AVZ 0.00% 78.0¢ avz minerals limited

Evening all, Tax loss selling and the rebalancing of portfolios...

  1. 1,259 Posts.
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    Evening all,

    Tax loss selling and the rebalancing of portfolios during the month of June has created another superb opportunity for value investors IMO, and this being especially the case for AVZ after a 5 cent correction (9.6c high to 4.6c low or > 50% retracement) in 4 weeks.

    In fact the company's resources have never been cheaper i.e. post the release of the 5mtpa SS.
    And while the average in-ground value for ASX listed igneous and sedimentary LCE deposits sits at @US $64p/t, AVZ's share of Manono's in-ground LCE value is currently US$6.25p/t, representing more than a 90% discount vs its ASX peers.

    At 4.7c, AVZ's Enterprise Value is now less than A$100m, and to keep it real I've included June's estimated quarterly outflows.

    AVZ Summary
    M/Cap: A$107m.
    Est. cash on hand as at June 30: ~A$8m
    Enterprise Value: 90% discount to ASX peer average of US$64p/t).
    Elpha's conceptual resource target: 1.6bt (see below conceptual image size of this monster)
    Conceptual LCE resource p/t (AVZ's 65% share): US$1.65 p/t  

    Last month, the DRC was officially reported by S&P Global Market Intelligence as having the seventh largest Lithium reserves and resources on the planet and by my estimate the second largest in terms of spodumene reserves and resources. Incredibly, this was all because of ONE monster project (see below) and thanks to the recent work of AVZ.

    Lithium reserves and resources June 2019 update.png

    AVZ - Hardrock Lithium Deposits Peer Comparison Apr 2019 update.png

    Once Manono realises it's full potential over time (conceptual resource converted), then the DRC's world ranking could jump to as high as no. 3  i.e. ahead of the United States, Chile, Canada and Australia - and no.1 for spodumene. These remarkable stats not only emphasise Manono's strategic importance to the Congolese, but to those who seek to control the Lithium battery supply chain as they gear up for the technology disruption event of a lifetime (clean disruption of energy and transportation).   

    Furthermore, Manono is an old tin mine with an abundance of Lithium confirmed at /near the surface. Therefore, for all intents and purposes it is 'ready made' and when comparing Manono to the salt lake (brine) deposits of Bolivia, Argentina and Chile and the numerous igneous and sedimentary greenfield deposits that exist throughout the world, Manono is both a geologically and economically superior resource - and from an  environmental perspective far less complicated (intrusive) than most. The truth is that for many countries and companies that host some of the world's largest Lithium reserves and resources, not many are economically and/or environmentally feasible.

    Thus with the exception of Greenbushes, I firmly believe that Manono is in a league of its own. Initial Met test results (due any day now) should provide further evidence that what shareholders have invested in is a freak of nature that could yield them and their families massive profits and dividends for decades.

    GLTA

    Cheers
    Elpha
 
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