Prospect Resources

Advancing the 2nd largest JORC compliant hard rock lithium resource in Africa

 


 

Prospect Resources is the brainchild of experienced mining executives Hugh Warner and Harry Greaves. The pair formulated a vision to list an Africa-focused mining company on the ASX that would utilise Warner’s vast previous experience as a director of many publicly listed companies along with the localised knowledge of Greaves and his team of Zimbabwean miners involved in various mining assets. It was soon decided that Prospect would initially focus on Zimbabwe, a country with many strong potential mining projects and bags of untapped skills according to Greaves, yet its mineral resources sector has invariably suffered in the past due to a lack of access to capital markets and political instability. However, under the co-guidance of executive chairman Warner, Prospect was listed on the ASX, and the first step of his and Greaves’ plan was realised.

 

In the first couple of years after its listing, Prospect began building a portfolio of gold assets in Zimbabwe but didn’t establish a flagship asset until lithium started to become an increasingly compelling mineral across the investment market.

 

At this point the firm began to evaluate a number of potential lithium assets before determining that the Arcadia Lithium Project, a hard rock deposit comprised of spodumene and petalite ore located on the outskirts of Harare, held the most potential.

 

When Prospect acquired the project in mid-2016, it gained access to historical information relating to previous activity at the site, which revealed that the UK Atomic Energy Association completed limited mining of part of the resource dating back to the 1950s and 60s.

 

From this material, the company formulated an initial resource target of 15-18 million tonnes at 3% lithium, ahead of a scoping study at the end of 2016 and pre-feasibility study in June 2017. To say that initial expectations were exceeded by the results of these studies is an understatement.

 

A globally significant resource

 

“When we started rolling out the drilling programme we discovered what we call the lower main pegmatite, which does not appear to have been previously known about or explored,” says Greaves.

 

“That has pushed us up to a total resource of 72 million tonnes, making Arcadia the sixth biggest lithium hard rock project in the world.” Blowing initial expectations out of the water would be a more appropriate way to describe the results of Prospect’s phased drilling programme.

 

After continued updates were made to the mineral resource estimate over 2017, the current estimate for the Arcadia project makes it Africa’s 2nd largest JORC compliant lithium resource and one of the most globally significant lithium assets.

 

In addition to the sheer size of the resource, there are a number of other key elements of the project that are working in the favour of Prospect, none more so than its location just 38 km East of the capital Harare.

 

“We’ve got bitumen roads within 15 km of the project. We have abundant water and power on site and we’ve got a large well-trained and educated labour force in close proximity. In terms of location we are very well suited to getting into production quickly and profitably.”

 

In addition, the project economics are also looking increasingly attractive for Prospect. There is no need to construct a big mining village or build any major roads and the only planned infrastructural work is the repair of around 16 km of gravel road for the haulage of concentrate through Goromonzi district towards the main arterial road leading to the Beira port in Mozambique.

 

Operating in Zimbabwe is a prospect that would raise the eyebrows of many experienced heads in the mining industry, bearing in mind the Southern African nation’s increasingly beleaguered-looking economy of late and the significant shift in the political landscape that took place late last year.

 

However, in a stark contrast to many reports of business dealings in Zimbabwe, Greaves happily reveals that from the very first moment Prospect signed the deal for the Arcadia project, the authorities have been nothing short of fantastic in helping the company advance its asset.

 

“We secured the project at the end of May 2016 and had drills turning within 30 days. We also declared our MRE (mineral resource estimation) within four months and all regulatory approvals were handled very professionally and very quickly.”

 

‘Extraordinary levels of cooperation’

 

Moreover, since the change of government in Zimbabwe in November 2017, the operating environment has further improved, according to Greaves. “We are currently witnessing extraordinary levels of cooperation,” he reveals.

 

“In all my experience of mining in Zimbabwe for 20 years, I’ve never seen a situation where the entire hierarchy of the ministry of mines are available at any time to take a call and their question to us is always: How can we assist you to expedite this project into production?”

 

He goes onto explain how the ministry expedited the process of changing claims into a mining lease, is assisting the company with bringing in a bigger power line to the project and is working very closely with Prospect to get the site designated as a Special Economic Zone, for to the second phase of the project which will deliver a lithium chemical plant adjacent to the existing site.

 

In February 2018, Prospect commissioned a lithium carbonate pilot plant located in the city of Kwekwe, which was recently visited by Zimbabwe’s Minister for Mines and Mining Development Winston Chitando to see first-hand how Prospect is delivering battery grade lithium carbonate.

 

The key reasons behind Prospect building a lithium carbonate pilot are two-fold. One is to demonstrate its commitment to providing greater beneficiation to the government of Zimbabwe. Two is to provide greater profitability margins for the company.

 

“We will initially be exporting 240,000 tonnes of concentrate primarily to China and a lot of that is just rocks going on holiday,” Greaves quips. “With a chemical plant we gain the ability to turn that concentrate into lithium carbonate in-country, which it is much more profitable and an important beneficiation process.”

 

Better returns for country and company

 

The pilot plant was designed and built locally, which is a strong indicator of Prospect’s faith in the skills and expertise of Zimbabweans and also shows the potential for economic benefits to be shared within the country when it comes to building a full-scale carbonate plant.

 

In the long term, Prospect will create between 250 and 300 direct jobs within the local community in Phase 1 of the project and around the same in Phase 2, while in the short term a significant amount of heavy labour jobs will be available as the project moves into construction.

 

“We are working very closely with our local communities to make sure that where the skills are appropriate, the communities will benefit. We will be training a lot of those folk to be available right through the construction and will then roll some of those people into the production phase too.

 

“We can also pull in some of the skilled people out of the city as we are in such close proximity to Harare,” Greaves adds.

 

So far, the pilot plant has successfully processed petalite concentrates into 99.5% lithium carbonate, which is a significant result for Prospect particularly as it looks to secure future customers for its battery-grade lithium.

 

“We are working on some additional steps in the process now which makes us believe we can get much higher grades than 99.5%, and that is the benefit of having a pilot plant.”

 

Arcadia’s first customer

 

Prospect has already secured an exciting seven-year offtake agreement with Chinese company Sinomine, who have a strong footprint across Southern Africa with stakes in mining ventures in Zambia and the DRC, as well as having access to a lithium carbonate facility in China.

 

“They have a lot of skills themselves which we will be leveraging off and they have agreed to buy 70% of our product for the next seven years.

 

“We are in advanced discussions with three other potential offtake partners and are very confident that we will close out the remaining offtake very shortly. There is strong interest in our spodumene and petalite concentrates, as well as the very keen interest in our carbonate plans too.”

 

Prospect has commenced the construction phase of its flagship Arcadia Lithium Project and is waiting to hear back from the President of Zimbabwe with regards to a date for the official opening of the mine, with first production slated for Q2 of 2019.

 

Looking beyond the near-term, Prospect has a pipeline of gold projects in Zimbabwe that pre-date the Arcadia project, which are set to be revisited by the company in the coming months.

 

In addition, the company is exploring various opportunities across Southern Africa for several high demand commodities, including copper-cobalt deposits in the DRC as well as various opportunities in Zambia and Mozambique.

 

“At the moment our geological team is extremely busy with additional projects across the continent. We would like to keep the company growing very rapidly in the next five to 10 years,” concludes Greaves.