PROSPECT Resources (Prospect) says it expects that additional funds will need to be raised prior to completion of any project finance discussions for the Arcadia lithium project in Zimbabwe.
According to a market report issued by the company, as of 31 March 2019, Prospect’s cash balance was at A$2.97 million. Reports have it that Prospect needed $165 million to begin the construction of its Arcadia Lithium project mine plant.
Prospect according to the report is considering to sale 115 million unlisted options exercisable at 1.5 cents to expire on June 15, the mining firm believes that it will get up to A$1 725 000 from the exercise to boost its funds.
“Prospect has 115 million unlisted options exercisable at 1.5 cents which are due to expire on 15 June 2019 (‘Options’). Total funds that may be raised from the exercise of the Options is up to A$1,725,000 (if all Options were to be exercised). The options are held by certain directors, employees and former employees of Prospect. The Company believes that there is a reasonable prospect that some or all of the Options will be exercised” reads the report.
Under the terms of the Options, Prospect is required to apply for quotation of any shares issued pursuant to the exercise of the Options, this, in turn, requires that the shares be freely tradeable. Prospect intends to lodge a ‘cleansing statement’ (as contemplated by section 708A(5) of the Corporations Act 2001 (Cth)) in the event of the issue of shares on exercise of the Options. In any such cleansing, statement Prospect will be required to confirm that there is no excluded information of the type referred to in Sections 708A(7) and 708A(8) of the Corporations Act.
Prospect also intends to engage in discussions in respect of a potential placement of shares. Any shares issued under the placement would be issued without disclosure to investors under Part 6D.2 of the Corporations Act.
The report also outlined that Prospects is engaged in numerous discussion in order to source funds to undertake the posed biggest lithium project in the world, Prospect also reported that engagements are heading towards their completion.
“Prospect is in ongoing discussions with a number of entities, including African development banks and institutions, and a European family office consortium regarding the possible project financing of Arcadia. These discussions are at various stages of maturity and contemplate a variety of structures from traditional debt and equity financing through to 100% debt financing” reads the report.
According to the report, The Company has received a draft commitment letter from a potential debt arranger/financier to provide project finance funding for Arcadia. However, at this stage, the Company believes the proposal is incomplete and requires further development and clarification before the Company can continue to progress discussions on that draft document. The Company continues to actively negotiate with this debt arranger/ financier and others.