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Unit of Russian energy giant in talks for stake in Zimbabwe’s lithium project, could buy bulk of output

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Unit of Russian energy giant in talks for stake in Zimbabwe’s lithium project, could buy bulk of output

Australian lithium developer Prospect Resources has signed a memorandum of understanding with Uranium One, the Canada-based unit of Russia’s Rosatom, that could see the miner take up a stake in Prospect and buy over half of the lithium from Arcadia mine.

The Uranium One announcement was made concurrently with the release of an updated definitive feasibility study, which showed improved economics for Arcadia, which is being developed near Goromonzi.

Under the MoU, Uranium One will be granted an exclusive 90-day period to complete due diligence, leading to negotiations for equity in Prospect and at least 51% of Prospect’s future lithium production from Arcadia.

“The discussions with Uranium One are incomplete and ongoing and there is no guarantee that the MoU or any discussions with Uranium One will result in a formal binding agreement or proposal or as to the timing or terms on which any transactions may proceed,” Prospect said in a notice release on the Australian Stock Exchange on Thursday.

The notice does not disclose how much of Prospect Uranium One could acquire. Prior to the ASX announcement, Prospect had a market value of US$18 million.

Lithium prospects

Prospect has, since 2018, made moves to secure markets for its future lithium output. In 2018, it signed an offtake agreement with Shenzhen-listed Sinomine, who agreed to buy 30% of Arcadia’s annual production over seven years.

Sinomine bought equity in Prospect for US$10 million and put down a further US$10 million in advance for Arcadia’s lithium concentrates. In May 2019, Sinomine announced it had started construction of a 15,000tpa battery grade lithium hydroxide plant.

Should an offtake agreement with Uranium One happen, Prospect would begin production with a guaranteed market for at least 80% of its output.

Prospect is aiming to become Africa’s first lithium producer. Because of the expected different types of lithium at Arcadia – spodumene, petalite and tantalite concentrates – Prospect has three potential product streams targeted at the electric vehicle (EV) and energy storage markets, the glass and ceramic markets and other industrial applications.

Prospect Resources Australia@ProspectResLtd

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The prices of lithium are forecast to rise over the next five years. The 50% drop in prices over the past year has presented investors with the gateway to buy stock in producers, including the likes of Prospect.

Lithium survey

In a separate notice, Prospect a new definitive feasibility study extended the estimated mine life to 15.5 years from 12 years. Output over that period is expected at 173,000 tonnes per year of spodumene concentrate, 122,000 t/yr of petalite concentrate and 173,000 lbs/yr of tantalite concentrate grading 25% tantalite pentoxide.

Capital expenditure for the project has been reduced by 2% to US$162 million, while the pre-tax net present value has risen by 39% to US$710 million. The project’s payback period has been reduced by 12 months to 18 months.

Life of mine operating costs vary from US$268 per tonnes for spodumene concentrate to US$458/t for ultra-low iron petalite concentrate.

Arcadia was recently granted special development status by the government, which allow the company some tax breaks. The project was also given a five-year exemption from paying export tax on unprocessed lithium. The company also reached a power supply agreement to account for worsening power cuts.

Prospect estimates that the project’s implementation phase will take 18 months once funding has been finalised, with a further five months for commissioning.

Uranium One

Uranium One has globally diversified portfolio of assets located in the United States, where it has sites in Arizona, Colorado and Utah,and also has operations in Tanzania and Kazakhstan. It is majority-owned by JSC Atomredmetzoloto, or ARMZ, the mining arm of Rosatom, the Russian energy agency.

Rosatom, which has been scaling up its African interests, has plans to double revenue from its overseas business from US$6.6 billion in 2018 to US$15 billion by 2024_NewZWire

Prospect Resources gets 5-year tax break on lithium exports

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Prospect Resources gets 5-year tax break on lithium exports

Zimbabwe will exempt Prospect Resources from paying a levy on unprocessed lithium from its planned Arcadia Mine for five years, which will cut the costs of developing the project, the company says.

Prospect plans to start development at Arcadia Mine in 2020, and the company says this new concession will slash operating costs and increase profitability.

