The world-class Manono lithium mine has recently attracted a lot of attention. The Congolese state and the population of Tanganyika Province are eagerly awaiting its development. However, as we all know, the mine has remained in desolate territory since the establishment of the joint venture Dathcom in 2016. So what is the reason?
Dathcom’s shareholder register (RCCM) clearly shows the capital structure: Avz International 60%, Cominiere (Portfolio Company) 10%, Dathomir 15%, Jincheng 15%.
Reminder: in June 2022, a one-hour investigative video filmed by Congolese independent journalist Mills TSHIBANGU showed that there was no development at the Manono mine, the roads were still dilapidated, vehicles could not pass, and numerous trucks were blocked for up to three months. The life of the people is hard and drinking water is not guaranteed.
There is no doubt that Avz International, a subsidiary of Australia’s Avz Minerals Ltd, is the major shareholder in the joint venture Dathcom. According to the Joint Venture Agreement, Avz made many promises such as the development of the mine and the construction of infrastructure, but things have backfired. Avz is now invested to answer the following questions:
- Avz has announced since the beginning of 2021 that it is about to obtain the Mining License on behalf of Dathcom. It even gave the promise, during the October 2022 roadshows and the annual shareholders meeting on November 7, that it would obtain the Mining License at the end of November without fail. Promise broken to date, was Avz misleading shareholders and investors? For the status quo that Dathcom is currently operating without the license, are the managing director and management of Avz responsible?
- From 2016 to today, why has the Manono Mine not been developed for six years? Is it a lack of financial capacity or technical capacity to develop the mine? Can Avz demonstrate that it now has the financial, technical, human and experience capacity to develop a world-class mine?
- Cominiere, a public shareholder, alleges that the 60% share transaction between Avz and Dathomir in 2016 didn’t respect its pre-emptive rights so it was an illegal and irregular transaction. Can Avz prove that this transaction fully respected Cominiere’s pre-emptive rights and passed the approval of the shareholders’ meeting and the board of directors of Dathcom Mining SAS? If it cannot prove, Avz will lose its status as a shareholder of Dathcom and how will Avz respond to its shareholders and unit holders?
- In August 2022, when exercising the pre-emptive rights, Avz proposed an offer of $ 15 million to the shareholder representing the DRC State, in exchange for 15% of Dathcom shares held by Cominiere ($ 1 million per share). On the other hand, it announced the sale of 24% of Dathcom shares to CATH, however the price was $ 240 million ($ 10 million per share). Is this kind of share resale behavior a disregard for the DRC government? Was the pre-emptive rights of the other shareholders respected? Did the general meeting of shareholders approve it?
- Cominiere holds the license to own the Mpiana Mwanga hydroelectric power plant, the concession registration numbers are PC1335, PC1336, PC1337 which validity period is from May 27, 2016 to May 26, 2041. In this case, how is Avz Power, a non-shareholder of Dathcom, bypassing everyone to sign an MOU with the Ministry of Water Resources and Electricity for this hydroelectric plant? Can the full text of the MOU be made public? Cominiere invited Avz Minerals in August 2022 to participate in the tender for the hydroelectric plant rehabilitation project, so why hasn’t Avz responded or submitted a bid? Is it because Avz does not have the funds or the technology to rehabilitate the hydroelectric plant?
- The concession for the rehabilitation of the Mpiana Mwanga hydropower plant was awarded to another company through a competitive bidding process, so the feasibility study done by Avz, without the basic energy project, became illegal and incomplete. Avz publicly acknowledged the loss of the Mpiana Mwanga hydropower plant during roadshows in October 2022. Does Avz have an energy assurance plan for the mine development? How will Avz correct this illegal feasibility study?
- It is reported that under the Dathcom Joint Venture Agreement, the public shareholder Cominiere has the right to review the feasibility study. Cominiere has repeatedly sent letters to the Ministry of Mines and CAMI (Mining Cadastre), making it clear that the feasibility study prepared and announced by Avz was seriously overdue for submission and was not approved by them, so how did Avz persuade the Ministry of Mines to pass the feasibility study and sign a decree for PE13359? Is there fraud against the DRC government? Cominiere has the right to terminate the Joint Venture Agreement and take back the mining rights, so how will Avz respond?
- Mr. Graem Johnson Godsman, the Avz-appointed managing director of Dathcom, is also technical director and director of Avz Minerals. In 2022, he was sentenced by the Congolese court to three years in prison and a fine of $ 50 million for falsifying the shareholder register of Dathcom to prove that Avz owns 75%. The Congolese court has stated in two rulings that Avz only owns 60% of the shares, so why did Avz hide this from the shareholders and the stock exchange? Was this a deliberate deception?
- In 2016 and 2017, the price of lithium carbonate exceeded $ 20,000 per ton. Avz delayed the development of the Manono mine, claiming to have invested $ 75 million, but there was no evidence of large-scale exploration at the Manono site. Where is the company spending its money? Can it give a good explanation to shareholders and investors?
- Avz has publicly responded that it has paid the « Key Clause Fee » stipulated in the Dathcom Joint Venture Agreement. However, this agreement includes the « Pas de porte » (Entry Fee) required by the Code Minier (Mining Law) and the « Bonus de signature » (Signature Fee) agreed by all the parties. Which did Avz pay? The « Entry Fee » equivalent to 1% of the value of the deposit, if it is not paid, and 10% of the shares are not transferred to the State, has it attempted by fraudulent means to obtain the Ministry of Mines’ decree on PE 13359?
- Avz failed to disclose its disputes with Dathomir and Jincheng in a timely manner, during which time Avz’s share price rose six times before being suspended. Avz’s announcements indicated that it had initiated international arbitrations with Dathomir and Jincheng, which by convention usually takes two years. Under the rules of the Australian Securities Exchange (ASX), an 18-month suspension would result in delisting. Avz has now been suspended for 8 months and will be automatically delisted if it does not resume operations within 10 months. Will Avz be able to resume trading by November 2023? What is Avz’s explanation for the potential losses to shareholders and unitholders?
- Former Avz Chairman and former Dathcom Managing Director, Klaus Peter Eckhof, is currently Chairman and Managing Director of AJN Ressource, a 3.69% shareholder, and also Managing Director of TTX. Avz’s current Managing Director, Nigel Munro Ferguson, is also the second largest shareholder with a 9.65% stake in AJN. Avz relinquished a part of PR13359 in May 2022 and then AJN announced in November that it would acquire that part, exactly the same size. Could it be that Avz has an apparent conflict of interest with AJN and TTX, but in fact Klaus Eckhof and Nigel Ferguson have turned corporate interests into personal interests? How does Avz explain the alleged insider trading between Avz and AJN Resource?
- CATL is shareholder of CATH, while Yibin Tianyi Lithium, a subsidiary of CATL, is the largest shareholder of AVZ. Therefore, is the sale of Avz’s 24% stake in Dathcom to CATH a related insider transaction to speculate on Avz’s share price?
The Manono mine, a world-class lithium mine, must be developed and operated to create great value. Is Avz’s real intention to develop the mine or to use it to collect investments and speculate on the share price? Avz is asked not to disappoint the confidence of shareholders and investors, to face the demands of the Congolese people, and to answer the above questions immediately! ASX and ASIC are requested to conduct an investigation to safeguard the right to know of shareholders and investors.