ASX-listed AVZ Minerals has locked in yet another offtake partner relating to its proposed Manono hard-rock lithium and tin project in the Democratic Republic of the Congo. The Perth-based company says it has struck a binding three-year offtake contract for the sale of 600 tonnes of tin concentrate per annum from the Manono project to Kalon Resources, a wholly owned subsidiary of Hong Kong-headquartered Noble Group Holdings.
Whilst Manono is headlined by lithium and likely the largest undeveloped hard-rock lithium deposit in the world, the tin credits are generally considered to be lucrative and this week’s announcement of a tin offtake will add another significant financial dimension to AVZ’s rapidly developing Manono story.
It comes after the company stitched up a lithium offtake deal earlier this month with Chinese firm, Shenzhen Chengxin Lithium Group, who has signed on to take up to 180,000 tonnes of spodumene concentrate per annum from Manono for an initial three-year period.
In December last year, AVZ squared away its first lithium offtake contract, with China’s Ganfeng Lithium, for the sale of up to 160,000 tonnes of spodumene concentrate per annum for an initial five-year term.
Between them, the two Chinese lithium heavyweights speak for more than 50 per cent or 340,000 tonnes per annum of the total of 550,000 million tonnes per annum of “saleable” spodumene concentrate forecast to be pumped out at Manono.
According to AVZ, Kalon specialises in the physical commodity trading markets and supply chain management of industrial minerals and metals including concentrates of tin, tungsten, niobium, tantalum, alumina, aluminium and specialty ores such as chrome, manganese and iron ore.
It works with mining companies, mining communities, mineral processing facilities and industrial end-users with footprints variously in Singapore, Hong Kong, China, South Africa, Rwanda and Brazil.
AVZ Minerals Managing Director, Nigel Ferguson said: “Given the rising London Metal Exchange cash price of tin metal, up approximately 30 per cent year to date, this offtake agreement is significant for the Manono project.”
“While this agreement represents a relatively small but growing portion of revenue for the Manono project, it does confirm another large international business is willing to secure future supply from the project.”
“Similar to our recent lithium offtake agreements, this tin concentrate offtake agreement with Kalon will assist the company in meeting certain conditions precedent which are required from our prospective financiers.”
The $600 million market-capped company has previously indicated it is eyeing a final investment decision on the proposed Manono mining and processing operation in the June quarter of this year.
Pre-production CAPEX for the project development has been estimated at US$545 million, with production start-up pencilled in for the first half of calendar 2023.
Incredibly, AVZ’s definitive feasibility study on Manono points to a bumper EBITDA of more than US$400 million a year from a fully developed operation.
The latest published indicated, measured and inferred resource estimate for the project’s Roche Dure deposit stands at a mammoth 400 million tonnes of ore at an average grade of 1.65 per cent lithium oxide. It contains proved and probable ore reserves of 93 million tonnes of ore going 1.58 per cent lithium oxide.
With lithium enjoying a resurgence in the past six to 12 months and electric vehicle markets burgeoning, AVZ looks to be well placed to ride its share of the lithium wave – and who knows, if lithium becomes the new oil in decades to come, discoveries such as Manono may be heralded as a Jed Clampett moment.
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