AVZ Minerals Limited

ABN 81 125 176 703

Interim Financial Report

31 December 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: +61 8 6117 9397

Facsimile: +61 8 6118 2106

Share Registry

Automic Registry Services

Level 5, 191 St George's Terrace

Perth WA 6000

Telephone: 1300 288 664 (within Australia)

: +61 8 9698 5414

Email: hello@automicgroup.com.au

Auditor

Hall Chadwick WA Audit Pty Ltd

283 Rokeby Road

Subiaco WA 6008

Telephone: +61 8 9226 0666

Securities Exchange Listing

Australian Securities Exchange

(Home Exchange: Perth, Western Australia)

Code: AVZ

OTCQX Best Market - OTC Markets Group

Code: AVZZVF

Website Address

www.avzminerals.com.au

AVZ Minerals Limited | 2

Contents

Directors' Report

4

Auditor's Independence Declaration

13

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 14

Condensed Consolidated Statement of Financial Position

15

Condensed Consolidated Statement of Changes in Equity

16

Condensed Consolidated Statement of Cash Flows

17

Notes to the Consolidated Financial Statements

18

Directors' Declaration

27

Independent Auditor's Report

28

Directors' Report

____________________________________________________________________________

The directors present their report on the consolidated entity consisting of AVZ Minerals Limited ('AVZ') and the entities it controlled ('the consolidated entity' or the 'Group') at the end of, or during the half-year ended 31 December 2021.

Directors

The following persons were directors of AVZ Minerals Limited during the half-year (or as disclosed) and up to the date of this report:

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

Review of Operations

Manono Lithium and Tin Project ("Manono Project"), Democratic Republic of the Congo ("DRC")

Highlights:

  • Signed Suzhou CATH Energy Technologies ("CATH") as a cornerstone investor to co-develop the Manono Project;
  • Completed a total of A$115 million in capital raisings (before costs);
  • Increased direct interest in the Manono Project from 60% to 75% by exercising options to acquire Dathomir's 15% shareholding in Dathcom Mining;
  • Progressed discussions with potential financiers for the balance of development capital required for the Manono Project;
  • Upgraded Manono 2012 JORC Proved and Probable Ore Reserves Estimate to 131.7Mt - an increase of 41.6% from the 93Mt reported in the April 2020 DFS;
  • Extended Life of Mine to 29.5 years based on a 4.5 Mtpa operation (underpinned by the Ore Reserves)
    - an increase of 47.5% from the April 2020 DFS;
  • Actively engaged with the DRC Government authorities regarding award of the Permis d'Exploitation ("Mining Licence"), as well as Collaboration Development Agreement, Mpiana Mwanga Hydro Electric Power Plant ("HEPP") Agreement and Manono Special Economic Zone ("MSEZ") Agreement;
  • Completed Primary Lithium Sulphate reagent optimisation study and awarded Lithium Hydroxide Pre- Feasibility Study;
  • Completed Front End Engineering Design ("FEED"), process plant design and site geotechnical investigation studies;
  • Drilling confirmed further high-grade lithium and tin mineralisation at Carriere de l'Este deposit, approximately 1.2km long and open at both ends and down-dip; and
  • Agreed to join new DRC Battery Council to develop sustainable battery value chain in DRC and Africa.

AVZ Minerals Limited | 4

Directors' Report

____________________________________________________________________________

Overview

A raft of milestone achievements during the first half of the 2022 financial year has AVZ poised to progress development of the Manono Project in the 2022 calendar year.

Securing a cornerstone investor deal with Suzhou CATH Energy Technologies ("CATH"), completing two share placements for a total of A$115 million (before costs) and increasing AVZ's equity interest in the Manono Project from 60% to 75% were just some of the funding highlights achieved during the July-December 2021 period.

The Company upgraded its JORC Ore Reserves Estimates at Roche Dure which resulted in an extension of its Life of Mine to 29.5 years based on a 4.5 Mtpa operation. This increase was based on new drilling from the pit floor.

In addition, resource drilling of four new, widely spaced 'step-out holes at the nearby Carriere de l'Este deposit confirmed further high-grade lithium and tin mineralisation directly beneath thin soil and laterite cover. This work confirmed the presence of sub-cropping spodumene mineralisation at Carriere de l'Este up to 1.2 kilometres long at average widths of 200 metres in places, confirming the deposit as a likely rival to Roche Dure.

Against a backdrop of ongoing impacts caused by the global COVID-19 pandemic, AVZ remained actively engaged with the DRC Government authorities undertaking the awarding of the Permis d'Exploitation ("Mining Licence"). As at the date of this report, the Company remains confident of securing a positive outcome with respect to all licencing and permitting agreements for the Manono Project.

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

At an industry level, AVZ was honoured and excited to be the only aspiring mining company to be invited to join the DRC's newly formed Battery Council, which was one of the key outcomes that emerged from a DRC-Africa Business Forum held in late November 2021.

The DRC and Africa are strategically positioned to play a pivotal role in the global transition to clean energy and decarbonisation and the Manono Project will greatly assist to improve the fortunes of the Congolese people, of which AVZ Minerals is very supportive.

The newly formed DRC Battery Council - to be presided over by His Excellency, Chief of State, Mr. Félix Antoine Tshisekedi Tshilombo, President of the DRC and the Executive Secretary for the United Nations Economic Commission for Africa - will be a public-private partnership charged with supporting the DRC Government in ensuring the roadmap and outcomes from the forum are implemented. This will involve implementing a battery value chain that is transformative, sustainable, innovative, socially and environmentally responsible whilst remaining economically viable.

The honour of being invited by the DRC Government to be a member of the newly formed DRC Battery Council is an incredibly significant development for the Company, pending the award of its Mining Licence, Collaboration Development Agreement, Mpiana Mwanga Hydro-Electric Power Plant ("HEPP") Agreement and Manono Special Economic Zone ("MSEZ").

Further information on sub-sections of the Manono Project is provided below:

Cornerstone Investor to develop Manono Project

In late September 2021, AVZ announced its wholly owned subsidiary, AVZ International Pty Ltd ("AVZI") had entered into a Transaction Implementation Agreement ("TIA") with CATH to co-develop the Manono Project.

CATH is a private investment entity jointly owned by Mr. Pei Zhenhua and Contemporary Amperex Technology Co. Limited ("CATL"), who both have significant influence in the global lithium conversion and lithium-ion battery industry.

AVZ Minerals Limited | 5

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AVZ Minerals Limited published this content on 18 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 March 2022 01:00:06 UTC.