Chinese to plough $14m into AVZ’s massive lithium play

An emerging Chinese lithium producer, which has the backing of China’s largest electric vehicle battery manufacturer, has thrown its considerable financial weight behind ASX-listed AVZ Minerals as it develops what looks set to become the world’s biggest hard rock lithium project.

Following the formal execution of a subscription agreement between the two companies, Yibin Tianyi Lithium Industry Co plans to funnel $14.1 million into AVZ via an equity raising in order to fast-track the massive Manono lithium and tin project in the Democratic Republic of Congo.

The cash injection will enable the WA-based AVZ to purchase an additional 5% interest in Manono from Dathomir Mining SARL, taking its total stake in the 400 million tonne project to 65%.

The strategic investment, which comes in the form of a 314.3 million AVZ share issue at 4.5 cents a share, will also fund early development works at Manono whilst its definitive feasibility due diligence program is being completed. 

Once the deal is set in stone, Yibin Tianyi will hold a 12% stake in AVZ. The partners are also planning to set up a binding offtake arrangement courtesy of a “subscription agreement”.

Established in November last year, Yibin Tianyi is a star-studded partnership between a number of Chinese heavyweight firms who are looking to invest in the construction of lithium battery materials projects.

Amongst the impressive list of Yibin Tianyi partners is China’s largest electronic vehicle battery manufacturer, Contemporary Amperex Technology, or “CATL” and Shenzhen-listed, Suzhou TA&A Ultra Clean Technology Co.

Headquartered in Ningde in China’s Fujian Province, CATL currently focuses on the research and development, production and sales of electronic vehicle batteries and energy storage battery systems.

During 2017 it expanded its global footprint, establishing branches in France, the US, Canada and Japan. According to sources, it has a market capitalisation of $31.5 billion and revenues of $5.9 billion in 2018.

Yibin Tianyi is currently constructing its phase one lithium chemical plant in its home city of Yibin and expects this to be completed by the second quarter of 2020. If all goes to plan, the phase two expansion should be wrapped up by 2023/2024, according to the company.

The arrival of Yibin Tianyi to the table – with its strong focus on the processing and sales of battery-grade lithium hydroxide, lithium carbonate, lithium metals, industrial-grade lithium carbonates and other chemical products - will no doubt further boost market interest in Manono.

Manono is a world class lithium resource that dwarfs every known lithium deposit in Western Australia. It boasts a 400 million tonne lithium mineral resource that grades a whopping 1.65% lithium oxide and is one of the single largest accumulations of high-grade, spodumene-dominated, pegmatite-hosted ore systems in the world today.

Once the placement is completed and Yibin Tianyi retains voting power in AVZ of at least 10%, the Chinese company will be able to nominate a non-executive director to AVZ’s board.

AVZ Managing Director Nigel Ferguson said:“Their (Yibin Tianyi’s) intention to become one of the largest global lithium chemical producers certainly complements our vision of developing the largest hard rock lithium deposit in the world.”

"Yibin Tianyi’s intention to invest in AVZ and enter into a binding offtake agreement underpins the tier 1 quality of our Manono project.”       

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