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78.0¢ avz minerals limited

Ann: Cornerstone investor secured for Manono Project, page-236

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unemployed

396 Posts.

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27/09/21

18:33

Post #: 56383707
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Originally posted by Freehold: ↑

Well there is a lot to digested here in this announcement and I don't expect the market and peers will have fully digested and re-valued it yet. I may take a weeks/months for the full implications of it to settle and for the market to adjust

So lets forget about the actual $$ amount for a minute and focus on actual underlying changes

Yesterday ---> and Today

1. 80% Spod in Offtake ---> 100% of Spod in Offtake
2. PLS no Offtake ---> 100% of PLS in Offtake
3. 4.5MT/Ann Production ---> 10MT/Ann
4. Onsite Hydroxide Dream ----> Hydroxide a real reality now.
5. No major partner with expertise ---> The best possible partner CATL in a technical sense
6. No Finance yet hence no ML allowed ---> Now partially financed (Expecting another ann shortly for Debt /African DFI's)
7. Ownership 75% ---> Ownership 51% AVZ / 24% CATH
8. Cornerstone investor None ---> Cornerstone investor CATH

This is seismic shift from where we were yesterday. You could say that AVZ has come of age with this Ann. It is 90% certain we will mine now. CATH would not have made the offer unless they were 100% certain that the DRC Govt would approve the Mining License.

So was it a good deal. I think so on reflection. It offers all parties significant upside. On this basis it was a good deal. Of course many retailers would have said wait for higher price but what you are forgetting here is that we are buying expertise/know how not just sourcing cash.

Does this limit AVZ mcap based on the valuation struck in the deal. No at all it allows significant upside from here for all parties. The price was struck broadly based on what the prevailing market price was at the time. Remember that we have a chicken and egg situation. We can't have a mining license unless we prove finance. The value ceiling is constrained until we get a mining License. So at some point you have to strike a deal else production deadlines and timings simply slip to the right indefinitely .

I would characterize it as a good/fairish deal given the timing constraints and market bullishness.

Perhaps the discussion should naturally migrate to comparison between this deal and those initially signed deals by some of our peers recently and historically. Let the comparisons begin I say start with initial deals signed with these companies to keep it fair.

FFX, KDR, PLS NMT PLL etc there are plenty of others.

I will point out that in some cases the revaluation process took weeks to months to materialize fully after some of the above Co's announced their maiden finance deals.

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I wonder how coincidental it is that this announcement so closely follows the Quad meeting in Washington that discussed strategies for securing the supply chain for strategic minerals. An AFR article today suggested that Australia supplies circa 50% of the world's lithium at present and most of that is sent to China for refinement. I'm guessing that the Quad would be happy for Australia's lithium supply to be refined onshore and in the near future they will take steps to ensure this happens, thus cutting China out of the equation and also becoming self-reliant. Manono is the largest undeveloped deposit of hard rock lithium so it makes sense for China to secure this deposit and guarantee its own supply chain for such a strategic metal. In the present atmosphere I'm sure the last thing China would want is to be reliant on Australia, so if they can bypass us [Australia] they will move heaven and earth to do it. A good omen for AVZ.

AVZ Price at posting: 35.0¢ Sentiment: Hold Disclosure: Held
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