Ground Breakers: Chinese gold giant Zijin makes shock claim to 15pc of market darling AVZ’s Manono Lithium project
China’s biggest gold miner has made a spectacular claim to a share in one of the world’s largest lithium deposits in the Democratic Republic of the Congo, spooking investors of its ASX-listed majority owner.
Zijin Mining put out an English language statement yesterday claiming to have secured a deal for a 15% stake in the JV company which hosts the Manono lithium and tin project from Cominiere, a mining company 90% owned by the DRC State.
That is a headache for AVZ, which has long claimed to hold the rights to 75% of Manono.
One of the largest known lithium bearing pegmatites in the world, Manono’s Roche Dure deposit contains measured, indicated and inferred resources of 401Mt at 1.65% lithium oxide with significant tin and tantalum credits.
Its ore reserves clock in at 131.7Mt of ore at a grade of 1.63% Li2O, making it one of the world’s true lithium monsters.
That would support a mega project of 29.5 years of mining at a world class rate of 700,000t of spodumene a year, production needed to fill a massive supply shortage for the battery metal which has hit record high prices this year as electric vehicle sales have soared.
But concerns about its location in the DRC have always tempered optimism about its future.
Zijin, which owns the 200,000ozpa Norton Gold Fields gold mining operations near Kalgoorlie in Western Australia, claims its subsidiary Jincheng Mining worked on a deal with Cominiere between July and September last year.
It also claims to have been locked in legal disputes with AVZ since November and that Dathomir Mining SARL — another firm which had held 15% of Manono’s holding company Dathcom — had withdrawn plans to sell its stake to AVZ.
With AVZ planning to sell a 24% stake to battery maker Suzhou CATH Energy Technologies, Zijin claims its share of the project could fall to as low as 36%.
It is understood AVZ claims to have a pre-emptive right to the 15% Zijin says it was sold by Cominiere, with the other 10% owned by Cominiere to be transferred to the Congolese Government.
Claims AVZ’s equity in the project were being disputed in the DRC legal system were first revealed by subscription based African business publication Africa Intelligence in late April.
The first comment AVZ made about the disputes came at the bottom of an announcement on ministerial decree of the mining licence award to Dathcom last week, a key step towards the development of the $545 million Manono mine.
In that press release AVZ described the Jin Cheng and Dathomir matters as “spurious and immaterial”.
“In relation to the Cominiere Transfer Claim, the Company notes any such purported transfer would be restricted under the terms of the existing shareholders agreement between the Dathcom shareholders and accordingly, any purported transfer of the 15% interest to a third party would be a material breach of the pre-emptive rights contained in the existing Shareholders Agreement owed to AVZI, invalid and of no force or effect,” the company said in the May 4 statement.
Zijin claims Dathomir still holds “good legal title” to its 15% interest in Dathcom, though AVZ said that claim had been brought to a tribunal in the DRC “vexatiously and without merit” and that neither AVZ nor AVZ International had been a party to the claim.
AVZ further said the tribunal decision was “the subject of a request on 1 February 2022 by the DRC Minister of Justice, that the DRC General Inspectorate of Judicial and Penitentiary Services, examine the case and that, pending the examination, nothing be done on the case.”
While western mining companies have operated in Africa and the DRC for several years, the Zijin media statement will do little to stem fears from within the investment community about the jurisdictional risk involved in operating in Africa and the grip Chinese business interests have on the continent.
That was highlighted in the iron ore sphere last year when Australia’s Sundance Resources took a range of legal actions against the Congolese (the other Congo) and Cameroonian Governments after its rights to the Mbalam-Nabeba iron ore deposit were expropriated.
Sundance’s former partner, the Australian based but Chinese backed AustSino Resources Group, was subsequently revealed to be part of an MoU to develop the mine, with Sundance recently being granted pre-action discovery for a potential suit against AustSino by WA’s Supreme Court.
AVZ remains in a trading halt it entered in Monday ‘pending the release of an announcement in relation to its mining and exploration rights for the Manono Lithium and Tin Project.’
The $2.75 billion capped company was one of the ASX’s class of lithium market darlings as prices for the hot battery commodity surged late last year and early this year, and entered the benchmark ASX 200 index in March.
Its shares have risen from 387% over the past year from just 16c to 78c, but have fallen almost 58% since hitting an all time closing high on April 4.
AVZ has been contacted for comment.