AVZ shares to delist along with $2.8 billion of shareholder wealth

This lithium developer is about to bid farewell to the ASX boards forever.

| More on:
A man packs up a box of belongings at his desk as he prepares to leave the office.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If you thought that today's market volatility was tough, spare a thought for owners of AVZ Minerals Ltd (ASX: AVZ) shares.

This lithium developer's shares have been suspended from trade for what seems to be an eternity due to an ownership dispute over its Manono Lithium Project in the Democratic Republic of the Congo (DRC).

In fact, next week on 11 May, it will be the second anniversary of its suspension.

That's two years that shareholders have not been able to touch the money they invested in the company.

And there sure is a lot of wealth tied up with AVZ shares. The company had a lofty market valuation of $2.8 billion in its final session before it was suspended.

To put that into context, that's greater than the current market capitalisations of Perpetual Ltd (ASX: PPT) and Nine Entertainment Co Holdings Ltd (ASX: NEC).

Unfortunately for those shareholders, it goes from bad to worse for them.

Goodbye AVZ Minerals shares

The Australian share market operator understandably doesn't appreciate lengthy suspensions. The share market is supposed to be liquid, after all.

So, its rules state that a company's shares will be delisted if they remain suspended for two years.

As a result, AVZ shares will be kicked off the ASX boards forever when that second anniversary is reached next week.

The lithium developer revealed that it will not fight the delisting and appeared to welcome it.

Why it won't fight the delisting

The company believes that delisting is actually in the best interests of its long-suffering shareholders. It said:

After careful consideration, the AVZ board has resolved not to seek reinstatement on the basis a reinstatement at this time would not be in the best interests of AVZ shareholders.

This is based on the following reasons:

The DRC Government's failure to comply with the interim orders made in the Company's favour by the International Center for Settlement of Investment Disputes (ICSID) tribunal on 16 January 2024.

Cominiere's failure to comply with the emergency orders made against it including the grant of emergency orders in the Company's favour by the International Court of Arbitration of the International Chamber of Commerce (ICC) tribunal on 5 May 2023 and on 15 November 2023 in ICC Case 27720.

The other key disputes to which the Company or a member of its corporate group is a party are ongoing; and operating as a listed entity gives rise to inherent complications for the Company as it seeks to advance its strategy for the resolution of the key disputes and the advancement of the development of the Manono Project.

What does this mean for its shares?

Once it is delisted AVZ Minerals will be an unlisted disclosing entity and will still be required to fulfil all the obligations of the Corporations Act. This includes continuous disclosure obligations. Those announcements will just be made via its website.

As for AVZ shares, they will still exist post-delisting. However, buying and selling them becomes more complex and will need to be undertaken by an off-market transfer via Automic.

In the meantime, AVZ will continue to seek a resolution to the disputes surrounding the Manono Project with the relevant stakeholders. It will also continue to defend its rights through international arbitration in the ICC and ICSID.

Overall, this demonstrates the dangers of investing in companies operating in countries that feature high on the corruption index.

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 recommended Nine Entertainment. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

Man in yellow hard hat looks through binoculars as man in white hard hat stands behind him and points.
Mergers & Acquisitions

BHP shares on watch after new $74b Anglo American takeover offer rejected

Is it third time lucky for the mining giant?

Read more »

Two miners standing together.
Materials Shares

Buy one, sell the other: Goldman's verdict on these 2 ASX lithium shares

The broker says lithium prices will not bottom until 2025. Here's what you should do in the meantime.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Materials Shares

Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Materials Shares

Why did this ASX All Ords stock just crash 24%?

What is weighing down this lithium stock today? Let's find out.

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Share Fallers

Why did the Core Lithium share price just crash 6%?

Investors are bidding down the Core Lithium share price today.

Read more »

Man with rocket wings which have flames coming out of them.
Materials Shares

Bell Potter says this speculative ASX stock could rise 200%+

This stock could more than triple in value according to the broker. But it is only suitable for high risk…

Read more »

Emotional euphoric young woman giving high five to male partner, celebrating family achievement, getting bank loan approval, or financial or investing success.
Share Gainers

Guess which ASX lithium share just leapt 13% on major financing news!

Investors are bidding up the ASX lithium share on the back of major financing news.

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Materials Shares

'Tip of the iceberg': Why this ASX lithium stock has exploded 200% in a week

What is getting investors excited this week? Let's find out.

Read more »