The AVZ Minerals Ltd (ASX: AVZ) share price hit a 52-week low of 3.7 cents today and is now down around 80% over the past year as the company’s cashflows start to disappoint its shareholders.
AVZ Minerals sold speculators a story about the potential of its Manono lithium project in the Congo, although it is still miles off the production stage and burning through shareholder cash.
In fact for the quarter ending December 31 2018 AVZ posted no revenue and an operating cash loss of $5.63 million to leave it with cash on hand of just $931,000.
Unsurprisingly, it has since sought to raise up to $5 million in capital from retail share owners, although even that amount is not going to go far given it spent more just over the last quarter.
It’s no surprise then that the share price is languishing at 3.7 cents as other capital sources such as bank debt are not a realistic option for mining companies at the costly exploration stage with no revenue let alone profit.
It boasts that it controls the ASX’s “largest lithium resource” but it seems even the speculative end of the market has woken up to the cash flow problems now.
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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.