lithium

Recovering lithium prices from the negative perception of a slower consumer uptake for electric vehicles has not affected ASX-listed Prospect Resources.

The company confirmed in January this year that its Zimbabwe-based Arcadia lithium project boasts mineralisation that will enable it to tap into the traditional high price glass-ceramic market, which is suffering a supply deficit, MD SAM HOSACK tells LAURA CORNISH.

This article first appeared in Mining Review Africa Issue 2, 2020

Read the full digimag here or subscribe to receive a print copy here

2019 Was a defining year for Prospect Resources. The conclusion of an updated definitive feasibility study (DFS) and review of its mineralogy has positioned the company at the forefront of its lithium junior peers.

This has been echoed by Australia-based small and mid-tier listed equity analysis business Pitt Street Research, which highlights robust economics for Arcadia and of equal importance, the strong support it is receiving from the Zimbabwe government.

Consequently, Prospect Resources has made significant progress in securing offtake agreements for its product and will likely secure the US$162 million needed to build Arcadia this year.

Unique mineralogy

The Arcadia ore body comprises hard rock spodumene – required for the EV market – as well as ultra-low iron petalite, currently in a supply deficit.

Having spent the last year evaluating the opportunities for this niche product, Prospect revealed it has passed two qualification processes with two of the world’s largest glass-ceramic manufacturers, both based in Europe.

As such, the company anticipates being one of only two mines in the world capable of producing ultra-low iron petalite and expects to be the largest player in this “natural oligopoly” – none of which are based in Australia.

To pass the final step in the product qualification process, Arcadia’s ultra-low iron petalite product needs a full test in a production kiln which will be undertaken in 2020, once the pilot plant is constructed and larger volume of product becomes available.

“The results of these tests has enabled us to commence discussions with an additional industry leading glass ceramic player based in Europe with a view of entering into a MoU where both parties seek to develop a commercial relationship,” Hosack says.

This is over and above engagements with other glass and ceramics customers across Europe, Asia and Africa who collectively consume over 130 000 tpa equivalent of ultra-low iron petalite.

“This bodes well for the business and has seen investment interest increase. The European glass-ceramics market trades at a premium. It also comprises sophisticated, mature customers and this equates to a non-volatile, stable market requiring consistent and steady supply which absolutely suits Prospect as the largest low-cost producer of ultra-low iron petalite,” Hosack continues.

The company will look to initially supply 100 000 tpa of petalite material (of which about 500 000 tpa equivalent is consumed at present) into this industry and thanks to a 15.5-year mine lifespan (up from 12 years in the original DFS), will be considered a reliable and steady mining partner to the industry.

Prospect has consequently updated its mine plan, better balancing production of low iron petalite and spodumene, in turn reducing Arcadia’s payback period to a short one and a half years, while boosting its overall project economics.

“We consider ourselves fortunate to have an ore body that also contains spodumene and so will look to tap into the EV market as it picks up in the medium future,” Hosack notes.

In fact, the company has already signed an MoU with Uranium One Group to conduct a 90-day due diligence which may see it invest in the business and secure at least 51% of its future lithium production.

Having commenced with the due diligence in mid-December last year, Prospect could secure an offtake agreement before the end of 2020’s first quarter.

“It is clear that in the space of a year Prospect has executed the necessary work to secure a strong position moving forward, which is now underpinned with technical and market confidence, which will facilitate discussions for securing the finance we need to build this project,” Hosack highlights.

Zimbabwe not a prohibiting factor

While the nature of doing business in Zimbabwe is considered difficult, this is not unique to the country or the continent for that matter. Developing a project simply requires pro-active regulatory compliance and for those who are fortunate – productive support from the government.

Prospect has this in abundance – having been awarded special economic zone (SEZ) status for Arcadia in February 2019. The licence is valid for 10 years, with the ability to renew and extend it prior to expiry.