“The development of beneficiation facilities requires time for feasibility studies, mobilisation of resources and construction. In this regard, The Zimbabwean Treasury has approved the exemption from the export tax of un-beneficiated lithium originating from a new mine for a period of five years from the date of commencement of mining operations,” the company said.

In February, Prospect Resources was awarded special economic zone (SEZ) status for Arcadia, which grants the project generous tax breaks and other concessions.

“This is further confirmation that the Government of Zimbabwe is supportive of Arcadia and is focused on attracting foreign investment into the country. This incentive will materially lift Arcadia’s project economics and will accelerate payback of project finance,” Prospect Managing Director Sam Hosack said.

“Our previously announced DFS and updates have all applied a 5% tax on un-beneficiated lithium to products sold. Removing the 5% tax for the first 5 years of production will reduce operating costs per tonne, increase profitability and lift the projects Net Present Value (NPV). Further details will be provided in due course.”

Arcadia prospects

In November, a new survey showed that the ore reserves at Arcadia could be 39% more than previously estimated, which extends the life of the mine and makes the project more viable.

Despite the tax holiday on lithium exports, Prospect has already started processing samples from the project. In December 2018, the company shipped its first battery-grade lithium carbonate from its pilot plant near Kwekwe. The next step, Prospect said at the time, would be to reconfigure the plant to manufacture lithium hydroxide. The hydroxide is in demand for its use in battery cathodes, and fetches a higher price than lithium carbonate.

Desperate to win investments into mining, Zimbabwe has repeatedly postponed plans to levy miners, particularly in platinum, for exporting raw or semi-processed ore_NewZWire

Afreximbank mandated to arrange US$143M Debt Facility for Arcadia lithium

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Afreximbank mandated to arrange US$143M Debt Facility for Arcadia lithium

African lithium company, Prospect Resources Ltd (ASX:PSC, FRA:5E8) (“Prospect Resources” or the “Company”)
is pleased to announce that African Export-Import Bank (“Afreximbank”) has been appointed to arrange and
manage the primary syndication of a US$143m project finance debt facility.

Afreximbank is proposing to fund and hold US$75m of the facility. The parties have also agreed a non-binding indicative debt facility term sheet.

The appointment of Afreximbank as mandated lead arranger is a critical milestone in the financing of the Arcadia
lithium project in Zimbabwe. The parties will now undertake further detailed due diligence and negotiate the
final facility agreements. Execution of the facility agreements will be subject to Afreximbank’s further due
diligence and credit approvals and drawdown will be subject to satisfaction of various conditions precedent to
be included in the agreements.

Prospect Resource Executive Chairman, Hugh Warner, said: “We are very pleased to have agreed this mandate
with Afreximbank, who have significant experience lending into Zimbabwe. The Company’s Arcadia lithium project is expected to be the first African lithium mine financed by Afreximbank and the first African lithium mine to attract debt finance. Afreximbank as a long-term partner and look forward to working together to deliver a tier one lithium project.”

Gold prices steady

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Gold prices steady

Gold steadied yesterday as the dollar weakened and investors sought more clarity on the “phase one” trade deal between the United States and China.

Spot gold was little changed at $1 475,50 per ounce by 0821 GMT after prices came under some early pressure in the Asian session on initial optimism over the trade deal. US gold futures fell 0,1percent to $1 480,10.

Despite some signs of caution, equities remained in positive territory, limiting bullion’s advance, after the world’s top two economies announced the “phase one” agreement and suspended some tariffs on each other’s goods that were due to go into effect on Sunday.

“We still don’t know what is in the deal . . .” said Hareesh V, head of commodity research at Geojit — Reuters.

Chamber of mines hails EPOs legal framework

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Chamber of mines hails EPOs legal framework

THE Chamber of Mines of Zimbabwe (CoMZ) has hailed the existing legal and institutional framework governing Exclusive Prospecting Orders saying it promotes the growth of the mining sector if properly enforced.

The remarks by CoMZ follows on-going debate on the importance of EPOs in the development of the mining industry and particularly on whether the above instruments would require restructuring or removal.

In a statement, the CoMZ said based on Zimbabwe’s past success stories and international best practices, it recommends that the EPOs be maintained.

