For us in southern climes, a cosy fireside read reinforcing 17/6/24 announcement via the Man toughing it out at Roland Garros.
Dear fellow shareholders and interested readers,
it is an exciting time to be alive – and a shareholder in Prospect.
Our recent acquisition of an 85% interest in the Mumbezhi Copper Project, located in the world-class Zambian Copperbelt, is a significant change. For this reason, I thought it an opportune time to pen something for our supporters and followers which helps contextualise why the whole team here is so excited about this asset and the opportunity it presents.
Let me start by saying this – we have been looking for a potential world-class copper exploration and development asset for a long time. Prospect is best known for lithium, and it is where we have delivered past success. Lithium was always going to remain a key focus for us – and it has. However, the acquisition mandate for a renewed Prospect was very carefully selected as ‘battery and electrification metals’ for a reason – we especially like the long-term copper market outlook. Further copper has been part of our DNA at Prospect Resources, in particular my own experience of 14 years with First Quantum Minerals has enabled me to acquire massive copper experience.
Like most searches for a worthy prize, it has not been straightforward or easy. We have had to be patient – it has been approximately two years since we completed the sale of Arcadia. We have needed to be disciplined – the search process saw us look at many opportunities in this space. We have also required diligence to maintain our ruthless focus on quality and returns – our filter is unashamedly rigorous, and most assets simply do not make the grade as result.The result – Mumbezhi. I can assure you however, the juice has been worth the squeeze.
The Mumbezhi snapshotMumbezhi is located in the world-class Central African Copperbelt region of north-western Zambia and on a single Large Scale Exploration Licence (30426-HQ-LEL), covering an area of approximately 356 square kilometres.The Mumbezhi tenure saw drilling by previous owner, Orpheus Uranium, and other operators, with a combined historical data set of 70+ RC and diamond drill holes totalling over 12,000 metres. Numerous wide, near-surface intercepts of strong copper tenor have been returned from this previous drilling of the Nyungu deposits, including results such as:20.0m @ 1.08% Cu from 27.0m (NYDD054)17.0m @ 1.03% Cu from 29.0m (NYDD055)30.0m @ 1.62% Cu from 174.0m incl. 6.0m @ 5.50% Cu from 174.0m (NYU11RD021)31.0m @ 1.06% Cu from 166.0m (NYU11RD010)44.5m @ 0.96% Cu from 177.0m (NYRD046)
This potential is further supported by the Mumbezhi tenure being surrounded by several world-class copper mines. These operations include Sentinel and Kansanshi, operated by FQM, and Lumwana, owned by Barrick Gold. I cannot emphasize this enough – we are in truly premium copper country here.In short, we believe that Mumbezhi has all the potential ingredients of a world-class, long-life, high-value, near surface, open-pittable, copper-cobalt mining and processing operation, with regionally favourable metallurgy and a significant exploration upside.
We like copperI mentioned earlier that we have been bullish for an extended period on long-term copper market fundamentals. I do not want to wax at length about this – there are plenty of commentators with more time and focus in this particular area to do that.I do however want to highlight one simple dynamic. The recent positive moves in global copper market prices represent, I believe, a growing recognition of the daunting long term mine supply requirements that this market needs to meet. In addition, we see the majors firmly focused on expanding their copper interest which is a huge plus.The world needs so many Mumbezhi’s developed over future years and decades that it is bordering on frightening the magnitude of the task that lies in front of the broader mining industry to achieve this. It is this very dynamic, however, which delivers a clear portent of the potential value that an asset such as Mumbezhi can hold as we move into this future.
We like ZambiaZambia is a leading jurisdiction to explore and develop mining operations in sub-Saharan Africa, having a long-standing history in the resources industry, particularly for copper. We have been looking for attractive entry points (including our attempt with the Kesya Rare Earths Project) and are delighted to have found the one in Mumbezhi.I spent over five years in this part of Zambia earlier in the first decade of my time with FQM. This provided me with substantial first-hand experience of the excellent infrastructure and strong support from both the government and community. There are multiple reasons why many major mining companies already call it a home for key flagship assets, and the geology is just one of them.
This asset was locked up in dispute – we resolved it
This is a big point. Mumbezhi has been tightly wrapped up in a tenure dispute for several years. This presented a significant challenge to any potential acquirer. However, it also provided an incredible opportunity to one patient and diligent enough to work through all the various corporate and human dynamics and still able to provide a commercial solution.We did this carefully and with a view to respecting, and providing derisking for, all stakeholder interests. It required concurrent acquisition agreements, negotiated in parallel, and a willingness to be constructive and flexible. I am very pleased to say that our team succeeded in this endeavour – with the result being the unlocking of this high-potential asset for the benefit of Prospect shareholders. The license is unencumbered now, and is held by Osprey Resources Limited, which Prospect owns 85%.Without wanting to put too fine a point on it, I honestly do not believe many other teams at this end of the resources space, and operating in this broader region, possess the necessary understanding, presence, constructiveness and application to achieve what Prospect has with the successful acquisition of Mumbezhi. I am incredibly proud of what the entire team has achieved in this regard.
We have the team, and it’s now being deployed
Speaking of the Prospect team, I believe you are now about to witness the gears in our arsenal.Post the Arcadia transaction, we sought to be lean and cost-efficient in pursuit of our next key asset. However, we also quite deliberately maintained a proven high-performance operational team, allowing for rapid deployment upon acquisition of the right E&D asset. That time has arrived.We have truly excellent people across a wide range of disciplines, split between our personnel hubs in Zimbabwe and Perth. This team can now collectively flex its professional muscle into the rapid evaluation and advancement of the opportunity at Mumbezhi. At heart, we are mine finders and builders, not promoters. You are about to see that in action.The recent appointment of Mwelwa Manda, a highly experienced mining executive, as our Country Manager, Zambia, also delivers substantial on-ground leadership for Mumbezhi. Mwelwa is set to operate in concert with Valentine Chitalu, who has been appointed as our Zambian Strategic Advisor and has decades of private sector advice and connections into the highest offices of government.This outstanding team has already been leveraged into the rapid advancement of this asset. It is exciting times ahead.
The path ahead
As highlighted in our ASX release of 17th June, it is full steam ahead from here.We are now on the ground at Mumbezhi, with robust site access and associated infrastructure being established. Our first phase of RC and diamond drilling – both growth and infill focussed – is scheduled to commence by later this month. Having undertaken most of our initial evaluation of the historical drill data sets for Mumbezhi, we also expect to be able to declare a maiden JORC-compliant Mineral Resource for the Nyungu deposits during the last quarter of 2024.For more information on Mumbezhi and our plans there, I encourage you to visit our website and follow our social media feeds.
I would like to finish by thanking you for your ongoing support and following. I can assure you that it is greatly appreciated and never taken for granted.
Take care and until next time,
Sam
Sam Hosack | Managing Director and CEO
Prospect Resources Ltd
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