Emerging Australian lithium producer AVZ Minerals (ASX:AVZ) has announced a 26 percent reduction in estimated transport costs for its Manono Project in the Democratic Republic of Congo, bolstering project economics for the world’s largest hard rock lithium resource.
The scoping study AVZ completed on Manono in October 2018 estimated that transport costs using the preferred route from the Project to the port of Dar es Salaam in Tanzania would be USD221 per tonne. This initial estimate meant transport was responsible for 62 percent of the project’s total operating costs.
AVZ flagged at the time that it expected to be able to reduce transport costs and after further investigation by its technical team, the Company announced in November that it had reducing its estimate by USD58 per tonne to USD163 per tonne.
Speaking on the news, AVZ Managing Director, Nigel Ferguson, said: “The Board is extremely pleased with the results of the updated scoping studies, demonstrating a significant reduction in costs associated with transporting product to port.”
“This further demonstrates the potential for excellent economic outcomes and again highlights the long-life, low-cost qualities of Manono and typical attributes of a world-class Tier 1 asset.”
The reduction in transport costs has significantly impacted the projected value and expected profitability of the Manono project.
Based on a two million tonnes per annum output scenario, the reduced transport costs would see the project’s pre-tax and pre-royalties net present value increased by approximately USD190 million to USD1.79 billion. The estimated internal rate of return is expected to be greater than 90 percent.
AVZ hopes to deliver further transport-related cost savings through negotiating volume discounts with transport providers, which would again have a positive impact on project economics.
Other opportunities to improve project economics include in the areas of processing and power costs. The Manono resource includes a tin component and if that can be recovered as a by-product, it should add considerable value, while AVZ has the option of utilising a refurbished hydro-power plant at Piana Mwanga that could deliver cheaper power.
AVZ continues to investigate all aspects of potential cost savings in order to deliver maximum value to shareholders.
Following a resource upgrade delivering in late November, Manono stands as the world’s largest undeveloped hard rock lithium project globally in terms of grade, mine life and expandability.
Read more about AVZ Minerals’ lithium deposit upgrade: The world’s largest hard rock lithium deposit just grew by more than 50 percent
This content is produced by Star Investing in commercial partnership with AVZ Minerals. This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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