The long-term dynamics for lithium remain a bright light for juniors and new market entrants, despite a recent dip in pricing.
The consequent scramble for lithium deposits in Africa, a region largely under-explored for the mineral, is buzzing with activity but only time will tell which players have the expertise, financial backing and wherewithal to bring their projects to production fruition.
ASX-listed Prospect Resources not only has those criteria in abundance, it has also chosen a well-positioned location to develop its Arcadia project, and will soon leave the pack of explorers behind, MD Sam Hosack tells Laura Cornish.
This article first appeared in Mining Review Africa Issue 11 2018
Zimbabwe has emerged from a politically depressing regime only recently but appears much stronger for it.
Newly elected President Emmerson Mnangagwa has vocalised his desire to bring foreign investment into the country.
And lithium can contribute towards this objective. The country is currently the fifth largest producer of lithium – all mined from an area in the country known as Bikita.
The Arcadia project is not located in this region, but is just a stone’s through away from Harare which means from a development perspective, Prospect is sitting pretty.
After a thorough evaluation of the tenement, Hosack confidently states that the project has the potential to be a globally significant producer.
The right team
While Hosack acknowledges that sentiment around Zimbabwe remains an investment challenge, he believes the company’s experience combined with the quality of its asset will compensate for this.
“We are a Zimbabwe player and we are going to tell a Zimbabwe story,” the MD, who was born in the country, states.
To make this possible, Prospect has assembled a strong team with significant regional experience across exploration, development and operations.
And so, the company has chosen to stop flying below the radar as it takes the final steps to bring Arcadia into the position of producer.
The company had been active in Zimbabwe for a number of years prior to the acquisition of the Arcadia project.
During this period, it tapped into its Zimbabwe network to identify significant projects with the view to transforming the company. It was via this network that it was introduced to Arcadia.
With substantial Zimbabwe experience intact, Prospect Resources also brings a wealth of lithium experience to the table, directly from Western Australia – currently the largest producer of the mineral in the world.
“Both our chief metallurgist and our mining engineer have extensive experience working in the Australian lithium industry.” Naturally an Australian listing makes sense as the product is well understood.
The missing piece of the puzzle in taking this project forward was the need for a leader at the helm and Hosack, who joined the company in July this year, fits the bill. Tasked with bringing the team and its execution abilities together, Hosack must jump the final hurdles to bring Arcadia into the mining world.
Having covered his background during a one-on-one interview in South Africa, he is clearly the right man for the job.
He is an engineer by profession and joined mining magnate First Quantum Minerals in Zambia in 2006, leaving the UK to learn the ropes within the company’s dynamic development team.
“Over the years I had the opportunity to learn many diverse elements of the business and worked across different functional teams developing projects that ranged from US1$ million in value to over $5 billion in value, both in greenfield and brownfield developments.”
With over 10 years of experience in one of the world’s elite mining companies, Hosack brings with him a cultural background on successfully bringing projects into fruition – with experience across many aspects of the mining and infrastructure value chains – from geological and mineralogical understanding to engineering proficiency and financial astuteness.
When he joined the company the Arcadia resource had already been defined to provide over 20 years of mine life at a throughput of 1.2 Mtpa (this actually took only 12 months to achieve) and under Hosack’s guidance will continue to be drilled until its full potential is understood.
For now however, the focus is on moving quickly up the value chain by optimising the project, and successfully bringing Arcadia into production.
A closer look at Arcadia
Hosack describes Arcadia as “a quality asset” with expected strong yields which makes it a solid investment case.
“We want to be first movers in the African lithium space and are taking the appropriate steps to ensure this,” Hosack notes.
At present, the company is working to complete a definitive feasibility study (DFS) by November this year which could change the project parameters. So for now, the MD talks only to the results of pre-feasibility study (PFS) it issued in July 2017.
The deposit has a 43.2 Mt mineral resources at 1.41% lithium oxide (Li2O) (1% cut-off), which includes ore reserves of 26.9 Mt at 1.31% Li2O.
The PFS determined a plant throughput of 1.2 Mtpa to produce 27 000 tpa of lithium carbonate equivalent over a 20-year lifespan.
“The PFS indicates the potential for Arcadia to become a large and globally significant lithium producer and this will be more clearly determined following completion of the DFS.
We are confident of increasing our numbers across the board which if successful would secure our position within the global lithium supply market.”
The company also has a lithium carbonate test plant on site where it has thus far produced over 100 kg/month of lithium carbonate at 99.9%.
“We want to be an independent supplier and must benefit from exposing ourselves to the battery markets. So our objective is to ultimately upgrade our concentrate on-site.”
“Our DFS process will focus on delivering stakeholder value by optimising the mine and plant, and reducing technical risk”.
Detailed engineering services and design are underway and Prospect has secured firm pricing for 80% of the equipment needed on site for the plant.
“While the Prospect story is an exciting and fast moving one – we are still proceeding with caution. We need to penetrate the market carefully as a low cost producer to ensure our competitiveness throughout the commodity cycle, and we are taking extra care to ensure our fundamentals position us well within the evolving lithium sector so as to deliver ongoing shareholder value,” Hosack concludes.