PERTH (miningweekly.com) – ASX-listed AVZ Minerals has completed a A$75-million share placement to sophisticated investors, allowing the company to start early site works at its Manono lithium project, in the Democratic Republic of the Congo (DRC), ahead of the award of a mining licence.
The placement comprised 150-million new shares, at an issue price of 50c each, representing a 22% discount to the company’s closing price on December 7.
The placement was done under AVZ’s existing placement capacity, with 85% of the funds raised coming from new global institutions and the balance from existing sophisticated shareholders.
AVZ said on Friday that the placement was significantly oversubscribed and further confirmed the significant level of interest in the company’s world-class Manono lithium and tin project.
“This capital raising marks an important milestone in our journey to develop the Manono project which strengthens the financial position of the company and will assist to keep the project timeline within reach, despite the award of our mining licence taking longer than we had previously anticipated,” said AVZ MD Nigel Ferguson.
“We are in close consultation with the DRC government authorities that are undertaking the mining licence assessment and are confident of delivering a favourable outcome for all stakeholders, most importantly the people of the DRC and our shareholders.
“Such a significant cash injection further de-risks the company during a time where increased market volatility is apparent and global economic uncertainty still remains.
“The placement also assists our financing discussions, providing capital for up-front debt finance establishment costs and ensuring minimum liquidity requirements are met which provides AVZ with a solid foundation to negotiate favourable terms.
“We welcome our new shareholders and thank our existing shareholders for their continued support, in what is expected to be an exciting time in the development of this truly world-class asset,” Ferguson said.
AVZ will use the funds raised to negotiate the extra 15% equity in Manono from the government, to fund an early-works programme that will include upgrades to roads and bridges, progress on camp construction, to progress various technical studies and to negotiate the final project financing requirements.
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 $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.