PERTH (miningweekly.com) – ASX-listed AVZ Minerals will raise A$40-million in a share placement to sophisticated, professional and institutional investors, to fund work at its Manono lithium and tin project, in the Democratic Republic of Congo.
The placement will consist of more than 307.6-million shares, which will be issued at a price of 13c each under the company’s existing capacity.
The share placement has been oversubscribed by A$10-million, which the AVZ board accepted, with the company announcing that it would not proceed with a share purchase plan.
“The capital raising marks an important milestone in our journey to develop the Manono project, providing AVZ with the required funds to increase the company’s stake in the project and secures the necessary working capital to commence the early capital works programme,” said AVZ MD Nigel Ferguson.
AVZ would increase its stake in Manono from 60% to 75% by exercising the option to purchase a 15% interest in Dathcom Mining for $20-million.
Proceeds from the raising will also be used to negotiate project financing, and assist to establish a working capital and contingency cost buffer during project development and to enhance AVZ’s limited early capital works programme before a final investment decision.
“Increasing AVZ’s equity stake to 75% of the Manono project adds significant value to AVZ’s shareholders, including the possible option to attract strategic cornerstone equity partners at the project level, which will assist to de-risk and potentially accelerate Manono’s development.
“The placement also assists our financing discussions, providing capital for up-front debt finance establishment costs, ensuring minimum liquidity requirements are met, while providing debt financiers with confidence from seeing a transaction to a larger, supportive, non-retail shareholder base, providing AVZ with a solid foundation from which to negotiate favourable terms.”
A definitive feasibility study into Manono 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 is expected to require a capital investment of some $545.5-million, which will include transport upgrades and the rehabilitation of the Mpiana Mwanga hydroelectric power plant, which would account for $41.85-million and $46.54-million worth of investment, respectively.