Why is the AVZ share price halted today?

AVZ shares are halted on Monday. Here's why…

James Mickleboro

Author Bio James Mickleboro is an investment writer and analyst who has worked with The Motley Fool Australia for 10 years, covering ASX shares, market news, broker research, dividends, growth stocks, and long-term investing ideas. Over that time, James has written extensively about Australian equities and developed a particular focus on helping everyday investors understand the stories behind share price moves, company announcements, broker views, and broader market trends. His best investment recommendation was identifying Afterpay while it was still a small-cap growth share, before its rise into one of Australia’s biggest technology success stories. His worst investment lesson came from CSL Ltd (ASX: CSL), where he was burnt by believing management could turn the business around sooner than the market ultimately allowed. Areas of Expertise ASX shares Growth and dividend investing Broker research Interpreting company announcements Market news Portfolio strategy Long-term wealth creation Education Bachelor of Politics, Philosophy and Economics. CFA Institute Social Media LinkedIn Favorite Investment Quote "It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price." — Warren Buffett

Published May 9, 2022 10:55 am AEST

The 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.

A person holds a stop sign in front of their head — Images source: Getty Images

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.

Automatic Renewal

By taking up this offer, you will also be enrolled in our auto-renewal program, which is our way of making your ongoing subscription easier by ensuring uninterrupted service. Don't worry, though – you're not locked in, and can cancel your auto-renewal at any time before each 'anniversary' date without question or penalty.