The mineral exploration company AVZ Minerals (ASX: AVZ) came out of a trade freeze this morning and announced its first off-take agreement for its Manono project in the Democratic Republic of the Congo (DRC).
AVZ has entered into a long-term purchasing partnership with GFL International, a subsidiary of Ganfeng Lithium, China’s largest manufacturer of lithium compounds.
In a statement to the market, AVZ stated that it had concluded a purchase agreement with GFL for spodumene concentrate for an initial term of 5 years, including an option to extend it for a further 5 years.
The minerals company’s executive director, Nigel Ferguson, said one of the key highlights of the deal was Ganfeng’s commitment to purchase 30% of the Manono project’s salable annual tonnage and described the deal as a « massive confirmation » of the project.
The 5-year purchase contract announced today provides for an annual supply of 160 from 2023. 000 dry tons of spodumene concentrate with a content of 6%.
With regard to pricing, the two parties have agreed that prices will be set according to a formula related to the pricing of lithium carbonate and lithium hydroxide, with quality adjusted accordingly and including a « scaled collar pricing mechanism ». .
If the term is extended by another 5 years, a review of the price formula can be triggered with reference to agreed market parameters, said AVZ.
It is important that the agreement stipulates that both parties focus on environmental, social and governance (ESG) development.
As Small Caps reported in October, AVZ resumed drilling diamond geological resources on its Manono lithium tin project in the Democratic Republic of the Congo after officials lifted travel restrictions the month before.
In the same month, AVZ began drilling the bottom of the Roche Dure pit with a total of 10 new geological drill holes on 1. 700 m.
AVZ now owns 75% of Manono while the Democratic Republic of the Congo government owns a 25% stake. In September this year, AVZ decided to increase its stake in the project to 75% by buying a 10% stake from a Congolese company for USD 15. 5 million (20 AUD). 1 million).
Ganfeng is a leading global manufacturer of battery materials that is further expanding its production capacity for lithium carbonate and lithium hydroxide.
The company is the third largest and China’s largest producer of lithium compounds in 2017 and the world’s largest producer of lithium metals in terms of production capacity.
« We are very excited to close these discussions with GFL and to sign our first lithium on-off agreement, » said Ferguson.
« The fact that we signed our first off-take agreement with China’s largest lithium compound manufacturer only confirms our belief that the Manono project is world class, » he said.
With the acceptance contract that has now been signed and the commissioning of production, AVL is already looking ahead.
« I look forward to finalizing additional off-take agreements in the coming months that are currently being negotiated, not just for our lithium products, but also for our tin and tantalum materials, » said Ferguson.
« This SC6 on-off agreement with GFL will also greatly assist the company in meeting any precedents required for our potential financiers, » he added.
AVZ Minerals, ASX: AVZ, Jiangxi Ganfeng Lithium Co. . ,GmbH.
World news – AU – AVZ Minerals signs first 5-year supply agreement with Ganfeng Lithium
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