The AVZ Minerals Ltd (ASX:AVZ) share price is pushing higher again on Tuesday following its second announcement in as many days…
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At the time of writing, the lithium focused mineral exploration company’s shares are up 5% to 22 cents.
What did AVZ announce?
This morning AVZ announced that it has secured a strategic, long-term offtake partner agreement with Yibin Tianyi Lithium Industry Co.
According to the release, the binding agreement is for the supply of spodumene concentrate (SC6) from the Manono Lithium and Tin Project in the Democratic Republic of Congo.
Yibin Tianyi is a leading global battery materials producer. It is continuing to expand its lithium hydroxide production capacity as a key participant in the supply chain of Contemporary Amperex Technology (CATL), the world’s largest lithium-ion battery maker.
The battery materials producer has agreed to purchase up to 200,000 metric tonnes per annum of SC6 for an initial three-year term following the commencement of production. It also includes an option to extend the agreement for an additional two years. Pricing will be determined by a formula which references various published market prices of lithium carbonate and lithium hydroxide products. It will also be underpinned by an agreed floor price.
This agreement means that more than 80% of the projected annual SC6 production from the Manono Project is now committed under long-term binding offtake agreements. Management notes that this satisfies an important condition precedent for prospective Project financiers.
AVZ’s Managing Director, Nigel Ferguson, said: “We are very pleased to conclude our discussions with Yibin Tianyi and to sign another binding offtake agreement for SC6 to a Chinese converter.”
“This agreement takes our SC6 binding offtake commitments to more than 80% of the Project’s annual SC6 production, which is a massive endorsement for the Manono Project and one that satisfies an important condition precedent for our prospective project financiers.”
Mr Ferguson also notes that SC6 prices are rising, which he feels bodes well for the upcoming Optimised Definitive Feasibility Study.
He explained: “At present, we are seeing buoyant market conditions with reported SC6 prices in China increasing circa 30% in the first quarter of the year while during the same time the LME cash tin price has surged circa 30% boding well for the Manono Project’s Optimised Definitive Feasibility Study which is due for completion next quarter.”
“Positive market sentiment is greatly assisting our negotiations and while we are not compelled to commit to further forward sales, we are continuing to explore strategic opportunities for our offtakes in both traditional and emerging lithium markets including Europe, US and India,” he concluded.
The AVZ Minerals share price is now up ~30% since the start of the year.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.