24/12/2020 - 11:32

AVZ locks in first lithium offtaker

24/12/2020 - 11:32

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AVZ Minerals will end 2020 on a high-note after locking in a 5-year offtake deal with China’s largest lithium compound producer, Ganfeng Lithium. The coup will see Ganfeng purchase up to 160,000 tonnes of spodumene concentrate per annum from AVZ’s world-class Manono lithium-tin project in the Democratic Republic of the Congo. The deal sees AVZ clear yet another hurdle on its development pathway as Manono edges ever closer to production.

Lithium is a key component in the manufacturing of batteries in the burgeoning electric vehicle market. Credit: File

AVZ Minerals will end 2020 on a high-note after locking in a 5-year offtake deal with China’s largest lithium compound producer, Ganfeng Lithium. The coup will see Ganfeng purchase up to 160,000 tonnes of spodumene concentrate per annum from AVZ’s world-class Manono lithium-tin project in the Democratic Republic of Congo. It appears that AVZ has now cleared yet another crucial hurdle on its pathway to development as Manono edges ever closer to production.

The agreement with Ganfeng is set for an initial 5-year term, with an option for a further 5-years at the Chinese giant’s discretion. The agreement covers the supply of AVZ’s primary SC6 concentrate product, which is expected to grade at a respectable 6 per cent spodumene.

Pricing for the concentrate is to be determined via a formula that references the market pricing for both lithium carbonate and other lithium products.

Ganfeng is the third largest producer of lithium compounds in the world and the world’s largest producer of lithium metal. The Chinese company is vertically integrated with operations across multiple levels of the lithium supply chain ranging from lithium concentrate processing through to battery recycling. Ganfeng produces more than 40 different lithium compounds for supply to end-users, most of whom are now related to the battery manufacturing space.

AVZ Minerals Managing Director, Nigel Ferguson said:“GFL has signed on to take 30% of the Manono Project’s initial saleable SC6 yearly tonnage, which is a massive endorsement for our project.”

“Over the coming months, I look forward to finalising other offtake agreements which are currently under negotiation, not only for our lithium products but also for our tin and tantalum materials.”

“This SC6 offtake agreement with GFL will also greatly assist the Company in meeting any conditions precedent that are required for our prospective financiers.”

The company’s Manono lithium-tin project is located in central Africa in the Democratic Republic of the Congo. The project hosts an immense open pit resource of 400 Million tonnes grading an impressive 1.65 per cent lithium oxide, making it one of the largest undeveloped lithium deposits in the world and it dwarfs all of its West Australian lithium cousins.

AVZ released a stunning definitive feasibility study, or “DFS” over the  project earlier this year, boasting a cavalcade of astonishing figures including a 20-year mine life, a A$3.25 billion Net Present Value and a stellar A$515 million annual EBITDA.

The company has moved from strength to strength since the release of the DFS as it eyes a move to production, having raised further capital to fund a raft of pre-mining activities which include the establishment of key infrastructure, the application for key permits in addition to putting the manufacturing of the processing circuit and mining operations out to tender.

AVZ’s Manono plant design assumes a mining rate and throughput of 4.5 million tonnes per annum and it is then expected to ultimately ramp up to produce around 700,000 tonnes of high-grade spodumene concentrate at 6 per cent lithium oxide in year three. Ganfeng will initially absorb close to a third of the mine’s initial concentrate production and its commitment that follows its rigorous due diligence over the project may even push other lithium players to muscle in for the remaining offtake.

Locking down an initial offtake agreement may also prove a pivotal point in the development of the Manono project with AVZ saying that the agreement will provide an added level of confidence for the various parties looking to finance the operation.

The company has delivered a welcome Christmas present to market pundits and with the first offtake now locked in, the AVZ is in a strong position as it looks to nail down financing and construction of its tier one asset.

 

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au

 

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