WWW.RESOURCEGLOBALNETWORK.COM
MINING | Prospect Resources
Africa’s most advanc
PROSPECT
Resource Global Network
ced lithium project
RESOURCES
131
MINING | Prospect Resources
Prospect Resources’ flagship venture is the 87%-owned Arcadia Lithium Project in Zimbabwe, which has been progressed from first discoveries to an updated definitive feasibility study (DFS) in less than three years. The Arcadia deposit, located on the outskirts of capital city Harare, is comprised of low iron spodumene and ultra-low iron petalite ore, and is the 7th largest hard rock lithium project in the world after the ore reserve was recently increased by 39% to 37.4 million tonnes (Mt) at 1.22% lithium and 121 ppm tantalum. Driving the project forward is a strong management team with a wealth of experience in lithium project development in Africa. The internal team is also supported by tier 1 EPCM partner Lycopodium/ADP and a host of other specialist companies.
SEZ status
from tax relief and exemptions (including 0% corporate income tax for the first five years), the ability to hold and operate foreign currency accounts and exemptions from the requirement to obtain permits for the trading of goods in and out of Zimbabwe. “The financial and non-financial benefits to Prospect Resources in achieving SEZ status at Arcadia will greatly assist in the financing, development and operation of the mine,” said Prospect managing director Sam Hosack following the approval of the 10-year licence. After decades of decline under the previous regime, Zimbabwe is starting on the long road to economic recovery, with mining set to play a crucial role. In 2018 Zimbabwe’s mining sector contributed 60% of the country’s national exports and 13% of government revenue. The government is therefore acutely aware of the importance of the sector to the economy and has taken upmost care to attract foreign investors in the mining sector in recent years, as evidenced by its designation of a SEZ for the Arcadia project.
2019 was a year of consistent news flow
“Mining is fundamental to Zimbabwe’s
for ASX-listed Prospect, starting with the
economic recovery, so we feel we are in the
announcement that Special Economic
right sector and worked hard to obtain full
Zone (SEZ) status had been granted for
government backing. We maintain a very
the Arcadia project by the Zimbabwe
good relationship with the government and
government in February.
in particular the mining ministry.”
SEZ status at Arcadia provides Prospect with an extensive list of benefits ranging
TECHNICAL EXCELLENCE & SURETY IN DELIVERY
PRECIOUS METALS
BATTERY METALS
BASE METALS
INDUSTRIAL MINERALS
Lycopodium is an internationally recognised engineering and project delivery group servicing global mineral resource projects and associated mine infrastructure. Lycopodium’s capabilities extend worldwide and across project size, process complexity and commodity. Coupled with our reputation in precious and base metals, we have now grown to be a widely recognised services provider to the iron ore, battery metals and industrial minerals industries.
Our demonstrated commitment and proven ability to safely deliver projects on schedule and on budget, quickly ramping up to meet project performance targets, is the cornerstone of our success and repeat client base. Lycopodium has a diverse team of Industry experts spanning a network of global offices, delivering fit-forpurpose and innovative solutions across all commodity types. On time. On spec. On budget.
IRON ORE
E minerals@lycopodium.com P +61 8 6210 5222 www.lycopodium.com
MINING | Prospect Resources
Zimbabwe team, Prospect Resources
The petalite market
Throughout the first half of the year, the
In Q3 Prospect made a secondary listing
firm focused on enhancing its understanding
on the Frankfurt Stock Exchange, a move
of the petalite it will produce alongside
designed to gain greater exposure to the
spodumene at Arcadia, as well as the markets
European market for petalite products and
that consume the mineral.
sophisticated European investors seeking exposure to the battery and the automotive
During this period, Prospect identified a
sector.
unique opportunity to supply technical
Resource Global Network iron lithium concentrate producer in the global market, which has a long history of being supply constrained. “We anticipate Arcadia becoming one of only two mines in the world capable of producing ultra-low iron petalite and we expect to be the largest player in this natural oligopoly,” Hosack tells RGN. This newfound understanding of Arcadia’s high quality petalite ore led to a shift in commercial focus towards exposure to the European glass and ceramics market, which compelled Prospect to revisit its original DFS that was published in November 2018. The DFS was subsequently updated and published in December 2019, taking into account changes to the mine plan and design in order to maximise production of ultralow iron petalite, alongside the spodumene destined for the battery minerals markets. “We were able to integrate a stronger market-driven approach into our mine plan, changing the mine design scheduling and upgrading our JORC resource to reflect the ultra-low iron petalite content for the glass grade ultra-low iron petalite to the glass and ceramics market - the primary consumer of petalite products worldwide.
and ceramics market.”
