Hi all,
Looking forward to further met test results being released this week, and I'm hopeful that the latest round of results will also contain tin recoveries.
If so, then it is worth remembering that AVZ investors not only have exposure to THE LARGEST Measured & Indicated Lithium resource on the planet (and soon to have the largest known RESERVES of any Lithium hard rock project on the planet i.e. once the DFS is published and initial reserve estimates are released), but AVZ investors also have exposure to the largest ASX listed Tin deposit (believed to be the third or fourth largest on the planet).
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Essentially, AVZ provides investors with two in one exposure for the Top 2 metals that are forecasted to be the most impacted by new technology.
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The expected tin (and possibly Tantalum) credits along with anticipated improvements to transport costs (my estimate @US$200p/t or a ~$20 improvement on last year's 5mtpa SS via Dar Es Salaam), should easy deliver a sub US$300 total cash cost p/t for the company during the first phase of production (currently estimated at US$323 p/t).
In the second phase however, Hydro power is expected further reduce overall cash costs, and the third phase should take the company to another level in terms of margin improvement p/t IMO - given that either a Lithium Hydroxide or Sulfate plant (the latter my preference at this stage) being introduced onsite is currently under investigation.
So folks - assuming Phase 1 only cost p/t estimates - that's still a 50% gross margin based on today's lacklustre SC6 spot price @$450p/t (which btw in conjunction with COVID-19 maybe be the death knell for the majority of WA Lithium projects already struggling to survive). Furthermore, the margin on AVZ's cash costs would be more likely to be @ 55 - 60% IMO, because a premium for AVZ's consistency, grade and overall quality (low deleterious elements) product still needs to be factored in.
Thus, is it any wonder that the WA Lithium trolls are out in full force on the AVZ threads, as they would be only too aware that the financial and operational effects of COVID-19 on current Lithium
producers plus the likely robust economics at Manono (i.e. from 2021/2022) is set to create a PERFECT STORM that triggers a mass migration of investors - as they switch out of their ASX listed WA Lithium investments and into AVZ's superb Lithium & Tin project at Manono.
The ironic part of this increasingly likely scenario (IMO) is that the DRC as well as other perceived high risk jurisdictions (eg. Zimbabwe & Argentina with other quality ASX listed Lithium development projects aka PSC, AGY etc.) are set to become the new safe haven jurisdictions for scarred Aussie Lithium investors IMHO.
In the world of commodities 'Grade & Scale' will always be King. However, in the Lithium business I would add to that raw material 'Consistency' and 'Overall Quality' is key, particularly for the successful and efficient conversion to Hydroxide.
IMO the above four ingredients are the recipe for a successful lithium mine. Logistical, geopolitical and other common issues can be overcome with a good team of people, but Tier 1 Lithium deposits that can boast all of 1) Grade, 2) Scale, 3) Consistency and 4) Overall Quality... are rare like red diamonds. And once the market fully understands this they will be recognised & valued in much the same way.
Hence why I believe that AVZ is in for a substantial and sustained re-rate very soon, particularly once the first OT agreement is signed and sealed (which btw could occur either before or after the DFS is released). And hence why there is no way that I would consider sitting on the sidelines (at least for AVZ) at this most opportune point in time.
GLTA
Cheers
Elpha
