ASX-listed AVZ Minerals has completed a scoping study for it Manono lithium project in the DRC which has delivered a very robust set of results. Although the production objective at this stage is 2 Mtpa, the company is evaluating the possibility of increasing this to 4 or even 10 Mtpa.
Summary of findings
- Case 1: (2 Mtpa) pre-tax pre-royalties NPV10 of approximately US$1.6 Billion (AVZ’s 60% share is approximately US$0.93Bn) with an estimated IRR greater than 90% based on ±35% accuracy and including US$36 million in capital contingency.
- Scope for annual production of approximately 440 000 tpa at a minimum of 5.8% Li2O concentrate from Case 1 throughput of 2 Mtpa of pegmatite ore with low strip ratio of 0.7:1.
- O.B. Operating costs to Dar-es-Salaam estimated at approximately US$355/t of concentrate for 2 Mtpa.
- Metallurgical test work indicates recoveries in excess of 80% are achievable.
- Capex estimated for Case 1 throughput at approximately US$150 to $160 million (accurate to ±35% and includes contingency).
- Study for Case 2 for 4 Mtpa and Case 3 for 10 Mtpa in progress and will be completed as soon as practicable.
- The potential for tin by-product credits was not taken into consideration in this analysis. It is expected that these credits will be included in the FFS.
The independent study was undertaken by CPC Project Design and completed in late September 2018. In addition, an independent economic model and financial analysis was undertaken and completed by Alan Dickson & Associates (ADA).
Both documents utilised measured, indicated and inferred resources as the basis for completion AVZ Minerals MD, Nigel Ferguson, says:
“The AVZ Minerals board is extremely pleased with the results of the independent studies and intends to immediately commence a full feasibility study. The studies undertaken not only demonstrate the potential for excellent economic outcomes, but also highlight the long-life, low-cost qualities typical of world-class Tier 1 assets.
“The Manono lithium project is now the largest undeveloped hard rock lithium project globally in terms of grade, mine life and expandability.”
“It is unique in many ways, with key attributes of: homogeneous deposit; low levels of deleterious elements; an extremely low strip ratio of 0.7:1 and therefore direct access to clean ore for the majority of the mining life as modelled to date. We are in no doubt of being able to achieve a superior product for end-users.
“We are confident that the project economics can be improved further, especially in the areas of transport, processing, power costs by utilising a refurbished hydro plant at Piana Mwanga and the recovery of tin as a by-product which can add considerable value to the bottom line and has not been included in any financial modelling.”
Additionally, there are considerable financial benefits available to the company in pursuing the 5-year tax concession offered by the DRC government for “projects of significance”, which has not been taken into account in the independent financial modelling and will be pursued vigorously.
Given that Manono is seen as a catalyst for investment in Tanganyika Province by local and federal government representatives the company believes that it is well placed to achieve success in this matter.
“Manono will not stay as a 2 Mtpa operation for long as it is the company’s intention to self-fund further expansions from retained earnings. Given the tier-one nature of Manono in terms of size, quality and homogeneity of resource, unsurprisingly, we are working quickly to bring a 4 Mtpa and 10 Mtpa study for release to the market.
“We anticipate the additional 4 Mtpa and 10 Mtpa study will be completed in November and further support our intention to achieve a globally dominant position in the lithium market place.”