Australia Stock Exchange (ASX) listed miner, Prospect Resources, developer of the Arcadia lithium mine near Harare, has appointed African Export and Import Bank (Afreximbank) as lead arranger for a US$143 million syndicated loan facility it needs to finance the lithium-ion batteries project.
The open-pit lithium mining project, regarded as one of the world’s biggest hard rock lithium-ion resources, was granted National Project status by the Government back in October 2017.
Prospect said the pan-African bank had also proposed to fund and hold US$75 million of the facility.
The parties have agreed on a non-binding indicative debt facility term sheet. The lithium miner said the appointment of Afreximbank as lead arranger was critical to financing of Arcadia.
Prospect, which holds 87 percent stake in Prospect Zimbabwe, while the remaining interest is free carried to production, said it will undertake further detailed due diligence and negotiate final facility agreements.
Execution of the facility agreements will be subject to Afreximbank’s further due diligence, credit approvals and draw-down will be subject to satisfaction of various conditions precedent to be included in the agreements.
An amount of US$162 million is required as capital expenditure to develop the Arcadia lithium-ion batteries, used for portable electronics and electric vehicles project to production and it is expected this will take about 18 months from the date of financial closure of project finance.
Development of Arcadia is key to Government’s vision of growing mining to a US$12 billion by 2023 and a definitive feasibility study (DFS) proved the lithium project will earn Zimbabwe at least US$3,5 billion over its life of mine.
It is Africa’s most advanced lithium-ion batteries project, which will raise Zimbabwe to fifth largest producer. Zimbabwe has one producing lithium mine, Bikita Minerals.
Large lithium deposits give Zimbabwe an opportunity to capitalise on growing lithium-ion batteries demand across the world, including growing demand for and transition to non-combustible energy cars.
The mine also possesses ultra-low iron lithium deposits that can go directly into glass and ceramics manufacturing with leading manufacturers overseas having completed initial tests of samples from the Arcadia project.
Prospect said this week that it had signed a three-year power supply agreement with State power utility Zesa Holdings for the Arcadia project and the contract is automatically renewable on expiry for a further three years.
Arcadia’s primary source of power supply will thus be Lake Kariba, a hydroelectric power station, whose main power distribution lines run adjacent to Arcadia, about 15 kilometres away via the Atlanta substation.
Supply will start in January next year for a period of three years, which is automatically renewable for similar term, but the tariff for the power will be determined by a statutory body that regulates the energy sector.
In the event of a major system fault, maintenance or major power supply shortfalls that may temporarily interrupt power supply to Arcadia, Zimbabwe Electricity Transmission Authority (ZETDC) has to provide advance notice.
ZETDC is the distribution arm of Zesa and is part of the utility’s other divisional units that include the generation arm, Zimbabwe Power Company (ZPC) and information communication technology service provider, Powertel.
“The development of the Arcadia Lithium Mine must be underpinned by secure, long term energy supply and the SPSA (Secure Power Supply Agreement) is the first stage in this process,” said Prospect Resources Plc managing director Sam Hosack.
Arcadia Mining is expected to reach an annual production of 2,5 million tonnes of lithium ore after the mine is deployed. The mineral already has joint ore resources certified reserves of over 43 million tonnes.
Prospect anticipates producing an average of 212 000 tonnes (t) of 6 percent spodumene concentrate, 216 000t of petalite concentrate, and 188 000 pounds (lbs) of tantalum per annum from Arcadia.
The project is estimated to have a mine life of 15,5 years.
Because of its strategic importance, the Arcadia lithium project has already been accorded Special Economic Zone Status (SEZ), rendering it available to a number of special incentives that will catalyse its progress.
Existing operational supply currently in place can only meet demand to 2021 and for producers to meet the demand from the market in 2022; development of additional capacity would need to commence 2019.
As such, without further investment in new lithium extraction projects, there will be a supply shortage by 2022, where EV growth will accelerate as they reach cost parity with internal combustion engine (ICE) vehicles.
Zimbabwe’s lithium deposits are second to none in Africa, and proven deposits are located in Bikita, Goromonzi, and Kamativi.
At present, Zimbabwe’s mining industry is dominated by gold, platinum, diamonds, nickel, chrome and coal and lithium will become one of the country’s major mining industries soon.
Prospect Resources and Sinomine International Exploration entered an off-take agreement, in November 2017, for the supply of 390 000t of spodumene concentrate and 1 097Mt of petalite concentrate from Arcadia.
The ore will be processed using conventional beneficiation techniques, including gravity-based processes of dense media separation (DMS).
The ore will undergo four-stage processing to achieve a sub-3mm crush size, which is ideal to achieve adequate liberation of petalite for primary recovery by DMS. Multi-stage spirals will be used to further recover the petalite. — www.ebusinssweekly.com.