PERTH (miningweekly.com) – An updated definitive feasibility study (DFS) of the Arcadia lithium project, in Zimbabwe, has increased the estimated life-of-mine (LoM) revenues for the project, along with the mine life, while decreasing the expected capital costs.
A 2018 DFS into the Arcadia project estimated that the 2.4-million-tonne-a-year lithium project would require a capital investment of $165-million, and would deliver LoM revenues of $2.93-billion over a period of 12 years.
The initial DFS estimated that the project would have a pre-tax net present value of $511-million and an internal rate of return of 44%, while average annual earnings before interest, taxes, depreciation and amortization (Ebitda) was estimated at $106-million.
ASX-listed Prospect Resources has now updated the DFS, extending the mine life of the openpit operation to 15-and-a-half years, while LoM revenue has increased to $3.42-billion.
The project’s net present value is now estimated at $710-million, while the internal rate of return has increased to 71%, while average annual Ebitda over the first five years of the operation is now expected at $168-million.
“The material upgrade to our DFS on a base case of 2.4-million tonnes a year development of the project is a significant achievement. The DFS results position the company to secure a key role in the expanding global lithium market, and validates my believe that Arcadia is Africa’s leading lithium project with respect to its scale, grade and economics and management team,” said Prospect MD Sam Hosack.
“What stands out from the intensive workstream as part of the DFS update is the technical and financial strength of the Arcadia project. This DFS represents a major milestone for Prospect as we transition through finance towards development.
“We are excited by the opportunity to capitalise on strong fundamentals of the lithium market, particularly the unique ability to supply the glass and ceramics market with technical grade ultra-low iron petalite. We see the battery market as a key driver of lithium demand growth but remain focused on the glass and ceramics market where Arcadia seeks to become a significant, consistent and reliable high-quality supplier, and thereby access the premium prices available to this market.”
Prospect on Thursday also announced that it has struck a memorandum of understanding with Uranium One Group, giving the uranium producer a 90-day exclusivity period to conduct a due diligence, with the aim of negotiating an equity investment into Prospect, and offtake terms for at least 51% of future lithium production.