Well I like AVZ and have done for some time now, 1stly when AVZ was merely a shell in fact. Although I seldom post on AVZ there is currently a lot to like with this companies MGMT who appear to be straight shooters and have some integrity (unlike may of the companies I research day to day) with considerable skin in the game prev history of successful definition of world class projects in the DRC.
The deposit/region itself has some 70 of years mining history confirming high grade Lithium, Tin and Tantalum production. Geology is relatively well understood and recent drilling has backed up that geological history thus far and I expect further drilling continue to confirm it.
Currently AVZ is waiting final agreements/contracts to be signed imminently to start a large phase 2 drilling program on the southern most outcrop (named Roche Dure) where 2 wide spaced holes have intercepted 200m+ true width of high grade lithium in spodumene. There are numerous unconfirmed rumours of offtakes being signed (subject to confidentiality clauses) but not allowed announced as per ASX rules, but as I said unconfirmed reports. I would not be surprised to find they signed at least half a dozen or more of these MOU's thus far.
Heres the layout of the main deposits
View attachment 788061
Note: Hole 1, 2 and 7 all returned intersections of 200m+ of high grade lithium (Spodumene).
View attachment 788079
The interesting question is valuation and what number to put on AVZ which is difficult. There are several unknowns which are hard to quantify these are :-
1. How big the project resource actually is - the consensus "guess" is between 1 to 2 Bt @ 1-1.5% Li20. If so then it will have more contained lithium that all higher grade Jorc'ed Hard rock lithium players combined.
2. If the deposit can stand up as a Tin project in its own right given the high Tin Credits and large size
3. The amount of Tantalum that is contained in the project boundaries and if there is and production credits available for it
4. The metallurgical results, although we have a strong indication from historical metallurgical work that it will be highly favourable to mine.
5. The amount of contaminants in the ore..(ie Fe203, Phosphorus etc) which need extracting although todays announcement based on a few holes claims low'ish contaminants compared to other players
6. Zonation ...the degree to which there are high or lower concentrations Li20/Tin/Tantalum across the Deposit. So far we have some evidence that it is fairly consistent. From todays ann
"... The high degree of homogeneity may permit a wider spacing of drill-holes to define a Mineral Resource and thus potentially reduce the lead-time from drilling to Resource Estimation..."
7. Likely production costs being low given unmatched economies of scale can be achieved given the size. That tin and possibly Tantalum credits will pay for all production and transport costs and there is abundant water, cheap labour and hydro power on site (restarting old hydro power plant). Although I think the ultimate owner will move to downstream processing to 100% battery grade lithium quickly to reduce transport costs to a fraction of the cost to transport 6% concentrate.
8. When the various Chinese (or a western major(s)) will make a acquisition move on AVZ, ie pre or post JORC / Bank Study definition. Many suspecting a move to be made by Chinese in the next few weeks which could entirely occur. Hopefully not I would rather see it post Jorc and Studies and hence support a much bigger price tag.
9. The degree to which the Chinese are sitting in the box seat for this acquisition given they are already "In Bed" with the DRC Govt. Many projects where Chinese engineers/developers are providing key infrastructure and expertise in return for access to key commodities such as Cobalt Lithium Copper Etc.
So I think apart from being situated in the DRC the only thing that has retarded the price movement thus far IMHO has been the stage of development that it is at. Currently early exploration. Only seven holes drilled and roughly 70 years of intermittent historic drilling, mining and exploration work which is not jorc 2012 compliant. This will be remedied shortly with the large drill program that is about to commence at Roche Dura.
The current rally in the last 3 days which I think has just started the 2nd leg of the rise is just beginning. The new rally I think is due to expectation that :-
a) the 100 hole drill program about to commence with the prospected of many 200+m intersection in the southern Roche Dura outcrop (excluding the subsequent drilling program expected on the world record northern Carrierra de la Este which has +250m true width intersections of high grade Lihtia and is several kms to the NW)
b) and the speculation that the Chinese will make an early T/over move. Quite likely IMO
c) Speculation that this resource is vastly bigger than all currently defined hard rock Lithium deposits, perhaps even double all known jorc'ed resource. Again very possible
As most will know price movement in stocks will move in anticipation or expectation of a good result. So waiting until the drill results and Jorc definition to arrive will not net you a big % gain. At this stage I'm of the mind that it is indeed very large and high grade resource and that the Chinese are in fact circling, hopefully they won't push the button just yet though.
So for a roughie example lets assume AVZ has 50% of the worlds hard rock lithium. Think Greenbushes, MIN, PLS, Nemaska, AJM NMT, KDR, TAW, GXY, BGS, PSC, etc etc now add all their current Jorc resources together and multiple by 2. Now assume that in approx. 6 to 12 months AVZ will define such a Jorc perhaps of slightly higher grade that the average listed. Think of the valuation each of these companies had at the time they had defined their final jorc and add them together and multiple by 2. Now given that AVZ own 60% of the project multiple by 0.6 and this will give you some idea.
So given all the above you can start to imagine the valuation such a resource would demand ? I'm not going to put a number on it but many multiples price wise of where we are now @ 19.5c.
All is IMHO DYOR to confirm
