BY MTHANDAZO NYONI
PROSPECT Resources (Prospect) says it is currently reviewing multiple financing strategies for its Arcadia lithium project in Zimbabwe.
The project is one of the largest hard-rock lithium resources in the world, with about 808 000 tonnes of the resource.
In its first quarter report, the company said it had scaled down exploration activities to focus its resources on securing finance for Arcadia and progressing the project from financing through to production.
“During the quarter, Prospect continued to focus its resources on securing a project finance facility for Arcadia and has, therefore, scaled back exploration activities,” the report read in part.
“The company is currently undertaking continuous improvement and value engineering initiatives to further reduce Arcadia’s technical risk and improve its economics,” the company said.
“The strategies are focused on providing funds at a low cost of capital and minimising dilution to existing shareholders,” it said.
In anticipation of development, Prospect said it was undertaking numerous continuous improvement initiatives in order to further de-risk the project technically, and to improve project economics.
During the quarter, Prospect introduced the use of high pressure grinding rolls (HPGR) technology to replace the tertiary and quaternary crushers.
The use of a HPGR is expected to reduce capital expenditure by 1,4% to US$163 million; operating expenditure by 2,46% to US$278 per tonne, while maintaining or improving metallurgical recoveries, the company said.
It also expects to increase project net present value (NPV10) by US$22 million to US$533 million as well as average annual earnings before interest, tax, depreciation and amortisation by US$3 million to US$109 million.
The company was awarded special economic zone (SEZ) status for the Arcadia project, which will grant it generous tax breaks and other concessions.
“With Arcadia now securing SEZ status, Prospect can hold and transact in foreign currency. This simplifies Prospect’s ability to make payments to and from suppliers and customers, as well as providing financiers confidence that the company can manage its currency freely in order to meet its operational and capital management requirements,” it said.
Arcadia is Africa’s second-largest undeveloped lithium project. It is estimated to contain 610 500 tonnes of lithium oxide and 11,3 million pounds of tantalite pentoxide. It has an ore reserve of 26,9 million tonnes.
The company also operates Sally Gold Mine and Prestwood Gold Mine in Gwanda.