Prospect outlines attractive numbers for its Arcadia lithium project
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Prospect has completed a Staged Optimised Feasibility Study that outlines the technical and economic viability of its Arcadia lithium project in Zimbabwe.
Key takeaways are pre-tax internal rate of return and net present value, both measures of a project’s profitability, of 35% and US$465m along with average annual earnings before interest, taxes, depreciation, and amortisation of US$97m for the completed project.
Importantly for Prospect Resources (ASX:PSC), the Staged OFS calls for the progressive construction of two 1.2 million tonne per annum processing modules that neatly lowers the upfront capital costs required to get Arcadia off the ground, reducing execution and market risk.
Pre-production capital expenditure is estimated at US$140m for the first stage during the first four years and a further US$72m in the second stage.
All-in-sustaining costs are estimated at US$405 per tonne of concentrate during the first stage and US$383/t during the second.
“It is very pleasing to have a viable alternative to the direct development pathway, being a progressive modular build to 2.4 Mtpa, now validated by the Staged OFS undertaken by Lycopodium,” managing director Sam Hosack said.
“This study confirms Arcadia as one of the only independent, shovel-ready projects globally without offtake totally locked up.
“The OFS details our clear differentiation with a range of potential product markets, and customers versus traditional spodumene projects.
“Even at the smaller initial scale, the Lycopodium results demonstrate a highly competitive forecast operating costs and margins, reflecting prices for technical petalite at a significant premium to traditional chemical grade spodumene concentrate pricing.”
Work is now underway to complete the direct OFS pathway, a single stage development that provides greater efficiencies and economic returns at a higher initial cost, before a funding decision is made.
The Arcadia project in Zimbabwe contains an overall mineral resource of 72.7 million tonnes at 1.06% lithium oxide and 119 parts per million tantalum pentoxide for 770,200 of Li2O and 19.4Mlbs of Ta2O5 at a 0.2%Li20 cut-off grade.
Ore reserves have also been upgraded from 37.4Mt at 1.22% Li2O and 121ppm Ta2O5 for 457,000t of contained Li2O and 10Mlb of Ta2O5 to 42.3Mt at 1.19% Li2O and 121ppm Ta2O5 for 504,000t of contained Li2O and 11.3Mlb of Ta2O5.
It is located within an established mining jurisdiction where mining and export of lithium products has been ongoing for over 60 years.
This puts the project, which Prospect has a 87% interest in, close to major highways and railheads that provide access to the Port of Beira, along with the major transmission line between the region’s largest hydro-electric facilities.
Arcadia is currently envisioned as a conventional truck and shovel open pit with waste dumps located as close as possible to pit exit points to minimise haulage profiles without disrupting the access to the minable resource or crushing plant.
Prospect is current running a partnership process being managed by Azure Capital and Vermilion Partners, with strong interest from several groups focused on the Direct OFS outcomes
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.