Chinese lithium player makes good on US$1m interim pledge for AVZ

AVZ Minerals is moving to lock in a binding offtake agreement with Yibin Tianyi after the Chinese lithium chemical player tipped an initial $1m into AVZ by way of a convertible note.

The move comes after the Foreign Investment Review Board said it needed more time to run the ruler over Yibin Tianyi’s intention to plough over $14m into AVZ.

Tibin Tianyi is a star-studded Chinese partnership that involves some of the biggest industrial names in China.

Established in November 2018, Yibin Tianyi is a vehicle created by multiple Chinese partners who are looking to invest heavily in lithium battery chemicals.

Amongst the impressive list of Yibin Tianyi partners is China’s largest electronic vehicle battery manufacturer, Contemporary Amperex Technology, or “CATL” and Shenzhen-listed, Suzhou TA&A Ultra Clean Technology Co.

Headquartered in Ningde in China’s Fujian Province, CATL currently focuses on the research and development, production and sales of electronic vehicle batteries and energy storage battery systems.

During 2017 it expanded its global footprint, establishing branches in France, the US, Canada and Japan. According to sources, it has a market capitalisation of $31.5 billion and revenues of $5.9 billion in 2018.

Yibin Tianyi is currently constructing its phase one lithium chemical plant in its home city of Yibin and expects this to be completed by the second quarter of 2020. It is targeting initial production of some 25,000 tonnes of lithium hydroxide per annum with a staged expansion to 100,000 tonnes per annum to follow, potentially making it one of the biggest lithium hydroxide providers in China.

AVZ Minerals executed a conditional $14m placement and subscription agreement with Yibin Tianyi Lithium Industry Company back in November that would see Yibin emerge with 12 per cent stake in AVZ upon completion. AVZ said the placement will allow it to secure an additional 5 per cent interest in it giant Manono lithium/tin project in the DRC.

The subscription agreement is a prelude to the negotiation of an offtake agreement for production from Manono.

The company said that Yibin Tianyi, through its associate, N-Resource Limited, has now provided a US$1m convertible note to AVZ to maintain its rights under the subscription agreement. The US$1m is meant to be a stop gap measure designed to provide some initial funding for AVZ whilst Australia’s Foreign Investment Review Board runs the ruler over Yibin Tianyi’s proposed larger $14m proposed investment.

AVZ Managing Director, Mr. Nigel Ferguson said: “We are pleased with Yibin Tianyi’s commitment to finalise this strategic investment through securing a convertible note for AVZ to maintain the terms of the Subscription Agreement, especially given the current volatile market conditions. We continue to work with Yibin Tianyi and FIRB to ensure the necessary regulatory approvals are obtained as soon as possible.”

“We are also pleased with the current progress being made with respect to finalising a binding offtake agreement with Yibin Tianyi for our lithium products from the Manono Project. We will keep the market appraised of the latest developments in terms of AVZ executing a binding offtake agreement with Yibin Tianyi.”

AVZ said early development works are already underway at Manono in order to be ready to supply Yibin Tianyi’s lithium chemical plant that is due to be completed in the current quarter.

Yibin has shown its bona-fides by providing the US$1m con note this week to AVZ who now needs to Foreign Investment Review Board to fast track its assessment of the broader $14m equity investment.

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