The man who spearheaded AVZ Minerals’ ill-fated acquisition of a world-class Congolese lithium project is back, and buying ground next door.
Would you risk investing in another AVZ?
Klaus Eckhof – the man who spearheaded AVZ Minerals’ (ASX:AVZ) Manono lithium project acquisition in 2017 – is acquiring ground next door via his new company, AJN Resources.
Former market darling AVZ is now a cautionary tale of the dangers of developing projects in the Third World, after its trials at Manono, in the Democratic Republic of the Congo.
The first sign of trouble came April last year, when AVZ shares plummeted 57.6 per cent in a matter of weeks from a record $1.33.
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The former ASX 200 company was then suspended at 78c in May after it was revealed China’s Zijin Mining had laid claim to a 15 per cent share of the Manono project, which AVZ said it had the right to buy from Congolese State mining company Cominiere.
Separately, one of the JV partners Dathomir, off which AVZ claimed to have bought a 15 per cent stake, reportedly pulled out of the deal, something AVZ said it was not able to do.
The upshot is this: Zijin claims that AVZ’s stake in Manono, after a planned 24 per cent sale to Chinese battery manufacturer CATH, will come to just 36 per cent, not the 66 per cent AVZ thought it would have.
The project and its stakeholders have been tied up in ongoing arbitration/legal proceedings since then.
But AZL was once an emerging lithium behemoth thanks to the world-class Manono project, which contains the biggest and second-highest grade undeveloped deposit in the world – 401Mt (132Mt reserves) at (1.65 per cent).
MORE FROM STOCKHEAD: May’s top ASX miners and explorers | Aussies chase Canadian lithium | PGM sector at crossroads
Monstrous. No wonder everyone wants a piece.
Now Eckhof’s CSE-listed AJN Resources is a neighbour.
The CSE, or Canadian Securities Exchange, is an alternative to the TSXV for microcaps and emerging companies.
The ground is about 7km northeast of the northern extension of the Manono pegmatites and 15km northeast of Manono centre.
AJN reckons the 13km-long Manono peggie swarm continues under cover into its new ground.
Field work is expected to commence within the coming weeks.
“We are extremely excited about this latest acquisition which potentially covers 10km of highly prospective ground with good potential to host lithium bearing pegmatites under surficial cover,” Eckhof says.
“Historically, mining and exploration was concentrated on the exposed spodumene bearing pegmatites around Manono which cover a strike length of approximately 13km and little focus was placed on following the extension of these pegmatites under cover to the northeast.”
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Interesting fact: current AVZ MD Nige Ferguson was a director at AJN until mid 2022, which is about the time all that drama for AVZ kicked off.
AJN will give $50,000 to vendor Palm to conduct six months of due diligence.
“If it decides to go ahead with the deal, AJN can acquire a 51 per cent indirect interest for $250,000 and a 10.5 per cent company stake.
AJN can acquire another 19 per cent for $5.25 million cash and 4 million shares.
How did the TSX/TSX.V perform last week?
S&P/TSX Composite Index eked out a small 0.48 per cent win, giving it a 2.99 per cent year-to-date gain.
Unlike the TSX.V, the index – which measures the overall health of the bourse – is heavily weighted towards the major banks.
The S&P/TSX Global Mining Index did a lot better, up 2.65 per cent last week to claw back a chunk of those YTD losses (currently just 2.33 per cent).
The S&P/TSX Venture Composite Index – repped heavily by big lithium project developers like Sigma Lithium, Standard Lithium and Patriot Battery Metals (ASX:PMT) — was up 0.66 per cent over the past five days.
That leaves it with a 7.39 per cent year-to-date gain.
TSX and TSX.V winners & losers
On the TSX and TSX.V last week, 367 resources stocks went up, 431 went down, and 337 didn’t move.
A better week for the big boys of the TSX, with uranium major Cameco (TSX:CCO) adding another 8 per cent, Robert Friedland’s copper play Ivanhoe Mines (TSX:IVN) putting on 4 per cent, and Teck Resources (TSX:TECK) adding 12 per cent.
Ivanhoe is scheduled to release production results for the month of May from the world class Kamoa-Kakula copper complex in the DRC today.
Multicommodity behemoth Teck is exposed to movements in the coal (24-26Mt), copper (390-445,000tpa), and zinc (645-685,000tpa) price.
It made $930 million adjusted profit in Q1.
The company has $2.3 billion in the bank, and liquidity of $8 billion. It returned $321 million to shareholders through dividends in Q1 2023.
This content first appeared on stockhead.com.au
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