Leading Africa in the Battery Minerals Revolution

 

Prospect Resources Limited (ASX: PSC, FRA:5E8) is an ASX listed company focussed on the exploration and development of mining projects, specifically battery and electrification metals, in Zimbabwe and the broader sub-Saharan African region.

 

Prospect has a strong, agile team split between Africa and Perth who have the optimal experience to build Prospect as Africa's leading mineral business.

Australian Team – financing, investor relations, corporate governance, offtake and marketing

  • Small and focused head office team
  • Deep financial market and transaction experience

African Team - development and exploration

  • Strong and experienced local team with a track record of discovering, proving, building and operating mining projects in Africa
  • Significant majority of the Prospect team is based on the ground in the region

Project Highlights

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Arcadia Lithium Project

On 20 April 2022, Prospect completed the sale of its 87% interest in the Arcadia Project to Huayou International Mining (Hong Kong) Limited, a subsidiary of Huayou.

The Transaction comprised cash consideration of approximately US$377.8 million. Following payment of US$26.8 million in Zimbabwean capital gains tax and US$8 million to Sinomine in relation to the termination of the offtake agreement between Prospect and Sinomine,[1] US$342.9 million in net proceeds were received by Prospect on completion.

Subsequent to the Transaction completing, Prospect converted the funds into Australian dollars, receiving A$465.6 million at an average AUD:USD conversion rate of 0.7365.

As previously announced, Prospect intends to distribute a substantial portion of the net proceeds from the Transaction to its shareholders:

  • the distribution will be a cash distribution, which will likely include a capital reduction component and an unfranked dividend component;
  • Prospect is applying for an ATO ruling which will set out the Australian tax treatment of the distribution for the main classes of Prospect’s shareholders;
  • the capital reduction component of the distribution will require shareholder approval and a shareholder meeting is expected to be convened in June 2022 to seek that approval. The record date for the distribution will be announced in the Notice of Meeting;
  • payment of the proposed distribution is expected to occur in July 2022;
  • Prospect expects to distribute between A$0.94 and $0.96 per share[2], which will include a capital reduction of up to A$0.20 per share; and
  • Prospect intends to retain a cash balance of between A$30-40 million to progress battery and electrification metals projects with a primary focus in Zimbabwe, and secondary focus on the broader sub-Saharan African region.

Prospect Resources Managing Director Sam Hosack and Huayou Cobalts Executive Vice Chairman George Feng

 

Step Aside Project

The Step Aside Project is located 8km north of the Arcadia Project[3], and comprises claims rationalised to approximately 100 hectares within the Harare Greenstone Belt, west of the Mashonganyika Fault. The potential of the area has been confirmed by positive historical regional stream and soil sample geochemistry results. Four mineralized pegmatites have been mapped from east to west within a meta-dolerite host rock. These mineralized pegmatites are all roughly parallel to each other, lying in a north-south orientation and have dip angles of 40-45˚ to the west.

The early stages of an exploration program is underway at Step Aside, with rock chip sampling underway, with a trenching and drilling exercise to follow. Trenching and drilling will aid in determining sub-surface strike extensions and will provide greater detail as to the thickness and strike length of any potential underlying pegmatite. Drilling is planned to be undertaken during Q3 CY2022.

 

[1] See ASX release dated 18 January 2022 for further detail relating to the arrangements with Sinomine.

[2] Calculated based on fully diluted shares on issue of 467,293,677, subject to final transaction costs.

[3] Full details of the Mineral Resource Estimate detailed in announcement dated 11 October 2021 – Arcadia Staged Optimised Feasibility Study

 

Project Generation

The Prospect exploration team continue to develop a pipeline of prospective battery mineral targets. The success and publicity associated with the Transaction with Huayou has resulted in an increase in opportunities being presented to Prospect. The team is assessing extensive opportunities in a rigorous fashion preselecting targeted scale and grade criteria that can be readily advanced with the company now in a well capitalised position.