Zimra’s delayed approval hinders Arcadia project

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TINASHE MAKICHI

A delayed approval by the Zimbabwe Revenue Authority (Zimra) has hin-
dered Prospect Resource’s conclusion of an additional acquisition of a 17%
stake in Acadia Lithium Mine

The lithium project is located 35 km east of Harare. Its mining lease was granted over an area of more than 10 km2 to the ASX-listed Prospect
Resources. On 11 June 2019, Prospect shareholders approved the acquisition of an additional 17% interest in the project, taking its ownership to 87% subject to national regulatory approval.

In a communication to shareholders, Prospect said it had received all but one regulatory approval which it expects to receive in due course. “The reason for the delay is that that transaction may only be completed with the approval of Zimra. The agreement is also subject to regulatory consent,”

Prospect explained. “The Zimra clearance certificate is the only remaining consent required to complete the transaction. The company is confident that Zimra will, in due course, issue the certificate.”

In a bid to regularise the transaction, the company sought and was granted a waiver from ASX. Listing Rule 14.7 so that it may delay the issue of the consideration shares until 10 January 2020. Prospect has since obtained a waiver from ASX

Listing Rule 14.7 to permit the company to issue 9,479,680 fully paid ordinary shares to Farvic.Consolidated Mines Pvt Limited not later than
one month after 11 June 2019, being the date shareholders approved the issue of the Consolidated Shares to Farvic at an extraordinary general meeting of shareholders.

The purchase of the additional equity on the project was through a combination of cash and script that seeks to strengthen Prospect’s position
in Arcadia. Prospect has, in the past, pursued an extensive fund-raising exercise and engaged in discussions with potential funders of the project.

While the process has taken longer than initially envisaged, the company says the efforts have yielded a promising shortlist of reputable development finance institutions (DFIs) that have rigorously evaluated Arcadia and expressed keen interest to participate in the funding of the project and costs associated with the development of the project.

“We have engaged with these DFIs not just as sources of funding, but with a view of securing credible long-term strategic partners and supporters of our corporate mission underpinned by growth and development,” said Sam Hosack, the managing director of Prospect Resources.

“Accordingly, the company has progressed these discussions to a point where we believe that a syndicate of these DFIs will commit to providing sufficient funds via a combination of senior debt facilities and equity subscriptions, and the management team continues to work assiduously to conclude these negotiations and enter into binding agreements, which will soon allow Prospect to announce further relevant details to the market,”
Hosack revealed.

The Acadia Lithium project is located close to major highways and railheads, with the Beira Port being less than 580 km away by rail/road transport while electricity power access through switchyard is within 4 km of the project. The Group produced about 99.5% lithium carbonate during the year in its Kwekwe laboratory, using Arcadia petalite.