- Lithium explorer AVZ Minerals (AVZ) has released its definitive feasibility study for the Manono Lithium and Tin Project in Congo
- The study models are 20-year mine life for Manono with almost $6 billion in profits lying beneath the ground
- AVZ expects the project will produce 700,000 tonnes of SC6 lithium per year, and 45,000 tonnes of primary lithium sulphate per year
- Managing Director Nigel Ferguson said the company has been “intentionally conservative” in its predictions, meaning there is potentially room for improvement
- Now, AVZ needs to source the funds to kick the project off
- AVZ shares have stayed strong today, currently up just over eight per cent and worth 6.5 cents each
Lithium explorer AVZ Minerals (AVZ) has released a strong feasibility study for the Manono Lithium and Tin Project in the Democratic Republic of Congo.
AVZ owns 60 per cent of the Manono project, with the remaining 40 per cent controlled by La Congolaise d’Exploitation Minière SA, and Congolese state-owned entity, and private company Dathomir Mining Resources SARL.
Today’s feasibility study outlines a 20-year mine life which is expected to produce 700,000 tonnes of high-grade SC6 lithium every year and over 45,000 tonnes of primary lithium sulphate per year.
Show me the money
Importantly, AVZ said it expects the project to return US$3.78 billion (A$5.98) billion in net profit after tax over the life of the mine.
With a 53 per cent pre-tax rate of return, the company expects a payback period of 1.5 years before tax or 2.25 years after tax. Essentially, this reflects how long it will take Manono to pay itself off based on estimated construction and extraction costs.
AVZ Managing Director Nigel Ferguson said the definitive feasibility study (DFS) proves Monono to be a very “robust project with strong financial metrics”.
“The Manono Project has a substantial ore body capable of extending the Life of Mine well past the current 20 years, as modelled. It also has a robust workable transport solution for securing delivery of products to the export ports and a clear plan to work with the community for social development and environmental compliance,” Nigel said.
He also added that the company has been intentionally conservative in its predictions about the financial impacts of the project, and as such believe even after the positive DFS, there is room for future improvement.
Nigel said the company will be updating shareholders “soon” on the offtake agreements, financing, and a decision to mine.
Of course, with roughly $2.16 million cash on hand at the end of December 2020, the company now has to find the funds to kick development off.
The DFS predicted capital expenditure of roughly US$545 million (A$860 million) for the project. As such, AVZ now needs to source the cash.
With the global switch to electric vehicles on the way, however, analysts suggest lithium demand will stay strong. As such, shareholders may be confident in AVZ’s ability to find someone willing to put their money on the line for the Congolese lithium product.
Despite a tough day on the wider market, AVZ shares have stayed strong today. At midday AEDT, shares are up 8.33 per cent and worth 6.5 cents each.