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AVZ Minerals raises $75 million ahead of Manono project FID

Published: 12:52 10 Dec 2021 AEDT

AVZ Minerals Ltd - AVZ Minerals raises $75 million ahead of Manono project FID

AVZ Minerals Ltd (ASX:AVZ) has tapped institutions for a $75 million cash injection to accelerate its flagship Manono lithium and tin camp towards a final investment decision (FID).

Several global strategic investors — including cornerstone investor Suzhou CATH Energy Technologies — got in on the raise, with the placement heavily oversubscribed.

At $0.50 a pop, the placement price represents a 22% discount to the last closing price on AVZ shares, while the company’s share price has doubled in the last two months.

All in all, the latest raising provides assurance ahead of an FID that AVZ has 90% of the project capital required — as outlined in an April 2020 definitive feasibility study — on hand to continue developing Manono.

AVZ will use the funding runway on early site works as it waits for a mining licence for the property.

“An important milestone”

Speaking to the capital raise, AVZ managing director Nigel Ferguson said: “This capital raising marks an important milestone in our journey to develop the Manono Project, which strengthens the financial position of the company and will assist to keep the project timeline within reach, despite the award of our mining licence taking longer than we had previously anticipated.

“We are in close consultation with the DRC Government authorities that are undertaking the mining licence assessment and are confident of delivering a favourable outcome for all stakeholders — most importantly the people of the DRC and our shareholders.

“Such a significant cash injection further de-risks the company during a time where increased market volatility is apparent and global economic uncertainty still remains.

“The placement also assists our financing discussions, providing capital for up-front debt finance establishment costs and ensuring minimum liquidity requirements are met, which provides AVZ with a solid foundation to negotiate favourable terms.

“We welcome our new shareholders and thank our existing shareholders for their continued support, in what is expected to be an exciting time in the development of this truly world-class asset.”

Placement details

Under the placement, AVZ will issue 150 million new shares — that’s roughly 4% of the shares on issue once the raise settles — at $0.50 to raise $75 million.

Cantor Fitzgerald and Curran & Co acted as joint lead managers and bookrunners.

Looking ahead, AVZ will use the funding to:

  • Negotiate the extra 15% equity in Manono from the Government from a strong cash position;
  • Undertake an early works program, including road and bridge upgrades and progress camp construction;
  • Progress various technical studies with respect to lithium hydroxide conversion and infrastructure initiatives that further enhance the project;
  • Negotiate final project financing requirements from a position of enhanced balance sheet strength; and
  • Provide necessary working capital for corporate requirements, including potential new exploration opportunities.

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