Why is the AVZ share price halted today?

A person holds a stop sign in front of their head

A person holds a stop sign in front of their headThe AVZ Minerals Ltd (ASX: AVZ) share price won’t be going anywhere on Monday.

This morning the lithium developer requested a trading halt prior to the market open.

Why is the AVZ share price halted?

This morning the AVZ share price was placed in a trading halt until the earlier of Wednesday or the release of an announcement. The company’s request states:

AVZ Minerals Limited requests that a trading halt be placed on the Company’s securities effective immediately, pending the release of an announcement in relation to it’s (sic) mining and exploration rights for the Manono Lithium and Tin Project.

What does this mean?

Judging by the request, it appears as though AVZ intends to address concerns about its ownership of the Manono Lithium and Tin Project in the Democratic Republic of the Congo.

Last week, the company announced that its 75%-owned Dathcom Mining SA business has received a mining licence for the Manono Lithium and Tin Project. The remaining 25% of Dathcom is currently owned by La Congolaise D’Exploitation Miniere SA (Cominiere).

Following the granting of the mining licence, Cominiere will cede 10% of its interest to the Democratic Republic of the Congo Government, with AVZ believing it has the rights to acquire the other 15%.

However, Cominiere has decided to transfer this 15% interest to China’s Jin Cheng Mining Company, preventing AVZ from acquiring the stake. AVZ doesn’t believe this is lawful and intends to fight the claim.

In addition, AVZ has previously signed away a 24% stake in Dathcom to Suzhou CATH Energy Technologies in exchange for a US$240 million investment to develop the Manono Project. This deal has not been finalised and remains subject to a final investment decision, among other items.

This means that AVZ could potentially end up owning as little as 51% of the project if things don’t go its way.

All in all, this has created significant uncertainty for investors and explains why the AVZ share price was sold off last week.

All eyes, therefore, will be on AVZ shares when the company releases its announcement in the coming days.

The post Why is the AVZ share price halted today? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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