Why is AVZ Minerals (ASX:AVZ) in news today?

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Why is AVZ Minerals (ASX:AVZ) in news today?

AVZ Minerals Limited (ASX:AVZ)
Image source: © Josepalbert13 | Megapixl.com

Highlights

  • AVZ Minerals’ shares have been put on hold today as it is likely to make an announcement regarding its flagship project, Manono Lithium.
  • The stock will resume trading on the ASX from 11 May 2022, as per the ASX announcement made today.
  • DRC Minister of Mines has signed the ministerial decree to award the Mining Licence for the Manono Lithium and Tin Project to Dathcom Mining SA.

Mineral exploration company, AVZ Minerals Limited (ASX:AVZ) announced a trading halt today (9 May 2022), before the market opened.

AVZ informed on Monday that the trading halt was requested because of a pending announcement related to exploration rights for the Manono Lithium and Tin Project.

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What can be the reason behind the AVZ trading halt?

Image source: © Elvector | Megapixl.com

Manono Project is a mine located in the Democratic Republic of Congo (DRC) and jointly owned by La Congolaise d’Exploitation Minière SA (Cominire) and AVZ. AVZ holds 75% interest in the mine and the right to get additional interest. The project is known for hosting lithium pegmatites and is centred on a Tin mining operation.

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The trading halt can be linked to the previous week's ASX-announcement. The company informed that the DRC Minister of Mines has awarded a mining licence to Dathcom Mining SA for the Manono Lithium and Tin Project.

To officially award the mining licence, the Cadaster Minier (CAMI) is required to ascertain the surface rights fees to be paid by Dathcom and after the receipt of payment, the mining licence will be granted officially.

In the ASX-announcement, the managing director of AVZ mentioned that the 'official award of the Mining Licence from CAMI expected in a matter of days.

Will the mining licence change the ownership of AVZ in Dathcom?

As per the joint venture agreement between Cominiere and AVZ for Dathcom (AVZ holds 75% interest and Cominiere has 25%), after officially receiving the mining licence, the 10% ownership of Cominiere will be transferred to the DRC government. Reportedly, a wholly owned subsidiary of AVZ, AVZ International Pty Ltd (AVZI), is in advanced discussion with the DRC government to buy 15% interest in Dathcom. As per the Dathcom Shareholder agreement, AVZI can do so.

As per the release shared by the company on 4 May 2022, AVZI is progressing with the sale of 24% interest in the project to Suzhou CATH Energy Technology, which might be completed by this month. With the successful sales of 24% interest in the project, AVZ will be left with 51% interest in Manono Project. 

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