“Our current functional legal and institutional framework, if properly enforced, can promote the critical role of EPOs in the development and growth of the mining industry. The current framework encourages both small scale and large scale (miners) to co-exist – ensuring optimal development of the mining industry.

“The current system, plus the additional provisions on reduced EPO size, limiting the number of EPOs a person may hold and relinquishment provisions, should adequately deal with access to ground by all investors,” it said.

CoMZ noted that this would ensure ground is released for other interested investors to acquire for purposes of mineral prospecting and exploration. 

It said the enforcement of the ‘Use it or Lose it’ framework, as provided in the Act will require strong and effective institutions to monitor and supervise activities.

“We further recommend that the Geological Survey Department be strengthened to better monitor exploration activities. This will ensure that the quality of reports are at the highest standard and the country and any future investor can benefit from work of the previous investor who would have worked the same ground,” said CoMz.

EPOs are essentially exploration titles for undertaking geo-scientific investigations that reveals the mineral potential of a defined area.

The Chamber of Mines said the country was not unique in availing to potential investors such titles as they also exist in many other mining jurisdictions.

EPOs were introduced into the mining law of Zimbabwe in 1947 and since their inception there have been significant transformation in the title management system which has influenced the growth of the mining industry, said CoMZ.

It said the existing provisions on prospecting and exploration titles were designed to accommodate small-scale and large-scale investors.

“Work carried out during the tenure of EPOs has, over the years, been translated into numerous successful mining ventures. Records of these successes are held at the Geological Survey Department.

“EPOs have been granted over ground where mineralisation was not known (green field) and ground where mineralisation was known to be present (brownfields) resulting in some discoveries of deposits that have been developed into major mines.

“The success rate for exploration in Zimbabwe was at 3,9 percent by 1984, which is quite high by global standards. Success rates for mineral exploration are generally in the order of 0,1 percent.”

The Chamber of Mines highlighted that some of the successes include Murowa Diamonds, Trojan Nickel Mines, Freda Rebecca Mine, Blanket Mine extension, Marange Diamonds, Mhangura Copper Mines, Kanyemba Uranium Deposit and Great Dyke Platinum-Nickel-Copper deposit, among others.

“Further to say that in achieving these successes, the small-scale mining sector has grown, having co-existed with the EPOs. Those who have requested to access ground with EPOs in accordance with the provisions of the Mines and Minerals Act have largely been accommodated,”  said the Chamber of Mines.

The world over, there has been competition for ground to explore for and mine minerals among investors large and small.

EPOs have been pivotal in generating geo-scientific information which has been archived and used for mining and other land uses.

The CoMZ said it is the duty of the regulator to craft policies, laws and the necessary institutional framework to ensure that activities are conducted in an orderly manner and they are aligned to the developmental thrust of the country.

It said important considerations include reducing the impact of mining on the environment, ensuring co-existence with other land and desired structures of the mining industry. SOURCE: THE CHRONICLE

South African mining companies excelling in Zimbabwe

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South African mining companies excelling in Zimbabwe

As Zimbabwe is going through tough economic times with foreign investors hesitant in getting into one of the world richest mineral resource countries some South African companies are doing extremely well on the Mining front. Mainly Platinum companies the listed below are excelling on Zimbabwean soil.

Tharisa

Tharisa stands to benefit following the declaration of a special economic zone (SEZ) that will benefit Karo Zimbabwe, in which Tharisa has a 27% indirect stake. The SEZ covers special mining grants issued to Karo Zimbabwe in the Great Dyke and will see Karo’s platinum mining project entitled to numerous fiscal incentives.

Impala Platinum (Implats)

Zimplats owns an 87% stake in Zimbabwean company Zimplats. Zimplats chairman Sydney Mufamadi (who was a South African government minister from 1994 to 2008) in late October was quite upbeat and wrote in the Zimplats annual report that the future of the company remained bright despite the challenging environment. However, the devaluation of the Zimbabwe currency against the US dollar resulted in Zimplats recognising a net exchange loss of US$20 million for the year ended June 2019. Nevertheless, Zimplats reported a profit of US$144 million for the year ended June this year, which was its best result in more than four financial years.

