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donegaldemon

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1901

04/04/21

06:50

Post #: 52240970
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Originally posted by grassseeds ↑

The progress made by AVZ in the last quarter is approximately in line with the nominated timetable, but there are still many hurdles to cross before AVZ can commence construction. Until greater clarity is obtained on the mining license and outstanding finance requirements I don't expect any substantial change in the share price. Refer to my earlier post #50973956.

AVZ does not have an image in the market place that currently satisfies major corporations to be committed to the project. I believe that major corporations will not commit any significant involvement until they see more derisking of the project.

AVZ's market place image is that they are a small Australian explorer, they have no experience in building a lithium plant or running a lithium plant.

Further AVZ currently has insufficient capital to purchase the extra 10% shareholding, or at the moment to commit to any substantial on site activities.

Assuming that AVZ can get US$400 million debt financing this still requires them to provide equity of about US$ 150 million for the balance of the plant. In addition, AVZ need funds to purchase the extra 10% equity plus obtain some more working capital. The other aspect that needs to be considered is the outstanding 25% shareholding in the project that also requires financing. Will AVZ endeavour to lift their percentage to say 90% and if so what are the terms, costs etc. Would the terms also influence possible arrangements between AVZ and the Government on the SEZ, taxes, royalties etc.

Various options of equity financing are available, including capital from offtake companies, selling a percentage of the project to a larger experienced high profile mining company or a rights issue to shareholders etc. The equity capital may be financed over a period of time to minimise shareholder dilution.

As nominated previously the lack of access to the site for key Directors is not beneficial in resolving outstanding issues. It would not surprise me if it takes AVZ a further 8 to 12 weeks to finalise the mining license, debt finance and for AVZ to nominate how they will arrange their required equity component to enable the project to be given the green light.

The other component we do not know is whether other supporters of Yibin etc are soaking up any available shares. If this is happening this will give Yibin and associated parties a greater decision-making capacity over the future direction of the project.

My opinion is that retail shareholders should just sit back, not get agitated and see how the project develops. We can all theorise on possible options and outcomes, but I see this activity as a waste of time. I suspect that if we are patient the next 8 to 12 weeks will provide answers to most of the outstanding issues.

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Id really like to see Nigel and co get them extra percentages tied up ASAP , even if they done a small CR to a cornerstone investor or insto ,, it would be very good to have a few instos on the register !!

AVZ Price at posting: 19.0¢ Sentiment: Buy Disclosure: Held
8 Upvote

0 Great analysis

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