Running discussion on SP, page-49262

Personally I think too many forget the Roche Dure project is actually in Dathcom. That is the entity that holds the project, of which AVZ has the largest stake in Dathcom. I personally think FIRB will not allow a TO of AVZ specifically by the Chinese, however there is nothing stopping the Chinese or anyone else taking a stake in Dathcom, which is a entity domicled in the DRC (and FIRB can do didley squat there).

Now, the reason I make this distinction is the project could be developed as a JV with someone, noting it will be the DRC government who can make a JV also happen (without FIRB doing didley squat about it). And by that I mean, giving the JV participant say x% of the project, and obviously AVZ would be involved in such discussions and probably lead such discussions, but basically not having to worry about FIRB because repeat the project is vested in Dathcom. I mean they could even list Dathcom on a stock exchange if they wanted to if the current JV participants want to do that (and not proposing that btw).

JVs lets discuss them using the Mt Marion project as an example - if you look at that project, that project is in effect a JV with Mt Marion assets held by a ánother entity, with Ganfeng taking supply at its equity stake in the JV (and obviously more as some of the other players sell to them as well - MRL). Now Greenbushes - in the past from recollection, before the recent change in ownership, took their share of the Greenbushes production based on their respective shares in Greenbushes (been Albermale and Tianqi back then). Basically Talison - which holds Greenbushes - sold its product to the JV participants based on their equity share in Greenbushes from recollection. If you want to understand that - Kemerton, owned by Albermale is using Greenbushes product for hydroxide, as is Kwinana owned by Tianqi.

So if a JV is entered into the Chinese will take their share of supply in the project fully, through a JV stake in Dathcom, and AVZ could sell its share to anyone else as could say the DRC govt who also has a stake in Dathcom etc etc. Albeit they will need to honour any binding agreements entered into and basically what I am alluding to is currently looks like the majority of product is Chinese bound. From a DRC Govt perspective they nonetheless will need to ensure that any sales of product from Dathcom is done at the correct price (or linked to a market price) because it will be Dathcom that pays the taxes in DRC.

Why the term so-called binding. Well I posted in the past these agreements, the current Offtakes, did not have a start date of supply, and in any event given the entities are Chinese with whom AVZ has agreements with I can see any JV partner most likely been Chinese anyway for the time being. In any event, if the Offtake Agreements are strictly binding, the key for a European JV participant is in terms of éxpansion timing, and ór whether it signs on the bottom line for all the sulphate product that is yet to be under any binding agreement with someone.

Obviously outside Dathcom, AVZ actually holds tenements that are 100% owned by it. This is a different scenario, and where future growth for shareholders can be leveraged from IMO especially (given AVZ its profits derived from Roche for developing these tenements, obviously starting with exploration down the track).

Now, in terms of the above, replace Chinese entity with European entity. Works the same for Roche.

As a final point, I am a little concerned as well at the increasing Chinese stake in AVZ itself. It would also appear too me that FIRB can do didley squat there as would also appear some on the register - who have a Chinese background - are through entities domicled in Australia (and/or SHs are Oz citizens).

A key becomes the sulphate agreement and who it is with - a contestable market is the key to share price because if AVZ is purely seen as a Chinese company then that does impact SP IMO.

I am still a little surprised a JV participant isn't been pursued through Dathcom - well no mention publicly anyway. The other key value in AVZ is the 100% owned tenements which obviously nothing really is been done with them at this time.

Some VB induced ramblings which this post really is, just some ramblings. We are at the pointy end - how value is extracted is about ensuring contestability.

Anyway, interesting discussion.

All IMO