BY MTHANDAZO NYONI
SOUTHERN African focused mining outfit, Prospect Resources has accelerated its Zimbabwean investments, pumping US$13,5 million in fresh capital to move Arcadia lithium mine towards production.
The funds were injected through a private placement, according to a statement released by the Australia Stock Exchange-listed firm.
A private placement involves the sale of stock, shares or bonds to pre-selected investors and institutions rather than on the open market.
Prospect managing director Sam Hosack said the transaction raised A$18 million (US$13,5 million) before costs, via the issuance of approximately 45 million new shares to institutional and sophisticated investors.
Funds raised from the placement will mainly be used for advancing development of the Arcadia lithium project near Harare.
Projects to be funded include front-end engineering and design (FEED), undertaking early works and securing long lead items and advancing current strategic partnerships.
The firm said the facility would also be deployed towards bolstering regional exploration and development activities, as well as for general working capital purposes.
“We are very pleased with the strong support received for the placement as we look to accelerate the Arcadia project,” Hosack said.
“We thank our existing shareholders for their ongoing support and welcome a number of new, high-quality institutional investors to our register.
“We believe the size and depth of the interest received for this raising is a robust endorsement of Prospect’s management team and development strategy for the Arcadia project.
“We are working hard to complete the direct optimised feasibility study on the Arcadia project during the current quarter.
“As previously flagged, the direct development route to 2,4 million tonnes per annum throughput is the key focus of Prospect and the counterparties engaged in our current strategic partnership process,” he said.
“This placement provides us the flexibility to progress the project, select the best possible partner while also allowing us to pursue growth opportunities for rare earth elements and lithium resources, particularly if we are able to secure additional feedstock for Arcadia’s future.”
The issue price of A$0,40 per share represents a 9,1% discount to the last close price on October 26, 2021 (A$0,44), a 12,8% discount to the five-day volume weighted average price (VWAP) at close on October 26, 2021; and a 11,6% discount to the 10-day VWAP at close on October 26, 2021.
Canaccord Genuity (Australia) Limited and Foster Stockbroking Private Limited acted as joint lead managers and bookrunners to the placement.
Settlement of the new shares issued under the placement is expected to occur on Thursday this week, with quotation on the ASX expected to occur on Friday.
Prospect is one of four key lithium developers that have taken an interest in the country’s resource.
Development has been boosted by a boom on the international market where lithium has gained significance in the production of batteries for the auto-mobile industry. Most of the demand has come from Chinese markets.