AVZ Minerals Limited has announced its wholly owned subsidiary, AVZ International Pty Ltd (AVZI), has entered into a transaction implementation agreement (TIA) with Suzhou CATH Energy Technologies.
- CATH will earn a 24% equity interest in a multi-faceted joint venture to develop the Manono Lithium and Tin Project.
- CATH shall pay US$240 million cash for their 24% equity interest and a further amount to fund their pro rata portion of funding for the development of the Manono Project.
- The transaction in totality will contribute more than US$400 million, subject to final project development costs being verified.
- The funds will be used by AVZI to advance the project into production.
CATH is a private investment entity jointly owned by Pei Zhenhua and Contemporary Amperex Technology Co. Limited (CATL), who both have significant influence in the global lithium conversion and lithium-ion battery industry.
Proceeds from the transaction will fund a majority of the total project financing required, whilst AVZ will retain a controlling 51% interest in the Manono Project post-completion of the transaction and its position as lead developer of the Manono Project.
The existing offtake agreement with Yibin Tianyi will be assigned to CATH and expanded in scope to provide offtake of SC6 for the life of the Manono Project.
Furthermore, CATH will enter into a long-term Primary Lithium Sulphate (PLS) offtake or tolling agreement in respect of PLS produced from the PLS calcining plant (PLS Plant), which will also be developed in joint venture with CATH.
AVZ and CATH have also agreed to evaluate and progress a study to increase annual production, expanding dense media separation (DMS) production capacity from a 4.5 million tpy throughput producing approximately 0.7 million t of SC6, as contemplated by the definitive feasibility study (DFS) dated April 2020, to a 10 million tpa DMS throughput producing approximately 1.6 million t of SC6 (expansion scenario).
These studies were commenced in early September and are expected to be significantly progressed by AVZ by end of December 2021. Under the expansion scenario, CATH will fund its equity share of the additional Manono Project development capital expenditure and increase its SC6 offtake commitment to approximately 50% of annual production.
The expansion scenario will significantly scale the size of the project and further de-risk the fundamental economics of the Manono Project. The parties will also assess the feasibility of developing a lithium hydroxide facility once studies currently underway are completed on this process.
AVZ’s Managing Director, Nigel Ferguson, said: “This is a very significant day for the company and all of our stakeholders as we move closer to making the Manono Project a leading global producer of lithium products.”
“We are delighted to enter into this deal with someone of the calibre of Mr Pei and CATL both of whom have the financial capacity, technical expertise and credibility within the lithium conversion and lithium-ion battery industry to compliment the world class Manono Project.
“Our shared strategic vision to develop the vast potential of the Manono Project and further downstream projects, provide an exciting future for AVZ shareholders.
“Forging of this partnership compliments AVZ’s excellent collaborative relationship with the government of the Democratic Republic of Congo (DRC) and the local communities in which we operate.
“We look forward to updating our shareholders in the near future with respect to award of the Mining Licence and execution of the Collaboration Development Agreement, which are progressing extremely well through Government channels.
“Once this transaction and the associated agreements are finalised, 100% of our saleable lithium products will be accounted for and a significant portion of the Manono Project will be financed via the equity contributions provided by this transaction.
“This is a major credit to the Board and senior executive team who have all contributed to making the Manono Project a reality.”
Read the article online at: https://www.globalminingreview.com/finance-business/28092021/avz-minerals-secures-investor-for-development-of-manono-lithium-and-tin-project/
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