AVZ Minerals (ASX:AVZ) has secured a commitment to raise $13.02 million from a subsidiary of Huayou Cobalt, the largest cobalt chemicals producer in China, via the issue of shares at $0.07 each.
The company is planning to use the funds for the drilling and the initial metallurgical testwork programs at the Manono lithium project in the Democratic Republic of Congo (DRC).
In addition, AVZ is also raising a further $1.98 million from institutional and sophisticated investors via the issue shares at $0.07 each.
The Manono Project is currently held by AVZ Minerals (60%), a DRC State-owned enterprise (30%) and Dathomir Mining Resources SARL (10%).
The project contains “LCT” or lithium-caesium-tantalum pegmatites which are well known for hosting significant amounts of lithium.
AVZ intends to embark on a diamond and reverse circulation drilling program commencing in the third quarter, with the objective of defining a resource by early 2018.
Huayou Cobalt or Zhejiang Huayou Cobalt Co., Ltd. is a Chinese company listed on the Shanghai stock exchange, with a market capitalisation of circa US$5.8 billion.
Huayou will acquire an 11% interest in AVZ by investing $13.02 million.
The Chinese company owns and operates a number of copper and cobalt mines in the DRC, exporting concentrates back to its processing and refining facilities in China.
The company’s proven track record in operating in the DRC, and in developing and financing mines, is expected to bring the Manono Project into production on the fastest possible timeline.
AVZ’s shares have surged by circa 140% during the last one month, closing at $0.092 on Thursday.