Mimosa

Mimosa, a 50:50 venture between Implats and Sibanye-Stillwater, is also bearing up well and the mine reported a 21% hike in gross profit to R773 million for the year ended June. Johan Theron, an Implats spokesperson, says that the business environment in Zimbabwe had become “extremely challenging” over the past eighteen months. All the metal the platinum mining industry produces gets exported and paid for in US dollars, and these hard currency earnings have sheltered the sector from the storm, he added.

Anglo American Platinum

Anglo American Platinum owns the Unki platinum mine in Zimbabwe. Unki seems to be thriving as it reported record platinum metal production for the half-year ending June and operating profit for the same six months was R488 million up 15% from the prior half-year.

Extract from Business Insider 

AU raises fears over illegal mining activities

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AU raises fears over illegal mining activities

THE Africa University (AU) has raised concerns over gold panning activities around the institution amid fears that the tunnels extending beneath the university, could cause structural damage to infrastructure.

This was revealed by Mutasa South MP Regai Tsunga at a constituency feedback meeting which was organised by the Zimbabwe Coalition on Debt and Development (Zimcodd).

The university is located near Redwing Mine, which recently stopped operations after failing to pay workers for several months, among other challenges.

Tsunga said he met the university’s vice-chancellor Munashe Furusa who raised the red flag.

“I met the AU vice-chancellor last week who raised security concerns of illegal gold mining around the university. Furusa said they fear for the students’ welfare and they might get in the crossfire of machete wars and other things,” he said.

“The university is adversely impacted by illegal mining activities around the institution and there are fears that some tunnels are extending beneath the university which can cause structural damages to the university infrastructure.”

The legislator said stakeholders should find solutions to illegal mining, which has seen many people losing limbs or life to machete-wielding artisanal miners.

Tsunga added: “This might affect the university economy in-terms of capacity to get international support from their partners. There is need for an all-stakeholder roundtable in Mutasa to discuss the issue surrounding illegal and artisanal mining in Penhalonga.

“We hope that the illegal mining activities might not further degenerate into chaos. What makes the matter complicated is that illegal mining has become a source of livelihood for many youths, so it is difficult to stop them. It is a no secret that there is no employment for most of the young people in the country and it is something that the government should address with urgency.”

Furusa was not reachable for comment yesterday.

The illegal miners have reportedly been clashing over disused gold claims in Mutasa district. Source: Newsday

Gold buyer shot, robbed of US 4k and R 12 000

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Gold buyer shot, robbed of US 4k and R 12 000

Bulawayo based gold buyer lost $US 4000 and more than R12 000 after being robbed and shot on both legs by a six-man gang armed with an AK rifle.

According to GreatDyke news Mr. Brian Gavanga was attacked by the gang that was traveling in a silver Honda Fit vehicle without registration plates at his place of work in Pumula South suburb.

The robbers are still at large and Mr. Gavanga is admitted at Mater Dei Hospital.

Another gold buyer Mr. Lawrence Mazhinje had received a call from a regular client identified as Mahlawulo Moyo, who has since been arrested. Both Gavanga and Mazhinje operate from the house of another gold buyer Mr. Lovemore Sibanda in Pumula South.

Bulawayo Police spokesperson Chief Inspector Precious Simango confirmed the robbery.

“I can confirm that we are dealing with a robbery that took place in Pumula South suburb where one male adult was shot. Investigations are underway. The complainant is Lovemore Sibanda, a male aged 55 of Pumula South, Bulawayo, a registered gold buyer. The accused persons are six unknown male adults who are still at large,” said Chief Inspector Simango.

She said Mr. Gavanga was rushed to Mater Dei hospital following the shooting.

Chief Inspector Simango said Gavanga had opened the gate, assuming that the regular client Mahlawulo Moyo had arrived, only to be met by the gang of robbers in the Honda Fit.

“ Six unknown male adults, armed with an AK rifle, machete, and an axe, disembarked from an unregistered grey-silver Honda fit and entered the yard. One of the suspects shot Brian Gavanga on the left and right ankle and demanded money and gold from him.

“The accused forced Gavanga into the room where Lawrence Mazhinje was and demanded more money from him,” said Chief Insp Simango.

