AVZ share price rockets 19% on 'watershed moment'

AVZ shares were rocketing this morning…

| More on:
Man with rocket wings which have flames coming out of them.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • AVZ has been granted a mining licence for the Manono Project
  • If all goes to plan, production will commence during late 2023
  • A legal wrangle appears to be offsetting some of this news

The AVZ Minerals Ltd (ASX: AVZ) share price rocketed out of the gates this morning.

In early trade, the lithium explorer's shares were up 19% to $1.18.

The AVZ Minerals share price has since pulled back but remains up 6.5% to $1.06.

Why did the AVZ share price rocket higher?

Investors were bidding the AVZ share price higher this morning after the lithium explorer provided an update on the Manono Lithium and Tin Project in the Democratic Republic of the Congo.

According to the release, the Minister of Mines has awarded a mining licence to AVZ's 75% owned Dathcom Mining SA business for the flagship Manono Project.

The mining licence will cover the entirety of the Roche Dure mineral resource (401 million tonnes at Li20 1.65%) and the Carriere de l'Este exploration target. It does, however, exclude a portion of the land holding to the north. AVZ intends to have discussions with the government in the near future regarding this land.

The company is now advancing its early works program ahead of a final investment decision to commence major works and first production toward the later months of 2023.

"A watershed moment"

AVZ's Managing Director, Nigel Ferguson, was pleased with the news. He said:

"The receipt of the Ministerial Decree to award the Mining Licence is leading to a watershed moment for AVZ and our partners, with the official award of the Mining Licence from CAMI expected in a matter of days.

This paves the way for AVZ to start developing what is arguably one of the most important new mining projects in the world that will significantly contribute to the global green energy transition, while also uplifting the lives of the Congolese people who will contribute and receive sustained benefits from the Project for many decades to come."

Legal wrangle

Taking some of the shine off the update was news that AVZ has been caught up in a legal wrangle.

This is in respect to a claim that La Congolaise D'Exploitation Miniere SA has transferred a 15% interest in Dathcom to Jin Cheng Mining Company.

It commented:

"In relation to the Cominiere Transfer Claim, the Company notes any such purported transfer would be restricted under the terms of the existing shareholders agreement between the Dathcom shareholders and accordingly, any purported transfer of the 15% interest to a third party would be a material breach of the pre-emptive rights contained in the existing Shareholders Agreement owed to AVZI, invalid and of no force or effect.

The Company has considered each of the Dathomir Claim and Cominiere Transfer Claim in detail and believes them to each be spurious in nature, without merit, contain fundamental and material errors, and have no substance or foundation in fact or law. The Company is continuing to take all necessary actions to resist these vexatious and meritless claims and to protect Dathcom's and its interests, and the Company will consider all options including engaging with the DRC Government and seeking international law remedies."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

More on Resources Shares

Three miners stand together at a mine site studying documents with equipment in the background
Resources Shares

Up 46% since June, should you still buy Pilbara Minerals shares right now?

A leading expert offers his verdict on Pilbara Minerals' resurgent share price.

Read more »

Female miner smiling at a mine site.
Resources Shares

Up 60% this year, this ASX 200 mining stock just smashed production records

Production surge headlines quarterly results.

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Resources Shares

After lifting its price target, Macquarie now expects 36% upside from this ASX mining stock

The precious metals producer released better-than-expected production guidance.

Read more »

A miner in a hardhat and high visibility clothing makes a thumbs up symbol.
Resources Shares

4 reasons to buy Rio Tinto shares today

A leading expert forecasts strong growth potential for Rio Tinto shares.

Read more »

Man with rocket wings which have flames coming out of them.
Resources Shares

Why Macquarie expects this ASX All Ords copper stock could surge 38%

With costs coming in below expectations, this ASX All Ords copper stock could rocket higher over the coming months.

Read more »

Iron ore price Vale dam collapse ASX shares iron ore, iron ore australia, iron ore price, commodity price,
Resources Shares

Major miners up as China announces new mega project

Can a new mega-dam absorb iron ore oversupply?

Read more »

A young man sits at his desk with a laptop and documents with a gas heater visible behind him as though he is considering the information in front of him. about the BHP share price
Broker Notes

Leading broker has just downgraded BHP shares. Is it time to sell?

Macquarie sees little upside. But why?

Read more »

A young woman wearing a blue blouse with white polkadots holds her phone up with an intrigued and happy look on her face as she reads some news.
Resources Shares

3 reasons why the BHP share price could be a buy

Here are my optimistic thoughts on BHP.

Read more »