PERTH (miningweekly.com) – Lithium developer AVZ Minerals will raise A$10.6-million through a share placement to China’s Yibin Tianyi Lithium Industry, which will take a 9% stake in the Australian firm.

Under the placement agreement, Yibin Tianyi will subscribe for 237.5-million shares in AVZ, priced at 4.5c each. While the Chinese firm would hold a 9% interest in AVZ following the placement, the new shareholder would not be entitled to a board seat.

While the transaction would be subject to Chinese Overseas Direct Investment approval, the placement would not be subject to Foreign Investment Review Board approval, as the share placement amounted to an interest of less than 10% in AVZ, and did not include a board seat.

The shares will also be placed under AVZ’s existing capacity, meaning shareholder approval would also not be required.

“Yibin Tianyi has remained committed to becoming an investor in AVZ and its intention of becoming one of the largest hydroxide suppliers in China is complementary to our vision of bringing our world class Manono project into production,” said AVZ MD Nigel Ferguson on Monday.

The two companies are also continuing negotiations to execute a binding offtake agreement for lithium products from the Manono lithium and tin project.

Meanwhile, AVZ has also entered into an underwriting agreement with Canaccord Genuity to underwrite the exercise of 177.62-million listed options, expiring on May 24, and exercisable at 3c each, raising approximately A$5.3-million.

The settlement of the shares to be issued under the Canaccord Genuity offer will occur on May 29.

“Funding from both the offer and placement strengthens AVZ’s balance sheet and together with existing cash, ensures that AVZ is well positioned with A$19.6-million, before costs, available to advance the development of its flagship Manono project, one of the world’s largest and highest grade undeveloped hard rock lithium projects,” said Ferguson.

A recent definitive feasibility study into the project, in the Democratic Republic of Congo, has estimated that it would produce around 700 000 t/y high grade lithium and 45 475 t/y of primary lithium sulphate over a 20-year mine life.
The project would require a capital investment of $545.5-million, which included a $49.59-million contingency.