AVZ Minerals is raising $15 million to fund its aggressive exploration push at its promising Manono lithium project in the Democratic Republic of Congo.

AVZ’s chairman Klaus Eckhof has described Manono as hosting one of the “longest pegmatite intercepts ever reported”. Pegmatites are rocks formed from lava or magma that are the primary source of lithium.

However, the company (ASX:AVZ) is looking for support from a North American institutional investor, and Australian investors don’t seem too pleased.

The shares fell as much as 13.3 per cent to an intra-day low of 26c shortly after market open on Monday, before recovering to 27c for a market value of about $539 million.

AVZ has witnessed massive growth in the past year, with shares soaring as much as 1750 per cent to a 52-week high of 37c in mid-January.

The placement to a client of Cantor Fitzgerald Canada Corporation will comprise the issue of 60 million shares at 25 cents per share, along with 30 million options exercisable at 30.5 cents within two years.

This will give the investor a 3.2 per cent stake in AVZ.

AVZ shares over the past year.
AVZ shares over the past year.

The company will use the cash for its 20,000m phase two drilling and pre-feasibility programs at the Manono project.

AVZ revealed earlier in February that it had unearthed 295.05m of pegmatite — its best result yet — in the first phase of drilling at the project.

“We are committed to an aggressive work schedule to advance development of Manono as quickly as possible and are cognisant of high volatility in international markets,” chairman Klaus Eckhof told investors.

“We have now secured funding for our planned exploration and pre-feasibility programs through to the end of the year.”

Phase one drilling and a maiden resource are slated for completion in mid-Q2. Phase two drilling will be aimed at increasing the confidence of the initial resource.

AVZ has been contacted for further comment.