AVZ’s Share Price Falls after Increased Stake in Manono Project

Today, AVZ Minerals Ltd [ASX:AVZ] announced its Share Sale Purchase Agreement with Dathomir Mining Resources SARL to increase their equity stake in the Manono Lithium and Tin Project.

At the time of writing, AVZ’s share price is trading at $0.056, down 1.82%.

Upon opening, shares of the lithium mining company were turbulent, pushing as high as $0.059 before falling.

For a while now lithium has been in the spotlight as the next up-and-coming element for many investors…

But here at Money Morning, we think it’s wise not to hedge your bets all at once. And with global battery markets only set to keep increasing, it could be time you look into something other than lithium.

Related: ‘This Could Make the Lithium Bonanza Look Tiny’. Find out what resource it is here, for fee.

What to know about AVZ’s purchase agreement

Dathomir is selling a 5% equity share in Dathcom Mining SAS to AVZ, at US$550,000. The company currently holds 100% of the Manono Lithium and Tin Project concession.

AVZ’s managing director, Nigel Ferguson, commented on the status of Manono project:

AVZ is pleased to be able to secure further equity interest in the Manono Lithium and Tin Project, given its Tier 1 status. We are still in discussion with our main partner, La Congolaise D’Exploitation Miniere (“Cominiere”) to secure additional equity from them on similar terms. Cominiere, as with all parastatal entities in the DRC, are currently under a “suspension of signature authority” following the Presidential elections.

It is hoped that this will soon be lifted and a positive outcome to purchase further equity in the project, as discussed to date with Cominiere, can soon be achieved for AVZ. The extra equity in the Manono Lithium and Tin project will add significantly to the bottom line and Net Present Values and it is critical for project financing as AVZ continues discussions with potential financiers and off-takers.

AVZ’s execution of the Share Sale Purchase Agreement gives shareholders a meaningful transaction, paired with minimal upfront payment.

There will be a tranche payment of US$500,000 to be paid within 14 days, and the balance of consideration can be paid any time within 36 months from the execution of the agreement, as stated in today’s announcement.

Following the completion of the transaction, AVZ’s equity interest will grow to approximately 65%, from its previous 60%.

AVZ’s share price outlook for 2019

Over the last six months, AVZ’s shares have been a little haywire, as the company secures further agreements with potential partners, in a bid to secure long-term growth.

However, some are concerned that the lithium miner’s deal with Dathomir isn’t all it seems. But on the other hand, a 65% holding could be a sign that the company has plans to commence drilling at the project.

Meanwhile, shareholders are hoping that AVZ holds the 65% retention of the Manono Project, and that Mr Ferguson’s next move isn’t to dilute shares.

More to come.

Regards,

Ryan Clarkson-Ledward,
For Money Morning

PS: If this has piqued your interest, check out our free report: ‘How Lithium Could Potentially Be the Biggest Resource Opportunity in Decades’. Click here to learn more. 


Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

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