Highlights from the June quarterly for me were as follows;
1. Better than expected financial position.
In my recent musings I opined the following;
'Cash as at 30/3/19 was $12,066,000
Outflows est. for June quarter were $4,477,000
Proceeds for June quarter were $190,000 (conversion of options)
That leaves an estimated $7,779,000 at the end of June
However we know that there were some delays to planned works last quarter so I'd expect the actual figure to be more like $8m or greater. In any case, $7.8 - 8.3m is certainly more than enough to not to have to worry about additional funding this quarter, and likely suffice planned expenditure until the end of this calendar year.' https://hotcopper.com.au/posts/39700636/single
So... the actual cash balance at the end of June of $8.73m is a welcome surprise.
Outflows were $3.35m against a budgeted $4.47m and this was in part due to some development delays.
However it's good to see that the Sept. quarter outflows estimate of $3.05m (included the down payment to Dathomir for 5% of the project) is still within the realms of the company remaining funded until the completion of the DFS and 'Decision To Mine', and certainly well funded for the remainder of 2019.
Then add the expected continued conversion of 3 cent options until their expiry in May 2020 (203,649,049 * 0.03) which will likely provide an additional $6.1m i.e. assuming 99.5% are converted between now and then.
AVZ's MD Nigel Ferguson noted: " It is clear that momentum is building rapidly for AVZ and its shareholders, whether it be operationally at Roche Dure, with further boxes ticked on the Mineral Resource and DFS front, or corporately with closer technical alignment with our largest shareholder Huayou and adding relevant expertise to the Board in anticipation of financing and development. The fundamentals of the Company have never been stronger and we have a healthy cash balance to take us through an intense period of activity during over the balance of 2019 and beyond."
I also suggested the following in my previous musings; 'In the meantime, the appointment of an 'OT expert' during the last half (of 2019) signals to me that project funding (at least part thereof) is imminent this half, and possibly following the completion of Met Tests. Such an outcome would likely mean no further standard or Patto's style CRs are necessary, but this is all IMHO of course.'
With the understanding that no person is always 100% on the money, my Balinese taxi driver (BTD) has very recently suggested that an OT agreement isn't necessarily contingent on the completion of Met Tests and may come sooner. He has also suggested that the Chinese aren't the only party in town when it comes to 'advanced negotiations'. He wouldn't disclose where the interested parties were from but my bet is that they're either European (possibly German or French) , Indian, Korean or US American (that narrows it down I know ).
Thus it sounds to me like AVZ could be closer to an OT agreement than I first thought and therefore IMO the company WILL NOT require another standard or Patto's style CR…. period.
Sidenote: I can think of only one other Lithium development project that is in a similarly strong position (their ticker also starts with A and their project is in Argentina). Both AVZ and this other favourite Li stock of mine are IMO about to handsomely reward their investors (no small feat given the carnage surrounding average ASX Lithium producers ATM), and due to the recent value appreciation for both of these little gems it appears that the market is starting to wake up and has begun to sort the wheat from the chaff.
Meanwhile, our good friends over at LTR are coming to terms with a humbling CR of their own - after reaching a July 2019 peak of 18c per share or $275m valuation = @$150m greater than AVZ's current valuation. Suggest that with this valuation LTR is close to (if not the end of) its discovery phase and speculators (having made 9 bags in less than 4 months) may soon be ready to take their money and run. In stark contrast, AVZ and A** have endured their orphan / survival periods and IMO have recently entered the development phase.
2. Company still targeting delivery of DFS in Q1.
BTD suggests that the de-watering of the pit is progressing well and should be completed by October. Also good to see that management are serious about Q1 delivery of the DFS and not focused on their fallback of Q2.
3. Further increase in equity ownership at Manono planned.
Note that that Cominiere' require ministerial signoff to release 5% equity ownership to AVZ. However this is now possible due to a) the recent agreement/ formation of the coalition government and b) ministerial appointments between the two parties FCC (Kabila) and CACH (Tshisekedi). http://www.xinhuanet.com/english/2019-07/30/c_138270519.htm
4. Manono ranks as the largest Tin deposit controlled by an ASX listed company. 'Several parties have contacted the Company and expressed an interest in potential Tin and Tantulum byproduct offtake.'
Want easy 'all-in-one' exposure to the two top ranked metals most impacted by new technology? Then look no further than AVZ.
5. Chairman appointment announcement this quarter 'AVZ expects to update the market further during the September quarter with respect to the selection of a Chairman for the AVZ board.'
BTD suggests that management have found their person but that start date is still to be determined.
6. Manono Lithium and Tin Project Video Fly Through
The company has indeed invested considerable time and effort to 'convey the nature and general scope of the project to its shareholders and potential investors.' Very impressive video, easy for potential investors to understand and therefore money well spent IMO. Should generate further interest in our world class project as the video spreads around the globe. I have already sent it on to several potential investors who have either been sitting on the fence or have invested only a small amount, but with the stars aligning I'd suggest they'll soon no longer be fence sitting.
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(20min delay)