Next news? Asannounced on 2 April we know that the FIRB approval process is nearing completion for the $14m placement to Yibin, next Thursday 30 April is the sunset date. “The Company anticipates that a decision will be made before 30 April 2020”. So as DFS is now out, placement news could drop at any time in the next week. If approved AVZ would then see a healthy $18min its bank account.($4m+$14m)
(DFS Page32) Offtake agreements being negotiated with several companies. Yibin is showing interest in securing 150 kt/a - 200 kt/a of SC6. Many other convertors in offtake discussions for lithium, tin and tantalum.
[Why Sulphate?] 46 kt/a of Primary Lithium Sulphate suitable for off-takers looking to reduce supply chain cost buying already processed lithium products to reduce their own operational working capital risk.[Plus transport savings for AVZ]
Some more detail in NFs post DFS interview posted by @H e pennypacker
At 5:00minutes NF Mentions lots of interested parties awaiting DFS before they engage.
At 5:30minutes Financing aims not to be too dilutive to preserve shareholder value. [I take it he means a mix of debt+equity here]
At 5:45minutes FID(Final investment decision) estimated in next 3 months.
At 6:45minutes US and Europe making a move on battery plants will take up demand for Spodumene and Sulphate.
More clues to what is coming next…
“I look forward to updating the market soon with respect to offtake agreements, financing and a decision to mine.”(DFS Page 2)
From the article below:
AVZ has been progressing offtake discussions with Yibin Tianyi Lithium Industry Co. Ltd and other potential buyers of product from the project.
The details within the DFS will assist in securing these agreements and may provide some advance funding under the offtake arrangements.
In the meantime, the company remains in a solid financial position with cash reserves of around A$4 million.”
do not advertise external links.au/companies/news/917689/avz-minerals-shares-up-as-dfs-confirms-robust-metrics-for-manono-lithium-and-tin-project-917689.html
The DFS provides robust metrics for engineering design,construction requirements, logistics, project finance and risk assessments.
AVZ holds 60% of the Manono project with an option toincrease to 65%
AVZMinerals Ltd (ASX:AVZ) is trading higher after a positive definitive feasibility study (DFS) confirmed robust economics for the Manono Lithium and Tin Project in the Democratic Republic of Congo.
As well as confirming strong project metrics, the DFSprovides a higher level of confidence with respect to engineering design,construction requirements, logistics, project finance and risk assessments.
These metrics based on 100% project ownership include:
- US$2,348 million pre-tax NPV10 and US$1,028 million post-tax NPV10;
- Internal Rate of Return of 53% (pre-tax) and 33% (post-tax);
- Net Profit After Tax - Life of Mine of US$3,779 million; and
- Payback period of 1.5 years (pre-tax) and 2.25 years (post-tax).
AVZ currently holds 60% of the project and has an option toincrease to 65%.
"Very robust project"
AVZ managing director Nigel Ferguson said: “The DFSproves the Manono Lithium and Tin Project to be a very robust project withstrong financial metrics, demonstrated by the key metrics of the DFS base casescenario on a 100% ownership basis.
“The Manono project has a substantial ore body capable ofextending the Life of Mine well past the current 20 years, as modelled.”
Shares have been as much as 22% higher to an intra-day highof 7.3 cents, up from 4.5 cents at close on March 23.
The DFS is based on ore reserves of 44.6 million tonnes inthe proved category and 48.5 million tonnes in the probable category withan average grade of 1.65% lithium oxide.
This underpins the project’s life of mine beyond 20 years andthe estimated 4.5 million tonnes per annum operation.
Conventional open pit mining is planned with a low ore wastestrip ratio of 1:0:48.
Processing plans
The DFS assumes a product mix of spodumene concentrate (SC6) for700,000 tonnes per annum and Primary Lithium Sulphate (PLS) for 46,000 tonnes per annum.
The processing flow sheet shows lithia recoveries of 60% usingdense medium separation and 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.
Ferguson said: “The Manono project economics are enhanced by addition of the high value-added Primary Lithium Sulphate product.’”
In 2019 the company commissioned a marketing report by Roskill which projected an increase in lithium concentrate prices in line with demand.
Ferguson said: “The project is also highly sensitive to marketpricing of SC6.
“Roskill has stated its 20-year price forecast sees an increase in unit value as demand increases and as such, the project becomes incrementally more robust and profitable.”
Breakdown of construction capex.
Financial outlook
Average EBITDA for the life of the mine is US$380.
The project has a capex of US$545.5 million which includesa 10% contingency of US$49.59 million, and a further sustaining capital ofUS$92 million required over the life of the mine.
This pre-production capital expenditure includes transportupgrade and rehabilitation of the Mpiana Mwanga Hydroelectric Power Plant andconstruction of the ROM pad.
Ferguson said: “We have intentionally been conservative in ourinterpretations of financial impacts on the project and therefore believe thesenumbers can be improved in the future, despite having included significant,non-project infrastructure items such as rehabilitation of roads, the MpianaMwanga Hydroelectric power plant and taken an adverse opinion on any potential VAT refund, amounting to some US$658 million over the Life of Mine, which hasbeen totally excluded from the cash flow.”
Due to the location of the mine in the DRC, the cashflows arealso sensitive to the transport costs which accounts for 46% of the totaloperating costs of the project.
Cost-effective transport
The company has finalised and priced two preferred routes whichservice the east and west coast of Africa.
Transport to the Lobito port in Angola is estimated at US$229per tonne and transport to Dar es Salaam port in Tanzania is US$275 per tonne.
Ferguson said: “[The project] also has a robust workabletransport solution for securing delivery of products to the export ports and aclear plan to work with the community for social development and environmentalcompliance.”
Routes investigated for product transportation during DFS.
Looking forward
AVZ’s board has approved the DFS and recommends progressing theManono project to construction, pending the successful completion of financingactivities in the current global market.
However, Ferguson said there was further upside potential forthe project which was “highly positive”.
He said: “There is significant upside resource potential fromCarriere de L’Este, added cash flow from tin and tantalum credits, additionalnegotiations on a reduction in pricing for transport, the roll-out ofelectric-powered mining equipment and the establishment of the Special EconomicZone at Manono, which will potentially provide discounted rates on tax, duties,VAT.
“I look forward to updating the market soon with respect toofftake agreements, financing and a decision to mine.”
AVZ has been progressing offtake discussions with Yibin TianyiLithium Industry Co. Ltd and other potential buyers of product from theproject.
The details within the DFS will assist in securing theseagreements and may provide some advance funding under the offtake arrangements.
In the meantime, the company remains in a solid financialposition with cash reserves of around A$4 million.
https://www.youtube.com/watch?v=smJC4GojeWU
