BY MTHANDAZO NYONI
AFRICAN lithium company, Prospect Resources (Prospect) ended the second quarter with a strong balance sheet of A$1,698 million (US$1,21 million) following the implementation of a material cost cutting strategy, in line with the rights issue.
In its second quarter activity report, Prospect said it registered progress by strengthening its balance sheet via a successful rights issue, signed an MoU with SCR-Sibelco NV regarding potential ultra-low iron petalite offtake, continued discussions with Uranium One Group JSC in relation to a spodumene offtake, investment and or acquisition of Arcadia.
As a result, it finished the quarter with a cash balance, as at June 30, 2020, of A$1,698m and US$10m funding commitment from offtake partner Sinomine on placement of ball mill.
As per rights issue, the company received applications for shares totalling A$2 017 238 and the entitlement offer was strongly supported by directors and management who subscribed for a total of about A$572 000.
“In line with the recent rights issue, Prospect implemented a material cost cutting strategy to extend the company’s financial strength. This was achieved through a number of initiatives including salary reductions at all levels of the business and, unfortunately, redundancies which resulted in the company having reduced its staff by 57 people in 2020,” the report read in part.
In the period under review, the Australia Stock Exchange-listed company did not undertake any material exploration activities because the company is focussing on the Arcadia Lithium project.
Consistent with its strategy of focusing on the development of the Arcadia Lithium Project, the company revealed that it sold its non-core Gwanda East claims and plant and equipment to Farvic Consolidated Mines for its written down value of US$105,864.
The project is located in the Gwanda Greenstone Belt, southeast of Bulawayo and covers the Bucks Reef, Prestwood Mine, Sally Mine, Colleen Bawn Mine, Valley Mine and other smaller mines including Bye & Bye, Act, Beaufort, Wilson and Ettrick.
Meanwhile, last month Prospect announced the results from its lock cycle petalite flotation testwork programme, indicating significant potential to increase petalite recovery from 31% to more than 60%, across all Arcadia Project ore bodies contained within the reserve.