AVZ invites US$300m pre-mining tenders at giant lithium project

In a sign that it is nearing the pointy end of development, AVZ Minerals has tested the market by calling for pre-mining tender submissions at its massive Manono lithium project in the Democratic Republic of Congo. The tenders are for infrastructure estimated to be worth USD$300m at Manono that boasts a gigantic 400 million tonne resource grading 1.65 per cent Li2O.

AVZ’s DFS shows Manono spitting out an incredible AUD$550m a year in EBITDA for at least 20 years and whilst the company has not yet made a final investment decision it is hard to see a scenario where that won’t happen.

AVZ has invited parties to submit prices for an engineering, procurement and construction package for its process plant at Manono.

The DFS for the plant design assumes a throughput of 4.5 million tonnes per annum to produce 700,000 tonnes of a high-grade spodumene concentrate grading 6% Li₂O before turning that product into lithium sulphate.

AVZ’s Managing Director, Mr Nigel Ferguson, said: “We will have final pricings on our various tenders back in July and August and then expect to be in a position to award these contracts, pending COVID-19 travel restrictions being lifted and a financial investment decision being reached.”

The Perth based company is also seeking tenders for the intermodal staging station at Kabondo Dianda, which is where train wagons will offload AVZ’s product that will then be transferred to a stockpile.

The company is also seeking a diesel supply and storage facilities contractor and a supplier for the mine site buildings.

It has also called for an ‘enterprise resource system’ tender, which is essentially an integrated software package required to manage day-to-day business activities from accounting to supply chain operations.

AVZ has been granted preliminary membership to the iTSCi program, which is an organisation focused on the “3T” minerals - tin, tantalum and tungsten. Tin and tantalum are potential future by-products from the Manono mine and iTSCi’s purpose is to assist companies to manage risk and establish responsible mineral supply chains in central Africa that actively prevent issues such as human rights abuse.

The tin and tantalum credits have not been factored into the DFS and provide an element of blue sky on top of the already stellar economics at the project. 

AVZ’s affiliation with iTSCi aligns its organisational practices with OECD guidelines and the American Dodd Frank Act 1502 for conflict mineral and metals supply chain management.

Mr Ferguson added; “Obtaining iTSCi preliminary membership is also a significant milestone for the company as it is viewed favourably by international financiers as part of their overall due diligence process on the Company.”

Non-binding Memorandums of Understanding between AVZ and several parties have also now been executed in a significant escalation of pre-production activities. These will allow AVZ to vary and refine pricing prior to executing the final binding off-take agreements the company said will be finalised within the next few months.

Meanwhile, AVZ said its discussions with the DRC Government to secure the proposed special economic zone, or “SEZ”, for Manono are progressing well.

SEZ factors have not been considered in the project’s DFS, potentially providing AVZ with upside again in the form of discounted rates on tax, duties and VAT.

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