Running discussion on SP, page-55948

Plenty of options for transport and costs factored into our DFS.

Our DFS, was stellar and will be beyond spectacular when we get an upgraded BFS, now 10 Mtpa start up, upgraded resource from wedge drilling, decreased payback, increased NPV/IRR etc. With CATH(CATL-the world's largest lithium ion battery maker) now as a JV partner I expect AVZ's plant to be built ASAP because they want the 10 Mtpa to fulfil their multibillion dollar contracts. With this need I would also expect transport to be upgraded quickly commensurate with the huge output. Also the DRC government is aiming to be the global hub for green metal mining and processing so watch the money and development pour in.

Regarding sovereign risk I think there is a lot of scaremongering out there.

Some of the largest mining companies in the world have operated very successfully for years in the DRC, such as Glencore and Ivanhoe with huge tier one copper and cobalt deposits, so NO they have not been confiscated. and the big daddy of them all BHP is looking to acquire a DRC mining project. Further, money is pouring into the DRC to develop the country's mining and infrastructure and the rating agency Moody's recently upgraded the DRC to positive.

'The positive outlook recognises the DRC's robust economic prospects driven by the mining sector and potential for improved economic resiliency from the implementation of structural reforms under the current IMF program. The positive outlook also reflects the increase in official foreign currency reserves which are set to continue to accrue over the coming years, may reduce the exposure to downturns in commodity prices and the severe episodes of macroeconomic volatility associated with them'.

The new government is also very pro mining and positive into developing the country.

I'd personally would be worried about the risks getting a mine up and running in Australia with a lot of red tape. For instance it took two years before LTR could fully access their Kathleen Valley deposit. And take Gina Reinhart's Western Australia's Roy Hill iron ore mine which was strangled by red tape.

"They spent nearly five years conducting studies, preparing reports and otherwise completing various applications for approvals – which in turn had collectively been ‘under consideration’ for more than 5 years. They needed 4,000 primary and secondary approvals. The resultant compliance costs were out of all proportion to the project risks .They also presented a major hurdle to achieving the complex funding required for a project of this scale."

It will always in the end be about the deposit, the size, grade and purity, ESPECIALLY THE TECHNICAL SPECIFICS OF LITHIUM INLITHIUM-ION BATTERIES where battery makers are finding that lithium sourced from inferior resources will literally not work in their batteries, let alone the costs of mining and conversion. There have been major failures of Australian companies, A40, Altura, PLS only produces industrial grade with the cost of conversion prohibitive and doesn't make a profit. LTR's main orebody is 350 metres below the ground and its open cut section veiny, plenty of lowish 1.1% grade so a high 8:1 strip ratio meaning a lot more ore feed to produce lithium product, and inconsistent grade meaning higher conversion costs and untested metallurgicals.

Then there is MIN's Wodinga deposit in the Pilbara, Western Australia with this independent assessment from Zhongtai Securities.

"Be cautious about the impact of DSO ore. MIN's Wodgina project has exported a large amount of lithium DSO ore to the country. However, judging from the current use of raw ore,the concentrates selected by most of the selected plants still have problems such as high iron content, low recovery rate and unstable product quality.A few enterprises have opened the mine to the lithium salt production line. However, there is limited room for capacity utilization improvement in the lithium salt smelting segment of the company."go HERE.

****Regarding AVZ and THE VALUE OF ITS LITHIUM DEPOSIT TO BE CHEAP TO MINE AND CONVERT, AND MORE IMPORTANTLY TO BE ABLE TO BE USED IN LITHIUM ION BATTERES...i.e. THE NEW GENERATION BATTERIES ARE LITERALLY FAILING (DON'T WORK) WITH LITHIUM SOURCED FROM INFERIOR DEPOSITS!- see below

****There are few lithium projects globally that have low impurities of mica or iron-oxide that can meet the quality requirements for the next generation of batteries.

The two highest grade in the world — as well as the largest hard-rock projects — are Greenbushes in Western Australia and AVZ’s Manono.

The Greenbushes pit is now more than 500m deep whereas AVZ is at surface — and has tin as a by-product credit.

