After a bit of a false start that looked like it would be knocked back by the Australian Government Foreign Investment Review Board, lithium hopeful AVZ Minerals will finally get a substantial investment from Chinese lithium giant, Yibin Tianyi, however it won’t be the $14.1M initially contemplated.
Yibin Tianyi will instead take up a $10.M placement in AVZ at 4.5c a share that will see it holding some 9 per cent of AVZ post placement.
AVZ has also entered into an agreement with Canaccord, who will underwrite the exercise of listed options, potentially raising another AUD$5.3M that will go towards the development of its giant Manono lithium and tin project in the Democratic Republic of Congo.
The scale and terms of the Yibin Tianyi deal have been amended and the Chinese partner will no longer take a board seat, meaning that the deal does not require the approval of the approval of the Foreign Investment Review Board to go ahead, markedly reducing the time to settlement.
AVZ said that discussions are also moving forward on its efforts to secure a binding offtake agreement with Yibin Tianyi for lithium products from the Manono lithium and tin project.
AVZ’s Managing Director, Nigel Ferguson, said: “Funding from both the Offer and Placement strengthens AVZ’s balance sheet and together with existing cash, ensures that AVZ is well positioned with A$19.6 million, before costs, available to advance the development of its flagship Manono Project – one of the world’s largest and highest grade undeveloped hard rock lithium projects.”
Yibin Tianyi is a perfect match for AVZ and has its sights set on becoming the largest hydroxide supplier in China.
Yibin is currently constructing its phase one lithium chemical plant and is targeting initial production of 25,000 tonnes of lithium hydroxide per annum with a staged expansion to 100,000 tonnes per annum.
To reach its goal, Yibin Tianyi will need to source about 600,000 tonnes per annum of spodumene concentrate or 180,000 tonnes per annum of primary lithium sulphate feed stock to satisfy its massive chemical plant’s hungry demands.
Fortunately, AVZ’s Manono project has plenty of scale and will be able to provide enough feed stock for Yibin Tianyi’s plant and over a 20-year mine life, will be able to supply about 700,000 tonnes of spodumene concentrate per annum.
Manono is currently expected to pump out AUD$6B in after tax life of mine net profits and AVZ looks set to grow those project financials even further after recently saying that ongoing development work on the alluvial tin fields surrounding the deposit could be even more lucrative than originally thought.
AVZ said that it will be revisiting its definitive feasibility study to look at its processing flow sheet in order to investigate producing valuable tin and tantalum ingots on site, in addition to the proposed lithium sulphate and spodumene plants.
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By Matt Birney
