Ann: Shareholder Meeting and Manono Due Diligence Update, page-79

8 MARCH 2017 SUMMARY

Mauritius-registered MMCS Strategic 1 filed a writ seeking a declaration in regard to its legal ownership rights of the mining license covering the Manono and Kitotolo lithium deposits.

Amsterdam & Partners LLP and Clifford Chance are representing MMCS.

Klaus Eckhof’s AVZ last month announced a deal to acquire 60% of the project from DRC state-owned Cominière.

Under the proposed deal, Cominière would retain a 30% stake in the project, which was historically mined for tin.

MMCS is a 68% direct shareholder in Manono Minerals SARL, a joint venture between it and Cominière.

MMCS argues that the DRC Ministry of Mines unlawfully revoked the permit covering the deposits last year, before issuing a new permit, covering the same area, to the AVZ/Cominière JV.

The revocation of the license remains subject to separate proceedings in the Administrative Section of the DRC Supreme Court of Justice.

MMCS said when an appeal is brought against the revocation of a permit, DRC law stipulates that the permit remains valid until the conclusion of proceedings.

According to MMCS, it notified AVZ of its pre-existing claims over the ground on February 10, about a week after AVZ announced the acquisition.

Last week, AVZ noted MMCS’ claim in the notice of meeting to shareholders to vote on the proposed deal

AVZ said this morning that it would vigorously defend the claims and said it understood that the DRC Minister of Mines had previously rejected an appeal by MMCS against the cancellation of the license.

MMCS said the WA Supreme Court was deemed to have jurisdiction, given AVZ was domiciled in the state.

“MMCS and its legal counsel consider the circumstances and events that led to the purported revocation of Mining Permit PE 12202 as highly unusual and exacerbated by the subsequent grant of rights over the same area to a new joint venture involving common parties,” it said.

MMCS said it would pursue a number of avenues to enforce its rights over the license and to protect its intellectual property rights.

MMCS said it had spent $US9 million on the project since September 2013.

AVZ is due to hold a shareholder meeting on April 6 to vote on the transaction, a placement to fund exploration, and the issue of options to company directors and broker Hartleys.

Shares in AVZ closed at A2.6c yesterday. Shares peaked at 3.2c when the deal was announced.