Lithium deal sealed
Gold and lithium developer Prospect Resources has cemented an agreement with Hong Kong-listed Sinomine Resources Exploration, which will see the development of the Arcadia lithium project, in Zimbabwe.
The two companies in November inked a conditional placement and framework agreement under which Sinomine will invest A$10-million through a share placement, priced at 5c a share. It has also agreed to an offtake agreement at the Arcadia mine for 390 000 t of spodumene concentrate and more than one-million tonnes of petalite concentrate over a proposed seven-year offtake period.
Prospect last week announced that it had completed the A$10-million share placement, which was priced at 6c a share, with Sinomine taking more than 166.6-million shares in Prospect.
Prospect told shareholders that in addition to the placement, certain terms under the conditional offtake agreement had also been favourably renegotiated with respect to the pricing formula, which had seen the Arcadia project’s net present value increase by about $61-million to $401.5-million.
Further amendments included the requirement for Sinomine to prepay $10-million under the offtake agreement, with these funds payable on the installation of a ball mill at the project.
Further, Prospect has also reduced the offtake volumes to be supplied to Sinomine to about 70% of the earlier-agreed volumes, with offtake volumes now classified as tonnes of spodumene, petalite and lithia units, giving Prospect the flexibility to alter supply quantities of spodumene and petalite.
The surplus is expected to give Prospect flexibility to negotiate offtake terms with other lithium downstream customers and enable the company to divert additional spodumene and petalite volumes to a proposed company-owned, lithium carbonate facility.
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