Now Reading
Prospect invests US$1m in fresh Arcadia deal

Prospect invests US$1m in fresh Arcadia deal

Sam Hosack

ZIMBABWE-focused lithium outfit, Prospect Resources moved close to taking full control at its flagship Arcadia Mine on Friday, after scaling up shareholding to 87% in a deal worth just under US$1 million.

The Australia Stock Exchange-listed firm previously held a 70% stake in the asset that has recently been reporting significant progress towards full-scale mining and exportation of lithium at Arcadia, a world-class asset on the outskirts of Harare.

Prospect acquired Arcadia in 2016.

In 2018, the firm said it would be increasing shareholding upon signing a conditional agreement with another shareholder, Farvic Consolidated Mines.

Under the deal, Farvic agreed to transfer its 17% equity in Prospect Lithium Zimbabwe, the firm that controls the Arcadia lithium project, to Prospect Minerals, a wholly-owned subsidiary of Prospect Resources.

Friday’s transaction saw the sides exchange A$1,18 million, about (US$874 257) in cash and 9,4 million shares, according to Prospect managing director Sam Hosack.

“Completing the Farvic transaction provides an immediate benefit to Prospect Resources as it now owns an additional 17% of the quality Arcadia lithium project,” Hosack said in a note to shareholders.

“The increase in ownership will have a major positive impact on our funding of the Arcadia lithium project,” he said.

Prospect had announced at the beginning of this year that the sale and purchase agreement with Farvic would be extended to December 31, 2021.

However, it appeared that requisite regulatory approvals were secured much earlier, giving the two sides the right to conclude the deal.

But most importantly for Prospect, the firm has been funding 100% of the project’s overheads, which means Friday’s transaction gave it an opportunity to increase its share of future revenues and profits from the mine, without an increase in expenditure.

Prospect’s shares on the ASX traded at 18,2% higher at 32,5 cents at 4:10pm on Friday, an indication of the market’s positive sentiment about the deal.

Last week, Prospect said it had produced 25 kilogrammes of spodumene concentrate from core samples collected at Arcadia Mine.

Spodumene is considered the most valuable lithium ore mineral, which is crushed to form a concentrate before shipment to chemical-manufacturing companies worldwide.

The firm is targeting strategic markets in Japan, China and Europe, as it fine-tunes its systems before full-scale production kicks off.

There has been significant progress by companies prospecting and developing lithium assets in Zimbabwe.

See Also
AMMZ Mimosa

Early this month, London Stock Exchange-listed Premier African Minerals said results from its drilling programme at Zulu Lithium near Bulawayo were encouraging.

The developments mark an important step in the southern African country’s ambition to transform its mining industry, turning over about US$2 billion annual revenue, into a US$12 billion sector by 2023.

Following recent finds, Zimbabwe has placed its lithium assets at the heart of this ambition, and also looks to gold, platinum and diamonds to drive the expansion drive.

About four lithium projects are currently under development in Zimbabwe, where firms including Premier and Prospect expect to invest up to US$300 million in the coming years to reach full
production.

Premier said the results of the samples confirmed significant lithium grade and lithium mineralisation.

 

NewsDay

Scroll To Top
error: Content is protected !!