SEZ status at Arcadia provides Prospect with an extensive list of benefits that includes; tax relief and exemptions and the ability to hold and operate foreign currency accounts, as well as exemptions and reductions of costs and trade barriers associated with the import of raw materials and capital goods through to the exportation of the concentrates.

“Let’s also not forget that Zimbabwe offers numerous other benefits for mine developers, specifically access to skills and infrastructure. Arcadia specifically is adjacent to the capital city Harare – making access to the project quick and easy,” Hosack indicates.

Securing finance and project build timeframes

In December last year, Prospect appointed Pan-African multilateral financial institution African Export-Import Bank (Afreximbank) to arrange and manage the primary syndication of a $143 million project finance debt facility. Afreximbank is proposing to fund and hold $75 million of the facility.

The parties have also agreed a non-binding indicative debt facility term sheet. The appointment of Afreximbank as mandated lead arranger is a critical milestone in the financing of the Arcadia lithium project in Zimbabwe. The parties will now undertake further detailed due diligence and negotiate the final facility agreements.

Execution of the facility agreements will be subject to Afreximbank’s further due diligence and credit approvals and drawdown will be subject to satisfaction of various conditions precedent to be included in the agreements.

The bank was established in October 1993 by African governments, African private and institutional investors, and non-African investors. It now comprises some 50 African member state countries.

“With our Zimbabwe based financial partner in place we are confident of progressing Arcadia to financial close in 2020 after which we will make our final investment decision. With an 18-month build timeframe we expect to move into production late in 2021 or early 2022 – the perfect time we believe to also benefit from the battery metals demand upswing,” Hosack outlines.

Understanding Arcadia

Arcadia is the seventh largest hard rock deposit in the world and represents the fastest moving lithium project in Africa. It is fully permitted.

Due to the shallowness of the ore body, open pit mining method is the most convenient and economic extraction method. The pit design takes cognisance of the local resource geometry to optimise the location of the ramps with respect to pit entry location, pit base access and utilisation of the pit floor for access to the final benches.

The mine schedule was prepared based on the following criteria:

The process plant has six-month ramp-up period prior to a steady-state throughput rate of 200 000 tpm;

  • Low grade ore is to be fed into the processes in the first month of commissioning, with high grade ore (+1.0% Li₂O) thereafter.
  • The remaining mined low-grade ore is to be stockpiled and fed to the process plant when high grade ore reserves are exhausted or blended with very high-grade ore to produce a relatively constant product production profile over life of mine

The Arcadia ore is hard, brittle and abrasive and three-stage crushing incorporating high pressure grinding roll crushing (HPGR) has been selected to achieve the sub-3 mm crush size required to achieve adequate liberation of petalite for primary recovery by DMS.

A split DMS concept (coarse and fines) with rougher and cleaner stages has been adopted. The target grade for petalite products is 4% Li₂O; with 80% petalite from the DMS meeting technical grade specification.

The spodumene grain size is finer than the petalite at sub-millimetre size, and together with the presence of spodumene-quartz intergrowth in the MP, resulted in limited recovery of spodumene by DMS.

Consequently, all ore post gravity recovery will report to the flotation circuit where spodumene is effectively recovered at a grind size P100 of 212 μm. The target grade for spodumene concentrate is 6% Li2O.

Tantalite will be recovered as rough concentrate by the application of spirals and wet high intensity magnetics separation (WHIMS) to reject streams from the DMS and flotation circuits. The rough tantalite will be upgraded to a saleable product containing approximately 25% Ta2O5 using conventional wet shaking tables.

Prospect’s ambitions

The company wants to be a dominant player in Zimbabwe. “We understand lithium in this country and this gives us a strong advantage. We are ready to go and mobilised to move this project into construction quickly. With fewer risks and limited uncertainties we are now stronger and more investment attractive than we have ever been and the pathway to both funding and development to first revenue is clear,” Hosack enthuses.

“Arcadia is not a typical hard rock deposit, we have diversified product streams and market opportunities and this will position us as a leader in the lithium field,” he concludes.