Russian energy giant in talks for stake in Zimbabwe’s lithium project

Australian lithium developer Prospect Resources has signed a memorandum of understanding with Uranium One, the Canada-based unit of Russia’s Rosatom, that could see the miner take up a stake in Prospect and buy over half of the lithium from Arcadia mine.

The Uranium One announcement was made concurrently with the release of an updated definitive feasibility study, which showed improved economics for Arcadia, which is being developed near Goromonzi.

Under the MoU, Uranium One will be granted an exclusive 90-day period to complete due diligence, leading to negotiations for equity in Prospect and at least 51% of Prospect’s future lithium production from Arcadia.

“The discussions with Uranium One are incomplete and ongoing and there is no guarantee that the MoU or any discussions with Uranium One will result in a formal binding agreement or proposal or as to the timing or terms on which any transactions may proceed,” Prospect said in a notice release on the Australian Stock Exchange yesterday.

The notice does not disclose how much of Prospect Uranium One could acquire. Prior to the ASX announcement, Prospect had a market value of US$18 million.

Prospect has, since 2018, made moves to secure markets for its future lithium output. In 2018, it signed an offtake agreement with Shenzhen-listed Sinomine, who agreed to buy 30% of Arcadia’s annual production over seven years.

Sinomine bought equity in Prospect for US$10 million and put down a further US$10 million in advance for Arcadia’s lithium concentrates. In May 2019, Sinomine announced it had started construction of a 15 000tpa battery grade lithium hydroxide plant.

Should an offtake agreement with Uranium One happen, Prospect would begin production with a guaranteed market for at least 80% of its output.

Prospect is aiming to become Africa’s first lithium producer. Because of the expected different types of lithium at Arcadia – spodumene, petalite and tantalite concentrates – Prospect has three potential product streams targeted at the electric vehicle (EV) and energy storage markets, the glass and ceramic markets and other industrial applications.

The prices of lithium are forecast to rise over the next five years. The 50% drop in prices over the past year has presented investors with the gateway to buy stock in producers, including the likes of Prospect.

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