The AVZ Minerals Ltd (ASX: AVZ) share price was scheduled to return from a trading halt this morning.
However, that won't be the case after the lithium developer requested the suspension of its shares.
Image source: Getty Images
What's going on with the AVZ share price?
AVZ shares have been suspended for a further nine days at the company's request this morning while it sorts out an ownership dispute.
AVZ's request states:
The voluntary suspension is requested in connection with the finalisation and release of an announcement in relation to its mining and exploration rights for the Manono Lithium and Tin Project. The Company anticipates that it will be able to make an announcement on this matter by commencement of trading on Friday, 20 May 2022.
What does this relate to?
This matter relates to the Dathcom Mining SA business.
It is the business that has been granted a mining license for the Manono Lithium and Tin Project. At present, AVZ owns a 75% stake and La Congolaise D'Exploitation Miniere SA (Cominiere) owns the remaining 25% stake.
Though, in exchange for a US$240 million investment to fund the development of the project, AVZ is about to sign over a 24% stake to Suzhou CATH Energy Technologies. In addition, Cominiere will shortly cede 10% of its interest to the Democratic Republic of the Congo Government.
This leaves AVZ with a 51% stake and Cominiere with a 15% stake.
AVZ believes it now has the rights to acquire Cominiere's remaining 15% stake, which would bump its overall share of the project back to 66%. However, Cominiere has thrown a spanner into the works by selling it to a third-party – Jin Cheng Mining Company.
This brings us to today. In a separate announcement, the company revealed that Jin Cheng is taking legal action to secure the disputed stake.
AVZ commented:
[AVZ] has received a request for arbitration and related correspondence regarding the proposed commencement of arbitration proceedings by Jin Cheng Mining Company Limited (Jin Cheng) before the International Chamber of Commerce in Paris (ICC) to pursue claims by Jin Cheng to be recognised as a shareholder of Dathcom Mining SA (Dathcom).
As previously disclosed to ASX on 4 May 2021, any purported transfer of the 15% interest to Jin Cheng would be a material breach of the pre-emptive rights contained in the existing Dathcom Shareholders Agreement, invalid and of no force or effect. The Company is considering the request for arbitration and related correspondence and will continue to take all necessary actions to resist Jin Cheng's vexatious and meritless claims and to protect Dathcom's and its interests.
Jin Cheng clearly believes it has a strong shout for the stake, but time will tell if the court sees it the same way.
