AVZ Minerals : Annual Report

AVZ Minerals Limited

Annual Report

30 June 2021

Corporate Directory

Directors	John Clarke (Non-Executive Chairman)
	Nigel Ferguson (Managing Director)
	Graeme Johnston (Technical Director)
	Rhett Brans (Non-Executive Director)
	Peter Huljich (Non-Executive Director)
Chief Financial Officer	Jan de Jager
Joint Company Secretaries	Jan de Jager
	Benjamin Cohen
Principal Place of Business & Registered Office	Level 2, 8 Colin Street
	West Perth WA 6005
	Telephone: [phone]
	Facsimile: [phone]
Share Registry	Automic Registry Services
	Level 2, 267 St George's Terrace
	Perth WA 6000
	T: 1300 288 664 (within Australia)
	[phone] (outside Australia)
	E: [e-mail]
Auditors	Hall Chadwick WA Audit Pty Ltd1
	283 Rokeby Road
	Subiaco WA 6008
	Telephone: [phone]
Securities Exchange Listing	Australian Securities Exchange
	(Home branch: Perth, Western Australia)
	ASX Code: AVZ
Website Address	www.avzminerals.com.au

1 Formerly Bentleys Audit & Corporate WA Pty Ltd

Contents

Review of Operations	4
Directors' Report	15
Auditor's Independence Declaration	29
Financial Statements	30
Consolidated Statement of Profit or Loss and Other Comprehensive Income	31
Consolidated Statement of Financial Position	32
Consolidated Statement of Changes in Equity	33
Consolidated Statement of Cash Flows	34
Notes to the Consolidated Financial Statements	35
Directors' Declaration	65
Independent Auditor's Report	66
ASX Additional Information	72

Chairman's letter to Shareholders

The 2021 financial year has been incredibly successful for AVZ Minerals.

We eagerly await the granting of a Mining Licence for our flagship Manono Lithium and Tin Project ("Manono Project") by the Government of the Democratic Republic of Congo (DRC), as well as the execution of our Collaboration Development Agreement and Manono Special Economic Zone Agreement.

The granting of our Mining Licence for the Manono Project will be a significant catalyst to finalise further binding finance agreements and, ultimately, a Final Investment Decision ("FID") by your Board of Directors.

To reach this point has required a massive amount of hard work and strategic execution from your Company.

On behalf of all shareholders, I want to congratulate our senior executive team led by Managing Director Nigel Ferguson and thank him and all our staff and consultants working in Australia, the DRC and other parts of the globe for their outstanding efforts.

As Steve Jobs once said: "Great things in business are never done by one person; they're done a by a team of people."

AVZ Minerals has a great team of people!

Dr John Clarke

Non-Executive Chairman

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Managing Director's letter to Shareholders

"An independent greenhouse gas assessment shows the Manono Project could have one of the lowest carbon footprints of any global hard rock lithium miner."

ASX Announcement, January 2021

Dear Shareholders

The level of work undertaken and the achievements delivered during the 2021 Financial Year have brought our flagship Manono Lithium and Tin Project ("Manono Project") substantially closer to being a leading global producer of lithium products.

AVZ secured the rights to an additional 15% equity in the Manono Project - taking our total interest to 75% on completion - and we also secured long-term, binding sales agreements with three major Chinese lithium converters for 80% of its saleable 6% Li2O spodumene concentrate, as well as a significant three-year binding offtake agreement with a major participant in the tin market.

Significant metallurgical work throughout the 2021 Financial Year also resulted in an upgrade of the JORC Proved and Probable Ore Reserves estimate for the Manono Project to 131.7Mt - an increase of 41.6% from the 93Mt reported in the April 2020 Definitive Feasibility Study (DFS). The average lithium grade increased by 3.1% from 1.58% to 1.63% Li2O while the tin grade of 990ppm remained the same but reported a 41% increase in contained tin metal to 130.3kt. The project's Life of Mine extended to 29.5 years based on a 4.5Mtpa mining rate of the Ore Reserves - an increase of 47.5% from its April 2020 DFS.

Importantly, during the last 12 months our senior management team in the DRC has continued positive engagement with the Government of the DRC and I look forward to updating our shareholders on the granting of the Mining Licence for the Manono Project, as well as the execution of our Collaboration Development Agreement, Mpiana Mwanga Hydro-Electric Power Plant ("HEPP") Agreement and Manono Special Economic Zone ("MSEZ") Agreement.

During FY21, project financing discussions continued to advance positively with potential debt financiers and equity investors. In late September 2021, the project secured a major cornerstone investor and we are now in a strong position to finalise our total required project funding. We are very pleased to have signed a deal with Mr. Pei Zhenhua of Suzhou CATH Energy Technologies (and related parties) who will invest US$240 million for a 24% interest in the project and contribute their pro rata portion of funding for development capital, providing over 50% of the total project capital required for the Manono Project.

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