Prospect Resources has registered significant progress on its Zimbabwe-based electric vehicle batteries lithium project just outside Harare, which it says will become the first major mining project to come on-stream under President Mnangagwa.
President Mnangagwa officially launched the Arcadia project early this year, one of multi-billion dollar investments his administration has facilitated since his rise to power in September 2017, including Cypriot firm Karo Resources’ US$4,2 billion platinum venture.
Zimbabwe’s foremost lithium mining venture, Arcadia Lithium Project, is expected to go into production within 18 months of financial closure agreements amid revelations a list of development finance institutions has already agreed to fund the project.
The Arcadia project, located 38 kilometres east of the Capital City, has also already secured Special Economic Zone (SEZ) status approval, which enables Prospect to transact, operate and trade in foreign currency and to retain those funds offshore.
Prospect said the SEZ status was critical as it allows it to operate competitively, attract global talent, demonstrate to lenders ability to repay loans in hard currency and deal with global customers.
Arcadia has an ore reserve of 26,9 million tonnes grading 1,3 percent lithium oxide. A definitive feasibility study indicates that it can produce 212 000 tonnes per annum.
The spodumene concentrate has grading of 6 percent lithium oxide, 216 000 t/yr of low-iron petalite concentrate and 188 000 lbs/yr of tantalum concentrate over an initial period of 12 years.
Prospect managing director Sam Hosack said in the Australia Securities Market listed junior miner’s annual statement released recently that the company had received massive support from Government, which has helped progress the project.
“This will be the 1st major mining project to come on-stream in the post-Mugabe Zimbabwe, the significance of this is well recognised by the Government of Zimbabwe,” he said.
Hosack said Prospect greatly appreciated and applauded the proactive stance taken by Mines and Mining Development Minister Winston Chitando, officials in the ministry and arms of Government facilitating approvals and legislative support required to give the project’s development partners comfort to believe in Prospect and Zimbabwe.
“During the past 12 months, Prospect has pursued an extensive fund-raising exercise and engaged in a multitude of discussions with potential funders of the project.
“While this process has taken longer than initially envisaged, we are delighted to report that our efforts have yielded a promising shortlist of reputable Development Finance Institutions (“DFI”) that have rigorously evaluated Arcadia and expressed their keen interest to participate in the funding of the project costs associated with the development of Arcadia,” Hosack said.
Accordingly, the company said it had progressed the discussions to a point where it believes that a syndicate of the DFIs will commit to providing sufficient project funding through a combination of senior debt facilities as well as equity subscriptions.
Prospect said while the international perception was that operating in Zimbabwe was challenging, which may be true for domestic-based business, export generators such as Prospect operating in SEZs have significant opportunity. The outcomes of the 2,4 million tonne per annum Definitive Feasibility Study (DFS) highlight Arcadia as a robust project and as a critical asset in the long-term supply of lithium.
Following the completion of the DFS, Prospect said it had moved onto the optimisation and value engineering of Arcadia to maximise the potential returns for the financiers and shareholders.
“These initiatives positioned Arcadia in the lowest quartile operating cost, lowest quartile capital intensity, upper quartile for capital returns based on Internal Rate of Return (“IRR”) and to generate strong returns for shareholders throughout the market cycle,” Hosack said.