Prospect Resources (ASX:PSC) - spodumene and petalite developer


by Rachael Jones

Prospect Resources Limited (ASX:PSC) Managing Director, Sam Hosack, provides an update on the company's key lithium petalite project in Zimbabwe.

Rachael Jones:
Hello. I'm Rachael Jones for the Finance News Network. Joining me today from Prospect Resources (ASX:PSC) is Managing Director Sam Hosack. Sam, welcome back to the network.

Sam Hosack: Thank you, Rachael.

Rachael Jones: Now, first of all, Sam, could you just remind our viewers about Prospect Resources?

Sam Hosack: Prospect Resources is an ASX listed battery mineral business. We're focused on the 87%-owned Arcadia Project, which is just on the outskirts of Harare in Zimbabwe.

Rachael Jones: Now, Sam, you are leading Africa in the battery mineral revolution. What can you tell me about this?

Sam Hosack: Prospect's been very busy in the last 12 months. We certainly are pushing the project milestones and the catalysts very aggressively. We've been very focused, in particular, on the geology and the mining as well as the marketing of the two products that we produce, which are spodumene and petalite. And, consequently, we've been able to convert that into a substantially upgraded definitive feasibility study, which came out late last year. So, that was a great milestone for us, and we really looked carefully at maximising the opportunities from those two markets, which are quite separate markets.

Rachael Jones: And what are some of the major project updates, and what is the marketability for Prospect for petalite and lithium?

Sam Hosack: Thank you. Look, that's a great question. Petalite is not abundantly understood by the market, particularly in the Western Australian hard rock context, because there is so little petalite. And so we've taken a huge amount of effort to travel around the glass and ceramics customers, understand them, understand their specifications and needs. And Petalite has a very niche application in that sector, the glass and ceramic sector. And so it's a supply-constrained sector and it's substantially different to the chemical market, which is where the EV battery conversion occurs. And so we naturally have quite a dominant entry into a supply-constrained market where premiums have been clearly registered over the last seven to eight years.

So, it's a great market. And the outcomes of our work with the customers and determination of pricing led to the upgrade of our geological model and the upgrade of the ore reserve by 39 per cent. We're able to then take that mine plan, schedule, and output into definitive feasibility, which led to an NPV10 of $710 million, average EBITDA for the first five years, $168 million, and a capital estimate at $162 million. So, really great outcomes for the business, a robust DFS that backs up the maximisation of selling petalite into the glass ceramics market. Now whilst we have some short-term focus on the glass ceramics market, we do have a long-term exposure to the EV sector, and we continue to be very focused on the spodumene sales into the chemical market.

Rachael Jones: That sounds fantastic, Sam. So what do you have planned over the next few months?

Sam Hosack: As we announced late last year, we've appointed the mandated lead arranger for the debt. Now, the debt terms and all the gates that follow through to financial close remain a priority for Prospect Resources. So, at this stage we have indicative non-binding terms agreed with Afrexim, and we're pushing and interacting with Afrexim so as to secure final terms, binding terms, on the debt, which will allow us to open all the other avenues towards financial close. So, priority one is project finance and closing that process with Afrexim.

In addition to the project finance, our focus is on the offtake and increasing our offtake. Late last year, we introduced an MOU, entered into an MOU with Rosatom for at least 51 per cent of the offtake. So, it's our expectation and we're still very focused on closing that with Rosatom within the quarter.

Rachael Jones: And last question now, Sam -- is there anything else you'd like to add?

Sam Hosack: We're very focused on the catalyst and the near-term gains that we've been working very hard towards. We've got a great team working on this, and we're very focused on getting Arcadia Project fully funded.

Rachael Jones: Sam Hosack, congratulations on all your news, and thanks for the update.

Sam Hosack: Thank you very much for having us back.


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