AVZ Minerals Limited (ASX: AVZ, 'the Company') is pleased to provide the following report on its activities for the Quarter ended 31 December 2020.

AVZ Managing Director, Mr. Nigel Ferguson said: 'The Company made significant progress into its 'road to production' for the Manono Lithium and Tin Project ('Manono Project').

'Our most significant milestone in the December quarter came just prior to Christmas when we signed our first lithium offtake agreement with GFL International, a subsidiary of China's largest lithium compound producer, Ganfeng Lithium.'

'The fact that GFL has agreed to take 30% of our Manono Project's initial SC6 yearly tonnage is a massive endorsement for the project as we continue negotiations with other off-takers for our lithium and tin materials.'

'I look forward to updating our shareholders and the market once these offtake agreements are finalised.'

'In terms of the project's funding arrangements, we have made significant progress during the last few months around securing project debt financing.'

'We have also attracted several interested industry participants and private equity investors around our equity component of the required funding, with those discussions still ongoing.'

'At an operational level, we advanced our licensing, permitting and environmental approvals for the Manono Project, as well as undertaking all of the necessary engineering and technical work that is required prior to the Board making its investment decision to mine by mid-2021.'

'We then look forward to awarding contracts for the construction of our process plants and hydro-electric power plant in Q2/21 in line with FID, with first shipment of Spodumene Concentrate (S6) scheduled for Q4/22.'

First Lithium SC6 Offtake Agreement

The Company signed its first lithium offtake agreement with GFL International Co. Limited (GFL), a subsidiary of Ganfeng Lithium Co Ltd, for an initial five-year term and with an option to extend for a further five years for SC6 from the Manono Project. Under the terms of the GFL offtake agreement, annual supply will ramp up to 160,000 dry metric tonnes of spodumene concentrate from year three onwards. GFL is a leading global battery metals producer that is continuing to expand both its lithium carbonate and lithium hydroxide production capacity.

Financing negotiations

Significant progress was achieved in the latter half of 2020 to secure the required project debt financing to fund the major proportion of the Manono Project's, pre-production capital expenditure. Discussions were held with several major commercial and non-commercial banks with many of the parties being granted access to the project data room. The most interest is currently being shown by the Pan African Development Finance Institutions (DFIs), which is understandable due to the project's central African location. The Company has received expressions of interest from a number of these DFIs and discussions are continuing with these and other financiers. Securing the equity funding of the pre-production capital expenditure funding has attracted several interested industry participants and private equity investors, with discussions also ongoing.

Pit floor drilling

During the quarter the Company commenced a 10-hole, 1700m diamond core drilling program around the Roche Dire pit floor 'wedge' with a view to increasing the potential to upgrade additional Inferred Resources to Indicated Resources.

As previously stated, the updated global geological Resource is not expected to increase, but the current combined Indicated and Measured Resource tonnage is expected to increase prorata. Once the 'wedge' material directly under the pit floor is drilled and assay results returned, it is expected that some of this previously classified 'waste rock' may then report as 'mineable ore'

This new data will allow the existing mine design to be re-run and optimised. The re-run of the mine design will also allow for plant design optimisation studies to also be completed and incorporated into the new modelling.

Manono Special Economic Zone (MSEZ)

A significant milestone occurred in late October when AVZ sponsored a two-day workshop attended by key Congolese Government agencies, AVZ staff and legal counsel to progress planning around the creation of the MSEZ. The workshop was attended by senior Government officials from the offices of the Minister for Industry, the Minister for Finance, the Minister of Economy, the National Agency for Industrial Promotion, the Ministry of Environment, the Minister for Mines and the Minister for Hydraulic Resources and Electricity.

Corporate

During the quarter, the Company received $1,728,000 from the exercise of 25 million options at 6 cents each and 4 million options at 5.7 cents each respectively.

Major cash outflow during the December Quarter included: $2.930M on early works, hydrogeological and geological drilling and other operating costs for the Manono Project. $0.331M on payroll, administration and corporate costs (including $0.268 M to directors and related entities in relation to non-executive directors' fees, Managing Director and Technical Director fees, paid in accordance with employment and consultancy agreements).

During the quarter, 3,000,000 Performance Rights have expired.

This release was authorised by Mr. Nigel Ferguson, Managing Director of AVZ Minerals Limited.

Contact:

Tel: +61 8 6117 9397

Email: admin@avzminerals.com.au

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