AVZ banks $75m for DRC lithium mega mine

AVZ Minerals has banked $75 million from tier 1 global institutions in a heavily oversubscribed capital raise issuing 150,000,000 shares at $0.50 per share to fund the company’s transition into production.

The capital raise is the latest step taken on a project which was turbo-charged by an eye-catching definitive feasibility study released in April this year for the Manono Lithium and Tin project. The document highlighted an EBITDA averaging US$380 million per annum and a mine life of an enviable 29.5 years based on an operation of 4.5 million tonnes per annum.

Having banked the latest round of funding, AVZ is now awaiting its mining licence – which could arrive in the next few weeks. The final investment decision, or “FID” will follow. 

The Manono project is located 500 kilometres north of Lubumbashi in the south of the Democratic Republic of Congo in Central Africa. It houses a gigantic 400 million tonne mineral resource grading at a stella 1.65 per cent lithium, 715 parts per million tin and 34ppm tantalum.

JORC compliant mineral reserves at Manono currently sit at a massive 132 million tonnes at 1.63 per cent lithium.

AVZ’s  $75m raise provides assurance that 90 per cent of the capital funding required is now locked away with any future funding following the FID likely to come from one or more of the many pan-African development banks lining up for a piece of the action.

The Perth-based company says Manono is strategically positioned as a sustainable source of lithium for the booming electric vehicle battery market with internal forecasts placing it as potentially the world’s largest standalone hard rock lithium source.

AVZ plans to initially use the funds raised to negotiate an extra 15 per cent equity in Manono from the Congolese Government through its strong cash position to boost the company’s equity in the project to 90 per cent. Money raised will also be used to upgrade infrastructure in the immediate area, fund various technical studies and provide the necessary working capital for corporate requirements, including potential new exploration opportunities.

AVZ’s 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 favorable 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.”

AVZ timing here appears to be exquisite. With global demand for lithium projected to increase from a current 2021 figure of 429,000 metric tonnes to an estimated 1,793,000 metric tonnes in 2030 and AVZ boasting possibly the largest lithium deposit in the world, it’s little wonder the company’s market cap has ballooned to above $2 billion this year up more than 250 per cent. With a mining licence potentially only weeks away, and a final investment decision to follow….watch this space.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au