22/10/2020 - 18:18

Tax relief hope for AVZ at Manono lithium project

22/10/2020 - 18:18

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ASX-listed equatorial Africa lithium hopeful, AVZ Minerals, has finally made solid headway in its efforts to set up a Special Economic Zone agreement inside the Democratic Republic of the Congo. If ratified, the agreement would enshrine significant tax concessions to the company in relation to its 75 per cent owned Manono lithium and tin project in the DRC.

ASX-listed equatorial Africa lithium hopeful, AVZ Minerals, has finally made solid headway in its efforts to set up a Special Economic Zone, or “SEZ” agreement inside the Democratic Republic of the Congo, or “DRC”. If ratified, the agreement would enshrine significant tax concessions to the company in relation to its 75 per cent owned Manono lithium and tin project in the DRC.

The progress came in the form of several weeks of meetings and a two-day workshop this week with senior Congolese Government officials from key departments and agencies.

Perth-based AVZ says the conclusions and recommendations from the long-sought-after discussions on the proposed SEZ framework will now be submitted to the country’s Minister for Industry, Julien Paluku.

The company hopes the Minister will in turn provide a draft SEZ agreement to the council of ministers and the Prime Minister of the DRC, Sylvestre Ilunga Ilunkamba, for their consideration, determination, and final execution.

AVZ says the tax relief would make a significant difference to the life-of-mine economics of the proposed, staged US$545 million development of Manono.

AVZ Minerals Managing Director, Nigel Ferguson, said: “Progressing discussions on the SEZ has proved challenging during the last seven months due to COVID-19 travel bans imposed in the DRC and the subsequent availability of key Congolese Government representatives.”

“We are excited with the very recent progress achieved with the Congolese Government and look forward to a positive outcome being reached in terms of creating a workable and transparent SEZ agreement for the mutual benefit of the Manono region.”

“A positive outcome will result in significant economic benefits for the company and the Manono territory by reducing the largest area of financial impact on the Manono project, as well as delivering a major catalyst for the redevelopment and invigoration of the socio-economic pulse of the Manono region.”

As well as trying to secure the tax benefits from the DRC Government, AVZ is looking to advance negotiations with potential offtake partners and debt financing providers for the Manono development.

Open-pittable inferred, indicated, and measured resources totalling a hefty 400 million tonnes going 1.65 per cent lithium oxide have been estimated by AVZ for the Manono project’s Roche Dure deposit.

Its definitive feasibility study, or “DFS” on Manono released six months ago forecast an initial mine life of 20 years predicated on proved and probable ore reserves of 93Mt grading 1.58 per cent lithium oxide for the production of up to 700,000 tonnes per annum of lithium concentrate grading about 6.1 per cent.

Using 100 per cent ownership of the project, the DFS projected an EBITDA of US$8.36 billion and an after-tax profit of US$3.78 billion over the 20-year life of the proposed mine and an impressive capital payback period of two-and-a-quarter years after tax.

 

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

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