AVZ locks in second Manono lithium offtake deal

ASX-listed AVZ Minerals has nailed down a second offtake contract with a major Chinese lithium outfit – its second in less than three months. The aspiring central African lithium developer has struck a binding agreement with new offtake partner, Shenzhen Chengxin Lithium Group for the supply of spodumene concentrate from AVZ’s mammoth Manono lithium and tin project in the Democratic Republic of the Congo.

The Perth-based company describes Shenzhen Chengxin as a “leading global battery materials producer” who is continuing to increase its lithium production capacity and will be looking for approximately 560,000 tonnes of spodumene concentrate feedstock per annum to meets its requirements after staged expansions.

Shenzhen Chengxin has agreed to purchase up to 180,000 tonnes of spodumene concentrate per annum for an initial three-year term following commencement of production at Manono. The two parties have also shaken hands on possible contract extension options.

AVZ Minerals Managing Director, Nigel Ferguson said: “This agreement takes offtake commitments to more than 50 per cent of the Manono project’s initial saleable spodumene concentrate production, which is a massive endorsement for our project. We are well advanced with our other offtake discussions, not only for our lithium products but also for our tin and tantalum materials.”

Late last year, AVZ secured its first offtake agreement with China’s Ganfeng Lithium, involving the purchase of up to 160,000 tonnes of spodumene concentrate per annum for an initial five-year period.

AVZ’s definitive feasibility study on the proposed Manono project development last year pointed to ore reserves underpinning a mining and processing operation producing about 700,000 tonnes of spodumene concentrate per annum for an initial 20-year life of mine. Of that total, 550,000 million tonnes a year is the saleable amount and 150,000 million tonnes designated to produce sulphate.

Financial projections in the bumper DFS were headlined by a cracking EBITDA forecast of more than US$400 million a year from a fully developed Manono.

AVZ says it is targeting a final investment decision in the June quarter this year on construction of the stand-alone Manono mine, which has an estimated pre-production CAPEX ascribed to it of US$545 million, with production start-up earmarked for 2023.

With more than half of the predicted saleable spodumene concentrate output from Manono now spoken for, the company is in a solid position to advance debt and equity funding discussions as the lithium hopeful continues to deliver on milestones on the way to production.

According to AVZ, Manono is one of the largest and highest-grade undeveloped hard-rock lithium projects in the world.

Its Roche Dure deposit hosts a whopping indicated, measured and inferred resource of 400 million tonnes of ore going an average 1.65 per cent lithium oxide, including proved and probable ore reserves of 93 million tonnes of ore at 1.58 per cent lithium oxide.

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