AVZ minerals

ASX-listed lithium junior AVZ Minerals has confirmed what it says are outstanding project metrics for its DRC-based Manono lithium and tin project following completion of the definitive feasibility study.

The DFS provides a higher level of confidence with respect to engineering design, construction requirements, logistics, project finance and risk assessments.

The DFS indicates the project to be robust and viable with a product mix of spodumene concentrate (SC6) for 700 000 tpa and primary lithium sulphate (PLS) for 46 000 tpa. PLS will be produced using 153 000 tpa of the SC6 product as feedstock.

The processing flow sheet also allows for the recovery of tin and tantalum from hard rock ore as well as smaller amounts of alluvial tin and tantalum secured from local artisanal miners.

The most cost-effective transport routes have been defined, thoroughly investigated and priced to meet the export requirements of the project. The thorough investigation has provided two suitable alternatives for transport of the products to port for export.

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Says AVZ MD Nigel Ferguson:

“The DFS proves the Manono lithium and tin project to be a very robust project with strong financial metrics, demonstrated by the key metrics of the DFS base case scenario on a 100% ownership basis.

“The Manono project has a substantial ore body capable of extending the Life of Mine well past the current 20 years, as modelled. It also has a robust workable transport solution for securing delivery of products to the export ports and a clear plan to work with the community for social development and environmental compliance.”

“We have intentionally been conservative in our interpretations of financial impacts on the project and therefore believe these numbers can be improved in the future, despite having included significant, non-project infrastructure items such as rehabilitation of roads, the Mpiana Mwanga Hydroelectric power plant and taken an adverse opinion on any potential VAT refund, amounting to some US$658M over the Life of Mine, which has been totally excluded from the cash flow.”

“Further upside potential for the Manono Project comes in the nature of significant upside resource potential from Carriere de L’Este, added cash flow from tin and tantalum credits, additional negotiations on a reduction in pricing for transport, the roll out of electric powered mining equipment and the establishment of the Special Economic Zone at Manono, which will potentially provide discounted rates on tax, duties, VAT and further significant benefits for the project.”

The Manono project has been evaluated on a discounted cashflow (DCF) basis. The results of the analysis show the Manono project to be economically robust, increased materially through production of the primary lithium sulphate product.

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The feasibility model for the project was developed on an ungeared basis and excludes inflation and escalation. The economic analysis assumes both equity and debt will be secured to provide all development and construction funding.

AVZ holds 60% of the Manono Project with an option to increase to 65%.

Initial construction capital is estimated at US$545.5 million including 10% contingency, with further sustaining capital of $92 million required over the LOM, which is allowed for in the opex calculations.

The initial capital cost estimated includes $7.1 million of pre-production mining which includes relevant work required for the construction of the ROM pad.