AVZ consultant Airguide, which regularly works alongside Chinese battery majors, believes “the market does not fully understand the specifications or requirements for raw materials required by the battery sector”.

That’s also reflected in recent comments by lithium majors. “Battery requirements are becoming more stringent and there is a definitive move towards higher energy density batteries,”Albemarle spokeswoman Hailey Cobb said.

This begs the question: what lithium impurities are okay for batteries, and what impurities may make the raw material unusable?

“[Battery makers such as] EVE and other companies are telling us that they can no longer use lithium that is derived from high mica sources, as they can’t produce a lithium concentrate suitable for the next generation of batteries,” Airguide says.

Mica is a mineral name given to a group of minerals that are physically and chemically similar. Lepidolite is a member of the mica group of minerals and is the most abundant lithium-bearing mineral.

What also matters is understanding the impurities, as this can have a significant impact on how many tonnes of concentrate are required to make one tonne of lithium carbonate or hydroxide.

AVZ’s spodumene from Manono has no mica issues as was reflected inAVZ’s metallurgical report.

AVZ’s recent metallurgy test work produced a 5.8 to 6.3 per cent concentrate, without any type of beneficiation processing or optimisation. Thats all very positive for AVZ.

This was also historically independently verified in a Belgian Government study of the Manono project, which produced a 6.82 per cent lithium concentrate.

Older lithium batteries are running lower energy density requirements, which means they can use lithium sources with higher impurities.

However, impurities in the next generation of batteries results in battery failure or underperformance.

This is a key reason battery manufacturers need a high purity source of lithium.

“Right now, when everyone is doing their lithium supply analysis they are making the mistake of saying that all lithium is equal in its ability to supply the battery sector; and it absolutely is not,” according to AirGuide.

“It is more than just a matter of better pricing for high grade concentrate”.

“In our opinion, what we are hearing is over the next one or two years those companies that produce concentrate with lower mica will command a higher premium compared to the operations that have a high level of mica in their raw material.”

Then this:

High-level independent metallurgical test verification of Manono's lower iron, fluorine and phosphorous levels - and projected significantly lower open pit stripping rates - underline the incredible latent value in the DRC project.

"We think this project is completely different to every other project out there because it is so large - we're not talking about 10m-wide zones, it's 200m," says Ferguson.

"But it's not just about being the biggest in the pack, it's very much about that scale translating into value, which comes back to quality.

"It's the nature of the beast at Manono, with such a big, wide [pegmatite] body; it's cooled slowly, so we've got large crystals and a cleaner pegmatite. We've literally got, one side to the other, a single zone, and the wall rocks are black,

and the pegmatite is white … so we can just strip it down either side and not worry too much about dilution. It's pretty much 1.65% all the way through.

"SCT, which has designed about 85% of all the hydroxide plants in the world, have said they've never seen such a clean product - just really high grade and no detrimentals of any issue whatsoever. We have low fluorine, very low phosphorous, the iron is down to 0.4% in the product … and we'll probably get that down further with more tweaking. There is 2-4% mica in the body itself, but once it's processed it's down to … less than 1.5% mica, and we'll get that down further too."

Exciting times ahead for AVZ holders!

AIMO

P.S.

AVZ short term rerating catalysts:

-collaboration agreement and HEPP

-SEZ-tax, royalty and duty benefits including VAT exemption and tax holiday increasing the economic bottom line and decreasing an already amazingly short payback period

-mining licence

-BFS-expecting major increase in already stellar NPV/IRR, plus shortened payback period with increased resource from wedge drilling, tax benefits from SEZ, the huge increase in output to a 10 Mtpa plant (2 times greater than PLS 2 plants combined!who have a MC OF 6.9Bn)+ 2 primary lithium sulphate trains.

The effect of AVZ's start up 10 Mtpa plant on the lithium market:





-more funding to add to our $400 million from CATH(CATL-the largest lithium ion battery maker in the world needing AVZ's lithium to meet their multibillion dollar contracts)...expecting 2.1 billion overall according to the DRC Industrial Minister Julien Paluku, I quote


-feasibility study for hydroxide plant...(hint the extra billion funding mentioned above)

-further offtakes with big hitters