Hot Stock Watch: AVZ Minerals Gets Lucky But Questions Raised Over Partner

AVZ Minerals (ASX: AVZ) has confirmed the discovery of the world’s largest lithium resource but worrying new details about its business partner have emerged.

The Australian miner told investors on August 2nd that certified drilling results for the Manono field in the Democratic Republic of Congo (DRC) showed it contained at least 4.25 million tonnes of lithium oxide.

The discovery comes as demand for lithium, a key raw material in electric vehicle and smartphone batteries, is soaring. However, a report in Business Insider has revealed that AVZ’s involvement in the Manono lithium project has put it into partnership with some mysterious allies.

AVZ was initially focused on exploration in Namibia but that changed in February 2017 when it announced the purchase of a 60% stake in Dathcom Mining, a DRC-based company that owns the Manono mining license.

Dathcom had only held the Manono license for six weeks when AVZ got involved. The licence was previously owned by another company but it was revoked by the DRC Government in mid-2016.

At the time of the deal, Dathcom was owned 30% by Cominiere, the DRC state-owned miner, and 70% by Dathomir Mining Resource. Following the AVZ acquisition, AVZ owns 60% of Dathcom while Dathomir owns 10% and Cominiere retains its 30%.

In return for selling its Dathcom stake, Dathomir was given shares in AVZ equivalent to 13.9% of the Australian company. But who is Dathomir?

According to Business Insider’s investigation, the company is 80% owned by Dathomir International, which is based in the Seychelles. The Seychelles is a tax haven that has limited transparency requirements so Dathomir International’s owners are currently unknown.

What little information that does exist shows that Dathomir International’s first director was Edmond Lecourt, a controversial Monaco-based financier. Lecourt runs a corporate services firm called Getad and media reports have claimed that one of his clients is Boris Rotenberg, a Russian oligarch who is a close friend of Vladimir Putin. Rotenberg reportedly bought two properties in France using Getad to allegedly hide his involvement.

The other 20% of Dathomir International is owned by the Winner Group, which is run by a Kinshasa-based lawyer Guy Loando. He is well known in the DRC mining industry and has reportedly been involved in facilitating numerous mining deals in the country.

The uncertainty surrounding who AVZ is working with in the DRC comes despite assurances from the company that it would do its due diligence into Dathomir. It is not known whether this diligence was completed or whether AVZ knows who owns Dathomir.

The stakes are high for AVZ because the Manono discovery has the potential to transform the company. Demand for lithium is expected to increase by about 42% over the next couple of years and by 74% over four years.

The importance of lithium to battery technology has resulted in a rush to lock up supply of the raw material and China now controls more than 50 per cent of global production. AVZ has attracted Chinese interest with Huayou Cobalt acquiring a 10.4% stake in August 2017.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.