Prospect tying lose ends in Arcadia Lithium Project funding

BY BUSINESS REPORTER

Australian company Prospect Resources Limited has announced that it is in advanced talks with a number of African banks and other international financing institutions to fund its Arcadia Lithium Project, 35km east of Harare.

“Prospect continued discussions during the quarter and is now in advanced negotiations with a number of African development banks and other international
financing institutions regarding the possible project-financing of Arcadia,” Prospect said in a statement yesterday for the three month-period ended June 2019.

“Subsequent to the quarter end, the Reserve Bank of Zimbabwe (RBZ) approved Prospect’s acquisition of an additional 17% of the Arcadia Lithium Project from
Farvic Consolidated Mines Pvt (Ltd) (Farvic) in accordance with the sale and purchase agreement dated October 3, 2018. The purchase will allow Prospect
additional exposure to the project’s strong economics and assist with the capital-raising process.”

During the quarter under review, Prospect managed to raise US$3,53 million via the exercise of 7,84 million options at US$0,10 to US$804 952,14.

The exploration firm also raised further funds via a placement of 23,5 million fully paid ordinary shares at US$0,11 to raise US$2,73 million.

“Prior to the above placement and exercise of options, Prospect completed a 10:1 share consolidation,” Prospect said.

Following the completion of the Arcadia Lithium Project definitive feasibility study in November 2018, Prospect’s major focus has been to rapidly progress the
project from financing through to production.

Prospect has continued to focus its resources on progressing Arcadia and has, therefore, scaled back exploration activities to maximise the value generated
from Arcadia.

Prospect came into Zimbabwe in response to growing global demand for electric cars, where lithium is a major raw material. Demand in battery capacity for these
vehicles is expected to grow to 2 319 gigawatt-hours (GWh) by 2040 from the current 17GWh.

“Prospect continues to discuss offtake terms with potential customers. Prospect expects that offtake discussions will be ongoing from time to time for the life
of Arcadia, particularly in relation to low iron petalite (a lithium aluminium phyllosilicate mineral) where a world-wide scarcity of supply of this product
offers premium pricing potential,” Prospect said.

“Bulk testwork on the Arcadia deposit (the results of which were announced on 1 May 2019) has provided Prospect with additional sample products (including low
iron petalite (4,1% Li2O and 0,04% – 0,08% Fe) to provide to potential offtake partners for evaluation. These potential offtake partners include chemical
converters and battery-end users, as well as glass and ceramics producers for who the low iron petalite is a strategic mineral.”

During the quarter, the company commissioned an independent market report from a leading market analysis firm benchmark mineral intelligence on the use of
lithium in the glass and ceramics market and the premium pricing of low iron petalite concentrate.

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