AVZ toasts a ‘high-margin, long-life mining project’ from scoping study
Mining & Resources
Special Report: A scoping study has highlighted the exceptional economics of AVZ Minerals’ Manono Lithium Project in the Democratic Republic of Congo.
AVZ (ASX:AVZ) told investors today the project was the largest undeveloped hard rock lithium project globally in terms of “grade, mine life and expandability”.
The independent study was undertaken by CPC Project Design last month alongside independent economic model and financial analysis by Alan Dickson & Associates.
The study found that Case 1 of the Manono project (2 million tonnes per annum) would result in a net present value of $US1.6 billion, with an estimated internal rate of return of greater than approximately 90 per cent. AVZ’s 60 per cent share of the project is worth about $US960 million.
Given the tier-one nature of Manono in terms of size, quality and homogeneity of resource, AVZ is working quickly to bring a 4Mtpa and 10Mtpa study for release to the market.
AVZ will be particularly focused on leveraging economies of scale and optimisation of proposed expenditures in the 4Mtpa and 10Mtpa studies to further improve on the excellent results already contained in the 2Mtpa study.
NPV and IRR are metrics used to assess the profitability of a project and these are outstanding results.
AVZ Minerals Managing Director Nigel Ferguson was confident that project economics could be improved further, as the company fast-tracks a full feasibility study for release in the second quarter of 2019.
“Especially in the areas of transport, processing, power costs (by utilising a refurbished hydro plant at Piana Mwanga), and the recovery of tin as a by-product – which can add considerable value to the bottom line and has not been included in any financial modelling,” he said.
He also added that there would be additional financial benefits in pursuing the 5-year tax concession offered by the DRC Government for “projects of significance.”
“Given that Manono is seen as a catalyst for investment in Tanganyika Province by local and federal Government representatives, we believe that we are well placed to achieve success in this matter.”
And Manano won’t remain a 2mtpa operation for long, according to Mr Ferguson.
“It is the company’s intention to self-fund further expansions from retained earnings, with the intention to achieve a globally dominant position in the lithium market place,” he said.
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