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Prospect Resources debt-free to advance Arcadia

Prospect Resources debt-free to advance Arcadia

Sam Hosack

Australian Stock Exchange-listed mining and exploration company’s investment in the Zimbabwe mining industry has been boosted with the company ending the quarter ended 30 September debt-free.

Rudairo Mapuranga

The company has recorded a debt-free cash balance of A$5.7M, as of 30 September 2021.

According to the company’s Managing Director Sam Hosack the September quarter mainly focused on developing Arcadia and extracting value from our other assets.

He went on to say that completion of the Farvic transaction increased Prospect ownership in Arcadia to 87%.

“The September 2021 quarter was focused on the further development of Arcadia and extracting value from our other assets. We completed the Farvic transaction, increasing Prospect’s ownership in Arcadia to 87% and operated the pilot plant and shipped on-spec technical grade petalite concentrate. Our key focus is to showcase Arcadia’s technical grade petalite to our existing off-takers and their customers in the global glass and ceramics markets.”

“The appointment of Azure Capital and Vermilion Partners as advisers to run a structured partnership process aims to leverage the extensive inbound interest we have received in the Arcadia Project.

The objective of the partnership process is to introduce a competent and aligned partner to provide funding and work alongside Prospect in bringing Arcadia into production, on terms that are favourable to Prospect’s shareholders. I am very pleased with the level of engagement with the potential partners in the process and have received positive feedback regarding the quality of the team’s work in the Staged OFS recently released.

Going forward, along with our colleagues at Lycopodium, we are now working hard to finalize the final phase of study on the Project (being the Direct OFS), as this is a key focus for our potential partners. We look forward to providing further updates to the market in due course.”

On 4 October 2021, Prospect announced that the first 25-tonne container of technical grade petalite concentrate from the Arcadia Pilot Plant was shipped to offtaker Sibelco, with a current inventory onsite of over 70 tonnes.

The Pilot Plant results were consistent with previous lab-scale test work and confirm the amenability of the Arcadia Ore Reserves to the production of an ultra-low iron, technical grade petalite concentrate product containing >4.0% Li2O, <0.06% Fe2O3.and <1.0% combined alkali (Na2O and K2O). The quality of the petalite concentrate in the shipment exceeds the specifications set out in Prospect’s offtake agreement with Sibelco.

Prospect received a pilot plant purchase order from Sibelco in May 2021 for up to 2,000 tonnes of technical grade petalite concentrate. The pricing in the purchase

order represents an implied premium to the prevailing chemical-grade spodumene concentrate (SC6) price of approximately 40%, at the time the order was received.

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While the price of technical grade petalite concentrate is typically linked to the price of technical grade lithium carbonate (for which it is a more direct substitute), this comparison to SC6 pricing highlights the significantly higher unit value of the technical grade petalite concentrate product relative to SC6.

The Arcadia Project is one of the most advanced hard rock lithium development projects globally. Following a review of various funding options, and in response to multiple inbound enquiries received from a range of international parties in relation to funding and development of Arcadia, the Prospect Board decided to commence a structured process for the submission of competitive partnership proposals to fully fund the Arcadia project.

The Board is prioritising the development of Arcadia through this partnership process over other funding options, to provide more flexibility, accelerate project execution and bring the project into production at the earliest possibility.

Azure Capital and Vermilion Partners have been appointed by Prospect to run this process. The parties have continued due diligence, including site visits, in line with the process timetable.

About Prospect Resources

Prospect Resources Limited (ASX: PSC, FRA:5E8) is a battery minerals company with a focus on lithium in and around Zimbabwe, with the flagship project being the 87% owned Arcadia Lithium project, located on the outskirts of Harare in Zimbabwe.

Arcadia Lithium Project represents a globally significant hard rock lithium resource. The project is being rapidly developed by Prospect’s experienced team, with the focus on near term production of petalite and spodumene concentrates.

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