The Reserve Bank of Zimbabwe has approved ASX-listed African lithium developer Prospect Resources’ acquisition of an additional 17% of its Arcadia lithium project.
This bodes well for improving the negative perceptions investors have in Zimbabwe and the government’s ability to make decisions that will drive investment into the country and its mining sector.
On completion, Prospect Resources will increase its ownership in its Arcadia lithium project from 70% to 87%, and increase its share of future revenues and profits from the project’s strong economics.
These economics includes:
- Pre-tax NPV1 (10% discount rate) of US$533 million
- Life-of-mine project revenue of $2.932 billion
- Average annual EBITDA of $109 million over an estimated 12-year mine life
- Competitive C1 cost of $2303/t of concentrate placing Arcadia in the lowest
- operating cost quartile
- Delivering a rapid payback for the project of 2.5 years from first production and an exceptionally strong IRR of 45%.
Says Prospect Resources’ MD Sam Hosack:
“This transaction is value accretive for Prospect’s shareholders. By acquiring Farvic’s carried interest we increase our share of revenues without increasing our share of costs.”
“Prospect is progressing discussions with multiple potential financiers at a rapid pace and the company is focused on advancing Arcadia and this transaction facilitates those discussions.”
“The company has a number of value engineering activities currently underway that are expected to further strengthen Arcadia’s project economics.”