Sinomine acquire majority stake in Prospect resources

SINOMINE Resources Exploration will snap up a 51% stake of Australian-listed Prospect Resources through a US$10 million share placement, with the option to wholly purchase the Arcadia lithium project.

Tinashe Kairiza

Earlier this year, Prospect Resources said it was mobilising US$55 million towards setting up the Arcadia lithium project. At least US$10 million has been generated already through a US$10 million share placement.

Once operational, the project will have capacity to process high-grade lithium suitable for the manufacture of batteries, glass, ceramic and tantalite products.

Zimbabwe is the fifth largest lithium-producer in the world, while it also holds the largest deposits of the mineral globally, the bulk of which is strewn in the Bikita area estimated at 11 million tonnes.

“On 12 February 2018, Prospect announced that it agreed to extend the period to complete the proposed US$10m placement to Sinomine Resource Exploration Co Ltd (Sinomine) to 31 March 2018. Prospect granted the extension at Sinomine’s request,” the company said in a statement.

“As previously announced, Sinomine’s reason for requesting an extension was to allow for further time to discuss: the terms of the Definitive Build and Transfer Contract and the Definitive Facility Agreement; and the potential acquisition of the Arcadia lithium project, via either: an offer to acquire a minimum of 51% of Prospect; or an offer to purchase 100% of the Arcadia lithium project directly.”

Sinomine’s intention to buy a key stake in Prospect Resources is buoyed by the firm’s plan to acquire Tiger Resources — a key copper and cobalt producing company in the Democratic Republic of Congo (DRC).

“In granting the extension, the directors considered Sinomine’s ambition to become a leading battery minerals company, the central role that Prospect’s Arcadia lithium project might play in their strategy and the benefits to Prospect’s shareholders of being engaged with a significant participant in a key market for its lithium products,” Prospects Resources said.

“The directors also noted that Sinomine appears to be quickly executing its strategy as evidenced by its conditional agreement (in conjunction with Shenzhen Oriental Fortune Capital Company Limited) to purchase the DRC operations of Tiger Resources Ltd (ASX Code: TGS) (principally cobalt assets, for some US$260m.”

As it seeks to consolidate its key role in the battery manufacturing industry, Sinomine has also announced plans to purchase Jiangxi Dongpeng New Materials Limited of China for an estimated US$280 million to be settled in shares and cash.

Dongpeng New Materials is one of the major suppliers of lithium fluoride-a key raw material of lithium-ion electrolyte in the Asian country.

In Africa, implementation of the Arcadia lithium project would consolidate Zimbabwe’s position as the fifth largest producer of the mineral on the continent.

Projections from the latest feasibility study show that with an ore reserve estimated at 1,34% lithium oxide and 125 parts per million tantalum pentoxide, Prospect Resources anticipates that the project will be developed into a US$1,2 million-tonne-a-year mining and processing operation. The plant is also projected to have a mine life of about 20 years.

Earlier this year, Zimbabwe’s government, now led by President Emmerson Mnangagwa, singled out the Arcadia Lithium plant as one of the projects which should be implemented within the new administration’s first 100 days in office.

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