Lithium: AVZ Minerals builds sizable lithium resource in the DRC

AVZ Minerals recently announced a significant increase to the mineral resource of its 60%-owned Manono project in the Democratic Republic of Congo. Additional drilling has allowed the company to increase the size of its mineral resource by 57% (on a contained lithium basis). As shown by the accompanying chart, globally, the project now stands as the largest non-brine lithium resource by some margin. 

Furthermore, unlike some of its closest peers shown in the chart (such as Clayton Valley, Sonora and Thacker Pass, which will require integrated plants), Manono hosts traditional pegmatite mineralisation that can produce a spodumene-bearing concentrate for conventional conversion at existing refining facilities in China.

Roskill view:

Cases such as this highlight the pace at which the exploration sector is reacting to the rally in lithium prices since 2015; where a time-lag between price rise and new discoveries is common. The reason the price rise has been so significant in lithium is that it has made many of these mineral-based lithium deposits economically viable targets again; for much of the past few decades, refined lithium supply has been dominated by lower-cost production from brine deposits.

The increase in resource has also allowed AVZ Mineral to evaluate an expanded operating capacity at the Manono project. Scaling from the October 2018 scoping study (2.0Mtpa), an operation with a processing capacity of 10.0Mtpa (as suggested by AVZ) has the potential to produce over 300ktpa of LCE contained in concentrate, or broadly enough supply to meet all lithium demand in 2019. An expanded processing capacity will ultimately bring some cost saving to the project through economies of scale, however, in our view the project’s main hurdle remains its location and the costs involved with transporting its concentrate to market. Furthermore, in the near to medium-term as projects such as Greenbushes, Wodgina and Pilbara Minerals’ Pilgangoora ramp-up production, the market should have an ample supply of concentrate.

Largest non-brine lithium mineral resources

Largest non-brine lithium mineral resources (based on company disclosures as of end-November 2018). These estimates have been prepared under different estimation methods and reporting codes. Source: Roskill Lithium Cost Model Service/Roskill company reports.

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