An Australian company, Prospect Resources Ltd announced that it has reached a conditional agreement with Farvic, Consolidated Mines (Pvt) Ltd to increase its ownership in the Arcadia Lithium Mine from 70% to 87% yesterday.
Under the agreement, Farvic agreed to transfer the shares it holds in Prospect Lithium Zimbabwe (PLZ) to Prospect Minerals Pte Ltd according to the announcement. PLZ is the holder of the Arcadia Lithium Mine.
“In consideration for the transfer of shares in PLZ, the Company (Prospect Resources Ltd) will issue 94,976,800 fully paid ordinary shares to Farvic, representing a dilution to existing Prospect shareholders of 4.6%, and pay Farvic A$1,187,210 in cash,” Prospect says. “Upon completion of the transaction, the Company’s equity interest in PLZ will increase from 70% to 87%.”
“Currently, Prospect ‘free carries’ the other shareholders in PLZ to production, meaning that Prospect funds 100% of the project expenditure.”
The Australian company also says the outcome of the transaction with Farvic, is that Prospect increases its share of future revenue and profits from the Acadia Lithium Mine by 70% to 87% without an increase in expenditure.
“The shares issued to Farvic will be subject to a voluntary escrow, with 25% of the shares being released every 6 months, subject to any additional escrow imposed by ASX,” Prospect says.
“The transaction is subject to a number of conditions precedent, including approval of the Zimbabwe Reserve Bank and the company (Prospect) obtaining shareholder approval in accordance with the ASX Listing Rules.”
Prospect says it has a team split between Africa and Perth in Australia who have the optimal experience to develop the Arcadia Lithium Project alongside building Prospect of battery metal projects.
Zimbabwe Government granted Arcadia with a national project status in October 2017.
The Arcadia Lithium Project, from a mine located 38km east of Harare, will turn around Zimbabwe’s economy according to the Zimbabwean Minister of Mines, Winston Chitando.