Prospect Resources Plc, the developer of the Arcadia lithium project in Zimbabwe, says strong demand from customers in battery, glass and ceramics markets will cause material improvements in global prices over the next few years.
The firm contends that recent stimulus packages in Europe around increasing electric vehicle adoption and growth in these markets, firmly positions the EU to become the largest electric vehicle market and overtake China.
Lithium (chemical grade or spodumene) is a key input in the manufacture of electric car batteries and Zimbabwe, the world fifth largest producer, stands to benefit once Arcadia (which becomes its second mine) starts production.
The mineral, which is available in Zimbabwe in limitless abundance, has been designated by the Government as one of the key elements of the ambitious target to grow the mining sector into a US$12 billion industry by 2023; with lithium accounting for US$500 million.
Mining contributes 60 percent of the annual foreign exchange inflows into Zimbabwe and the Government sees the sector anchoring short to medium term growth.
Against this background, the clean energy policies continue to gain momentum and in turn, increase the requirement for lithium to meet the rising global demand.
Further, the company has signed off take agreements with global giants in the production of glass and ceramics, for which petalite (technical grade lithium) is a major input.
This, the Australia Stock Exchange (ASX) listed entity said, reinforces its plan to commence near term production of high purity petalite and spodumene near Harare, to take advantage of this rising market prices globally.
“We have set ourselves clear targets in 2021, focused on rapid development of Arcadia to take full advantage of the lithium market resurgence,” said Prospect in a statement authorised by managing director Sam Hosack.
Prospect said its competitive advantage was high purity petalite and the opportunity to sell into the glass and ceramics market, adding this makes the company unique and presents a long-term competitive advantage.
The company has delivered a Definitive Feasibility Study showcasing the strong economic potential of the Arcadia project, completed test work that materially improved petalite recovery whilst also mitigating technical risk. Further, the company has signed an off take agreement with European industrial mineral leader Sibelco N.V further strengthening Prospect’s off take position.
The junior lithium mining firm recently completed a transformational capital raise exercise to fast track Arcadia as Africa’s leading lithium producer.
In October, Prospect presented to investors a clearly defined pathway to production. This was a key driver in the overwhelming success of the capital raise, which attracted institutional investors.
Prospect now has the funds to rapidly develop a pilot plant at Arcadia which will generate samples that will demonstrate Prospect’s economic and technical advantages.
Most importantly, it advances the project finance timelines as the company focuses on a lower capital expenditure plant that allows for staged expansion of operations.