion, Ministry of Environment, Minister for Mines and Minister for Hydraulic Resources and Electricity.
Ferguson said: “At an operational level, we advanced our licensing, permitting and environmental approvals for the Manono Project, as well as undertaking all of the necessary engineering and technical work that is required prior to the board making its investment decision to mine by mid-2021.
“We then look forward to awarding contracts for the construction of our process plants and hydro-electric power plant, with the first shipment of spodumene concentrate (S6) scheduled for Q4 of 2022.”