Why Did AVZ Minerals Stock Rise on ASX Today?
AVZ Minerals is a Perth-based company focused on mineral exploration. The key project of the company is the Manono Lithium and Tin Project which is in the Democratic Republic of Congo in Africa.
AVZ project is one of the largest lithium-rich lithium, caesium, and tantalum deposits in the world. The firm owns a 75% interest in the project as well as 100% of the extension project in the surrounding area.
AVZ conducted an evaluation programme at the Manono project during 2017 and 2018. The company reports that the Manono pegmatites extend around 13 kilometres in length and are more than 240 metres thick in parts.
Announced recently, AVZ Minerals plans to initially produce 700,000 tonnes every year of spodumene concentrate. Furthermore, the company expects to produce 46,000 tonnes per annum of lithium sulphate from its Manono project in the Democratic Republic of Congo.
The early site works at AVS’s African lithium-tin project will now go ahead after the firm raised $75 million from global institutions and a private Chinese investment company. The proceeds of the raising will allow early site works to begin whilst AVZ waits for the awarding of a mining licence from the DRC government.
About 85% of the latest raising came from global institutions, whilst the balance was subscribed by sophisticated shareholders, including the cornerstone investor Suzhou CATH Energy Technologies.
The issue was significantly oversubscribed which attest to a strong level of interest from investors in the company’s world-class Manono lithium and tin project.
The placement comprises 150 million new shares at 50 cents per unit.
This latest development set AVZ ahead of its competition. Hence, the company will use this money to raise its equity holding in Manono to 90%. Moreover, this working capital will accelerate early works including upgrades of roads, bridges, along with the camp construction.
AVZ will also be progressing various technical studies, negotiating final project financing, and looking for new exploration opportunities.
Since the last twelve months, AVZ minerals has tremendously outperformed its peers. The company saw its share gain more than 300% year-to-date and nearly 600% in the last trailing twelve months. In comparison, three of its major competitors, Pilbara (PLS), European Metals (EMH), and Lithium Australia (LIT), returned 262%. 74%, and 41%, respectively.
On Monday session, AVZ ended the day after a solid upside momentum of 17.8%. As of the time of writing, AVZ is trading at 69.5 cents per share. AVZ Minerals shares have started the week in a very positive fashion. In early trade on Monday, the lithium explorer’s shares are outperforming the market materially.
The catalyst for the rise in the AVZ shares comes out of news of MV Index Solutions and VanEck. MV Index Solutions has decided to add AVZ to its Strategic Metals Index at the December quarterly rebalance.
This has the potential to be good news for AVZ Minerals for a few reasons. The popular index will give exposure to the company. This index covers one of the hottest industries right now. And also, any ETFs that are tracking the index will need to buy shares to reflect these changes. This adds to buying pressure and can be a boost to AVZ share prices.