An optimised DFS The December DFS for the 2.4 million tonnes
Prospect then announced that Arcadia’s
per annum (Mtpa) base case reinforced the
petalite product had passed the stringent
Arcadia project’s geological and financial
product specification requirements of the
merits, positioning Prospect as leading
glass and ceramics market in November and
lithium producer to both the chemical and
confirmed it would be the largest ultra-low
technical markets.
134
MINING | Prospect Resources
Improved financial outcomes from
While Prospect has chosen to focus on
the DFS included a 39% increase to
petalite production for the glass and ceramics
the pre-tax NPV10, which now stands
market in the short term, it maintains the
at US$710 million, average annual
view that the battery chemicals sector will be
EBITDA of $168 million for the first
a key driver of lithium demand growth in the
5 years of operation, a $162 million
long term.
capex estimate, $3.42 billion LOM revenue (excluding tantalum credits)
“We now have two target markets: the
and a pre-tax IRR of 71%.
mature glass and ceramics market in Europe and the emerging battery chemicals and
Meanwhile, the Arcadia mine life was
energy storage industries in China. We were
extended by three and a half years
able to leverage the mine plan to reflect
to 15.5 years, further increasing
these markets in the DFS,” says Hosack.
Arcadia’s exposure to long term demand from growing sections
“I think we are now identified as Africa’s
of the lithium battery industry,
leading lithium project. We believe that 2020
including the electric vehicle (EV)
and 2021 will be the major turning point in
sector.
the lithium demand cycle underpinned by growth in electric vehicle (EV) sales, with the
Resource Global Network
market moving into deficit. We think it will be
In December, the company announced
very beneficial to our shareholders to have
it had entered into a Memorandum of
maximum upside exposure to the EV story
Understanding (MoU) with leading energy
whilst benefitting from the security of the
group Uranium One Group, part of the
European glass and ceramics sector.”
Rosatom business. The MoU affords Uranium
Offtake ambitions
One a 90-day exclusivity period in which the companies can negotiate equity investment
Soon to be one of the largest and highest
terms and an offtake deal for at least 51% of
quality producers of ultra-low iron petalite,
Prospect’s future lithium production.
Prospect sees itself as a very strong contender for supply in the glass and
“The offtake discussions with Uranium One
ceramics market and has received a lot of
are progressing and we see them as being
interest from European customers already.
particularly determined to not miss an opportunity like this to secure the volumes
Commencing negotiations with potential
and quantity of product they seek to secure
future customers was another key focus for
for the strategic model,” declares Hosack.
Prospect in 2019, building on the offtake agreement signed in 2018 with Chinese lithium chemical converter Sinomine Resources Group.
136
MINING | Prospect Resources
Later in the month, Prospect announced the
significant experience financing projects
appointment of African Export-Import Bank
in Zimbabwe, so the securing of a project
(Afreximbank) to arrange and manage the
finance debt facility with the organisation was
primary syndication of a $143 million project
a major coup for Prospect and provides a
finance debt facility.
strong foundation for full project financing.
Afreximbank is one of the largest
“We worked diligently with Afreximbank to
development banks in Africa and holds
deliver this result which is a reinforcement
Resource Global Network
Africa’s most advanced lithium project After a year of substantial progress in the geological, technical and financial development of the fully permitted Arcadia project, Prospect has reached a crucial phase in the project’s life cycle. With an updated DFS to reflect Prospect’s dual focus on the glass and ceramics and battery chemicals markets and a clear pathway to funding laid out, this serves as the catalyst for Prospect’s globally significant Arcadia project. “I think our management has done an excellent job establishing a clear pathway towards financial close and from financial close to first production. We are an advanced development story having de-risked the project throughout 2019, and we have a clear plan to increase our offtake, progress our project finance and deliver our goals as the most advanced lithium project in Africa,” concludes Hosack.
and validation of the strategic importance of our asset, and its credentials as one of the top 10 lithium projects in the world.
ASX:PSC FRA:5E8
a j
Published by Anderson Murray Media Ltd
To tell the resource market your story, contact: editorial@resourceglobalnetwork.com
WWW.RESOURCEGLOBALNETWORK.COM