Seven grammes of gold were recovered from Moyo following his arrest. Source: GreatDyke

First diamonds from Angola’s new pipe to arrive mid-2020: Alrosa

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First diamonds from Angola’s new pipe to arrive mid-2020: Alrosa

Angola’s major new Luaxe diamond deposit may start trial mining in mid-2020 and could produce 1 million carats of diamonds worth $90 million in 2020, Russian diamond producer Alrosa said.

Angola’s state-controlled diamond miner Catoca and Alrosa found Luaxe’s Luele pipe in 2013. Catoca has spent $200 million studying and developing it further and has said the pipe may turn out to be the largest discovery in the industry in 60 years.

“It will be one of the largest deposits in the world,” Vladimir Marchenko, Alrosa’s deputy chief executive in charge of its Africa business, told Reuters.

In November, Alrosa’s specialists finished reviewing a sample of Luaxe’s ore containing 45 000 carats of diamonds. This data will be used to complete the reserves audit, he said.

The pre-feasibility study is yet to come, and the scale of Luaxe’s future production will depend on the project’s economics and global demand. Global diamond production, Alrosa estimates, will fall to 139 million carats in 2023 from a record of 151 million in 2017. Alrosa is the world’s biggest diamond producer by volume, it competes with De Beers, the largest by revenue.

In 2020, Luaxe’s ore will be processed at Catoca’s nearby mine. Catoca, in which Alrosa owns 41 percent, currently holds a 50.5 percent stake in the project. Both are discussing the final distribution of Luaxe’s ownership.

Angola, which aims to boost production to 14 million carats in 2023, is Alrosa’s number one priority in Africa, especially since the country dropped the practice of obligatory sales via “privileged” companies and improved Catoca’s corporate governance.

The new diamond trade policy, approved by Angola’s president Joao Lourenco in 2019, made sales more transparent and boosted Catoca’s revenue by 30 percent, Marchenko said.

“It was a stimulus to expand our activities in Angola,” he added. Alrosa will spend $9 million on exploration in Angola in 2020-2022.

Speaking about Zimbabwe, which aims to triple diamond production by 2023, Alrosa said that its two-year exploration there would cost around $12 million.

A joint venture, in which Alrosa plans to finalise a stake of 70 percent in December, has applied for a number of greenfield licences.

Alrosa is also considering prospecting for diamonds in Mozambique, which borders gemstone-rich Tanzania and Zimbabwe. Its geologists will start studying documentation in December.

Alrosa, with 50 percent of revenue coming from sales in the United States and Western investors among its minority shareholders, has signed up to a process which helps to prevent “blood diamonds” — blamed for financing conflict and criminality in some poor African countries- from entering the global diamond trade.

Transparent and ethical business conditions are a must for Alrosa, in Africa and elsewhere, the deputy CEO said: “We will never risk the existing business when choosing new projects.” — Reuters

Prospect Resources signs power supply deal with ZETDC

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Prospect Resources signs power supply deal with ZETDC

African Lithium Company, Prospect Resources Ltd (ASX: PSC, FRA:5E8) (“Prospect” or “the Company”) is pleased to announce that the Company has signed a secure power supply agreement (“SPSA or “the Agreement”) with Zimbabwe Electricity Transmission & Distribution Company (ZETDC) for the supply of power to the Arcadia Lithium Project (“Arcadia”).

Arcadia’s primary source of power supply is from the existing Lake Kariba hydroelectric power station, whose main power distribution lines run adjacent to Arcadia, some 15 kms away via the Atlanta substation.

Material terms of the Agreement:
1. Commencement Date: 1 January 2020
2. Term: Three (3) years from Commencement Date;
3. Renewal: Automatic renewal for another three years;
4. Tariffs are approved by the Zimbabwe Energy Regulatory Authority; and
5. In the event of a major system fault, maintenance or major power supply shortfalls that may temporarily interrupt power supply to Arcadia, ZETDC is required to provide advanced notice in line with electricity regulations providing quality assurance.

Prospect’s Managing Director, Sam Hosack, said “The development of the Arcadia Lithium Mine must be underpinned by secure, long term energy supply and the SPSA is the first stage in this process. Secondary sources of power, including a possible solar farm, will now be a focus for the team.”

This release was authorised by Mr Sam Hosack, Managing Director of Prospect Resources Ltd.

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