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AVZ Minerals (ASX:AVZ) - Managing Director, Nigel Ferguson - The Market Herald
Managing Director, Nigel Ferguson
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  • AVZ Minerals (AVZ) has executed its second offtake agreement with a major Chinese lithium player
  • Under the three-year deal, global battery metals producer Shenzhen Chengxin Lithium Group agreed to purchase up to 180,000 tonnes of spodumene concentrate every year from the explorer
  • The arrangement represents AVZ's second pathway into the Asian market after it secured its first offtake agreement with a separate company in China in December last year
  • The arrangement is set to come into place once production has started and is said to include mutually agreed options to extend if desired
  • AVZ is up 7.5 per cent following the announcement, trading at 21.5 cents per share

AVZ Minerals (AVZ) has executed its second offtake agreement with a major Chinese lithium converter.

The new deal is with Chinese lithium converter Shenzhen Chengxin Lithium Group, a global battery materials producer focused on expanding its lithium hydroxide capacity.

This announcement marks the second of AVZ's agreements in the Asian market after the explorer secured its first arrangement with a separate China-based company in December last year.

Under the three-year arrangement, Chengxin has agreed to purchase up to 180,000 tonnes of spodumene concentrate (SC6) every year from AVZ's Manono Lithium and Tin Projects.

The arrangement is set to come into place once production has started and is said to include mutually agreed options to extend if desired.

According to AVZ, Chengxin is set to become one of the largest lithium hydroxide producers in China and is tipped to require approximately 560,000 tonnes of SC6 per annum to satisfy its internal demand should its expansions go as planned.

AVZ’s Managing Director, Nigel Ferguson, said he was pleased to have concluded the deal.

"This agreement takes offtake commitments to more than 50 per cent of the Manono Project’s initial saleable SC6 production, which is a massive endorsement for our project," he commented.

There has been no explicit mention of pricing arrangements, however, the formula will be determined by references to various published market prices of lithium carbonate and lithium hydroxide products.

An agreed undisclosed floor price will underpin the arrangement.

AVZ is up 7.5 per cent following the announcement, trading at 21.5 cents per share at 10:31 am AEDT.

AVZ by the numbers
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