As battery metals boom, Prospect Resources seeks a partner for one of the world’s best lithium developments
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In the midst of a bullish lithium market Prospect Resources is clearing a pathway to production, announcing it is on the lookout for a partner to develop and fund its high-grade Arcadia Lithium Mine in Zimbabwe.
Prospect (ASX:PSC) says the start of the process has come off the back of “multiple enquiries” from “a range of international parties” in relation to the project’s funding and development.
It is believed the process would provide more flexibility and pace to market than traditional methods like debt or equity, with Azure Capital and Vermilion Partners being handed the mandate.
There has been a flurry of corporate activity in the lithium industry over recent months. Prices have stormed higher at a rate of knots as the supply-demand balance has tipped back in favour of producers.
Last week alone, high purity lithium carbonate chemical prices rose 10.3%, according to Fastmarkets, while spodumene concentrate was up 27.1% between June and July.
China’s dominant lithium player Ganfeng has set the tone for this recently, buying into projects and taking equity stakes in ASX-listed companies Core Lithium and Firefinch.
Prospect director Sam Hosack said Arcadia had received interest from ‘key players’ for what is one of Africa and the world’s most advanced large-scale hard rock lithium developments.
“We are excited with the interest from key players in the lithium sector and look forward to working with Azure and Vermilion to find the right long term partner for the funding and development of the Arcadia Mine,” he said.
Prospect is currently optimising a definitive feasibility study, with contractors Lycopodium looking into two options.
The first is a two-stage development with a run rate of 2.4 million tonnes per annum via the development of two 1.2Mtpa with a lower initial capital intensity.
The second is a single stage development that provides greater efficiencies and economic returns at a higher initial cost.
The studies will be completed in the September and December quarters, respectively.
The Arcadia project in Zimbabwe contains an overall mineral resource of 72.7 million tonnes at 1.11% lithium oxide and 119 parts per million tantalum pentoxide for 807,800t of Li2O and 19.1Mlbs of Ta2O5 at a 0.2%Li20 cutoff grade.
Within that is a high grade zone with a 1% cut off of 43.2Mt at 1.41% Li2O and 119ppm Ta2O5 for 610,500t of Li20 and 11.3Mlb of Ta2O5, and an ore reserve of 37.4Mt at 1.22% Li2O and 121ppm Ta2O5 for 457,000t of contained Li2O and 10Mlb of TaO5.
The project’s DFS was updated in 2019, outlining a low-cost project with a pre-tax internal rate of return of 71% and payback within 18 months of first production.
The DFS mapped an estimated 15.5-year initial mine life – a substantial project of note in a country where lithium potential is largely untapped.
Located close to the capital of Harare, Prospect has been producing petalite through a pilot plant in Zimbabwe since the middle of the year, and has long-term offtake partners secured.
Last month the company upped its stake from 70% to 87% by issuing about 9.5 million shares and $1.2m cash to vendor Farvic Consolidated Mines.
This article was developed in collaboration with Prospect Resources, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.