Morning
@setfire2thehive et al,
You can cross points 3, 7, 8, 9 and 14 off your above list and as per the below. Also note that points 7, 9 and 14 were covered in the following post dated 30/5/2019
https://hotcopper.com.au/posts/38833129/singleHowever I've covered these off again as per the below.
3)Independent Research Reporthttp://www.rmresearch.com.au/wp-content/uploads/2019/05/RMResearch_AVZ_20190528.pdf'Price Catalysts
• Further metallurgical test work results expected Q3 CY2019
(with initial results expected any day now).
• DFS expected to be completed Q1 2020.
• Strategic investors/partners, conversion of MoUs with various Chinese Groups to binding offtake agreements for lithium concentrate and other products.
Action and Recommendation
• RMR is initiating coverage on AVZ with a Speculative Buy underpinned by the favourable results from the 5mtpa Scoping Study.
• Our near term price target of 10 cents still puts AVZ at an 72% discount to attributable after tax NPV10 of A$1.54bn based on a 5mtpa operation.
RMR is showing upside to 16 cents post DFS and 36 cents at production on a range of reasonable assumptions.
• The project is a standout among lithium hard rock players and consider AVZ cheap under 10 cents'
(now even cheaper under 6c)
7) 10% Project interest increase
Q. How does AVZ plan to pay for this purchase, what incentive would Cominiere SA and Dathomir have in selling 5% if not at a significant premium to current market valuation. This was briefly touched on, but could eventuate as an unexpected piece of news.
A. Option to purchase an additional 10% interest in the project from Cominiere (5%) and Dathomir (5%) discussions are well advanced, with Dathomir likely to be the first cab off the rank. When I asked how AVZ would pay for the additional 10% of the project without eating into the funds that were recently raised to complete the DFS, the response was that only a small payment for the 'option to purchase' would be initially required. Translation: an 'option to purchase' IMO provides AVZ with the flexibility to exercise that right down the track and this could even occur in conjunction with project funding negotiations. i.e. AVZ secures the additional 10% but swaps it for project funding (part thereof). This would be an ideal scenario for shareholders IMO, as it gives management the ability to provide potential partners with a 10% stake in the project without the dreaded dilution.
8) 5Y tax concession Q. Due??
A. Post DFS
9) New Chairman Q. Mentioned Jul 2018 - Severely overdue - Can you be more specific as to where the discussions are at, or the type of candidates shortlisted, can the date of appointment/s be refined. Can you elaborate on why this has taken close to 12months?
A. Chairman apparently down to 2 candidates. They want to be sure that they have the right person and are in no rush to appoint. I gave my 2 cents worth and implored management to appoint someone who not only has the credentials and experience to steer a world class African project through to production stage, but also someone who is hands on and 100% dedicated to building value for his or her shareholders. I added that if that means that neither of the 2 candidates fit this mould, then personally I would be happy to wait until they are able to find someone who is 100% fit for the job.
As a lean company, the last thing AVZ needs IMO is some tired, old city spiv (inefficient chairperson) sitting in a cosy office doing not much else other than shuffling paperwork in between board meetings. Sorry, but I've had my fair share of experience in dealing with these types over the years, and believe me when I say that they're 'dead wood'.
14) Transparency on AG and JNS deliverables Q. How is their value or success measured. What are their explicit guidelines? i.e. are they responsible for tabling deal, or performing introductions? Additionally do you expect to review their contracts?
A. AG were appointed to provide AVZ with introductions and advise AVZ on strategic matters (eg. original timings of the plan to production etc). In addition, I was also informed that AG were given free reign to table any deals, but clearly and more recently these never came to fruition.
AG are apparently still advising AVZ, however it is my understanding that moving forward the current monthly retainer will be dropped in favour of a success-based fee/outcome i.e. a similar arrangement to AVZ's current US advisors. This has been on my wish-list for some time, as I don't believe the company needs to pay a flat $25k per month retainer to any advisors/consultants, especially when no visible / measurable value is being added on a regular basis.
Furthermore and in addition to my recollection of the above point, I've also heard through the grapevine in recent weeks (via a reliable source) that AVZ have engaged an expert in offtake agreements (Glencore and Mitsui were namedropped as relevant experience). If this is the case, then I can well understand why management would be feeling increasingly confident that project funding (or part thereof) can be secured prior to the DFS.
It's crazy how people think that yesterday's strategic agreement with HY prevents AVZ from signing further OT/JV agreements. Nothing could be further from the truth IMO and it's only a matter of time before the first OT/JV is signed. Hint: pre DFS imminent IMO. Our deposits at Manono are far too strategically important for the major EV/battery players to ignore, and HY's strategic partnership simply reinforces the plan and belief that Manono will be mined sooner rather than later. And there will be ample supply for more than one OT partner IMHO. Plus all the talk of political and country risk is way overblown IMO (just ask Huayou, Glencore and Ivanhoe who have all recently increased their investment in the DRC) and in any case has been more than accounted for given the massive discount of AVZ's resource vs it's inferior Aussie peers.
All IMO but hope the above helps to alleviate some of your concerns.
GLTA
Cheers
Elpha
p.s. found this little tidbit amongst the latest news
https://www.moneymorning.com.au/201...es-9-84-on-agreement-with-huayou-asxu-lw.html'Today, AVZ Minerals Ltd [
ASX:AVZ] entered into a strategic relationship with Zhejiang Huayou Cobalt Co Ltd, through its group company Huayou International Mining (Hong Kong) Ltd.
The strategic agreement is non-binding and non-exclusive.
At time of writing, AVZ’s share price is trading lower at $0.055, down 9.84%.
AVZ’s Manono projectAs stated in the announcement, AVZ and Huayou are focused at bringing together and strengthening the Manono Lithium and Tin Project, located in Democratic Republic of Congo (DRC).
Under the agreement, AVZ can take Huayou’s experience in the DRC and mainland China and use it in its Definitive Feasibility Study at Manono.
Huayou can also offer financing, offtake financing, strategic services, EPCM and cost-effective transport of product to its last destination.
As stated in the announcement, AVZ and Huayou are focused at bringing together and strengthening the Manono Project.
AVZ Managing Director Mr Nigel Ferguson Said:
‘AVZ values its existing relationship with Huayou very highly and this new agreement will see the two companies come even closer to advance the Manono Project. We believe that bringing Huayou’s tremendous mining expertise to bear on the DFS, financing and offtake negotiation will accelerate the commercialisation of the largest lithium ore body on the ASX and yield tremendous value for AVZ shareholders.’Additionally, the President of Huayou Cobalt Group, Mr Hongliang Chen said:
‘Huayou is pleased to have joined AVZ in a Strategic Relationship to progress the Manono Lithium and Tin Project. This project is one of the standout development projects globally in our view. It has the potential to deliver a premium grade product to market and we expect to work closely with AVZ to maximise the potential of the Manono Project.’AVZ’s 2019 share price outlookThe strategic relation between AVZ and Huayou is set to promote a relationship beneficial for all stakeholders.
It seems after previous tension, the two groups have come together in what is a positive development for both companies, despite AVZ’s share price taking a bit of a hit today.
More to come.
Regards,
Ryan Clarkson-Ledward,
For Money Morning'
