What is your rationale for taking part 121 Mining Investment? Arcadia is one of the most advanced lithium projects globally and is a pre-development phase, currently securing project finance. Prospect is in a strong position with supportive shareholders, offtake partners and high calibre team. Now seeking to partner with appropriate investors on financing of the project.
What are your key goals for the next 3, 6 and 12 months? 3 Months:
Complete development of pilot plant
Deliver samples to existing and potential new offtake partners
Release exploration and potential option agreement of highly prospective rare earth project
6 Months:
Complete balance of lithium availability via offtake/streaming/royalty for lithium
Complete offtake/streaming/royalty for tantalum product
Complete project finance and commence early works to target near term production
Receive funds from the divestment of gold project
Assess exploration program/potential divestment of existing rare earth project
12 Months:
Developments on project development/construction
Opportunities to target small; scale early production
Assess M&A potential of further assets and operations
Target first production Q4 2022 and prepare scaling opportunities
What do you see as the key risks and challenges facing your company at the moment and how are you overcoming these? 1. Technical metallurgical risk, being mitigated by continual optimisation using the pilot plant. 2. Jurisdiction risk, being mitigated by our Special Economic Zone. This allows us to bank offshore and in foreign currency, provides tax holidays and express customs clearance allowing for ease of logistics to port for export to offtake partners.
What do you think makes your company such a compelling investment? Fully permitted, large resource with high grade, completed Definitive Feasibility Study, strong economics, offtake partners secured and substantially undervalued versus peers.
Analyst Insight – provided by Independent Investment Research
Prospect Resources is an ASX-listed lithium company with operations in Zimbabwe. The company’s flagship project is its 87%-owned Arcadia Lithium Project, located on the outskirts of Harare.
The Arcadia Lithium Project represents a globally-significant hard-rock lithium resource and is being rapidly developed, with a focus on near-term production of high-purity petalite and spodumene concentrates. Arcadia is currently one of the most advanced lithium projects globally, with a Definitive Feasibility Study (DFS) completed, offtake partners secured and a clear pathway to production.
Prospect updated its Arcadia Project DFS for the planned 2.4 Mtpa Base Case development. The DFS confirms that Arcadia will be a strong, high-margin project with current forecast Life of Mine (LOM) revenue of US$3.42 billion and average annual EBITDA of US$114 million over an estimated 15.5-year mine life. The pre-tax NPV (10% discount rate, real) of the project base case is US$659 million, at Benchmark Mineral Intelligences’ long-term battery grade Lithium Carbonate price of US$12,500 per tonne CIF China price.
The Arcadia Lithium Project has a capital cost (pre-production) of US$162 million, which will be incurred over an 18-month period. The project has focused on generating strong net cash flows after tax, especially in the first five years of operations, by processing high-grade ore (+1%) and stockpiling low grade ore for future processing. Project payback is expected in 36 months (18 months post-production).
Arcadia’s product marketing strategy is to maximise spodumene sales into the chemical (battery) market, and ultra-low iron petalite sales into the premium technical (glass and ceramics) market. The intention is that all spodumene products will be marketed under long term ‘off-take’ agreements for utilisation in the chemical market, as well as all non-technical grade petalite product.
All ultra-low iron petalite products that achieve technical grade specifications will be marketed to the glass and ceramics technical market, with an assumed limit of 100,000 tonnes being sold into this market in any given year. Supported by metallurgical test-work, it is expected that 80% of petalite production will meet technical market specifications, which equates to approximately 94,000 tpa LOM average. All technical grade ultra-low iron petalite samples produced to date have met customers’ specifications when subjected to their qualification processes.
(20min delay)