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RBZ approves Prospect Resources acquisition

PERTH — The Reserve Bank of Zimbabwe has approved ASX-listed Prospect Resources’ acquisition of an additional 17% interest in the Arcadia lithium project.
The transaction would increase Prospect’s stake in the project from 70% to 87%.

Under the terms of an agreement struck in October last year, Prospect would acquire the additional interest from Farvic Consolidated Mines in exchange for 94,97 million of its own fully paid ordinary shares, and A$1,18 million in cash.

“This transaction is value accretive for Prospect’s shareholders. By acquiring Farvic’s carried interest we increase our share of revenue without increasing our share of costs,” said Prospect MD Sam Hosack.

“Prospect is progressing discussions with multiple potential financiers at a rapid pace and the company is focused on progressing Arcadia and this transaction facilitates those discussions.”

Hosack said that Prospect also has a number of value engineering activities currently under way, that are expected to further strengthen Arcadia’s project economics.

A 2017 prefeasibility study estimated that the project could produce 75 000 t/y of spodumeme concentrate, ramping up to 123 000 t/y, 155 000 t/y of petalite concentrates and 88 000 t/y of tantalite concentrates over the life of the mine.

The project is estimated to have a pre-tax net present value of $533 million and a life-of-mine project revenue of some $2.93-billion, with average annual earnings before interest, taxes, depreciation and amortization of $109 million over an estimated 12-year mine life.

Meanwhile, the Zimbabwe Electricity Supply Authority (Zesa) has been ordered to electrify London-listed Premier African Minerals’ RHA tungsten mine, with the project now considered a priority for the Zimbabwean government.

Premier, which holds a 49% interest in RHA and is the operator, on Wednesday said essential in-country mine repairs were to start immediately.

This follows a successful meeting between Premier and the National Indigenisation and Economic Empowerment Fund, which has reaffirmed its commitment to providing additional RTGS dollar-based funding to the extent this is reasonably necessary to bring RHA back into production.

Premier CEO George Roach believes the value of the in-country funds provided by the Zimbabwe government to support the project has been generally misunderstood.

“For example, Zesa has now quoted to electrify the mine at a price which is only [about] 30% greater in RTGS dollars than the original quotation that was denominated in US dollars,” he said.

Roach noted that while it was inconclusive as to whether the funds provided to date would be sufficient to bring RHA back into production, “it is certain that the payment by RHA of local operating costs within Zimbabwe has not been seriously adversely affected by the funding in RTGS dollars, particularly with regard to transactions involving State-owned entities”

Mining Weekly

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