THE BOURSE WHISPERER: AVZ Minerals (ASX: AVZ) has executed a Share Sale Purchase Agreement with Dathomir Mining Resources SARL that will result in an increase to the former’s equity in the Manono lithium and tin project in the Democratic Republic of Congo (DRC).
AVZ Minerals said it has been in discussions with Dathomir over the past few months, from which Dathomir has agreed to sell a five per cent equity share in Dathcom Mining SAS to AVZ for a total consideration of US$5.5 million.
Dathcom currently holds 100 per cent of the Manono lithium and tin project concession.
AVZ explained the terms of this purchase agreement represent a highly accretive transaction for AVZ shareholders with minimal upfront payment.
The first tranche payment of US$500,000 is to be paid within 14 days of execution and the balance of the consideration can be paid at any time within a period of 36 months from execution of the agreement.
At the completion of the transaction, AVZ’s equity interest in the project licence will increase to 65 per cent, representing an NPV value added, based on the recent 5 million tonnes per annum Scoping Study of some US$130 million to approximately US$1.68 billion for AVZ’s 65 per cent equity interest (based on ±35% accuracy and including US$78M in capital contingency).
The deal will need to pass an Extraordinary General Meeting of Dathcom to be convened in late July or early August to approve the sale of additional equity within Dathcom to AVZ.
“AVZ is pleased to be able to secure further equity interest in the Manono lithium and tin project, given its Tier 1 status,” AVZ Minerals managing director Nigel Ferguson said in the company’s announcement to the Australian Securities Exchange.
“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 offtakers.”