Prospect agrees lithium supply deal with Belgium’s Sibelco, seven-year output now has ready buyers

Sibelco's plant in Brazil: The company is to buy Zimbabwean lithium

Lithium developer Prospect Resources has signed a seven-year deal to supply ultra-low iron petalite to Belgium’s Sibelco, the largest distributor of the metal in Europe and one of the world’s largest glass-ceramic manufacturers.

Petalite is used in the glass and ceramics industry. With this Sibelco deal, all of the petalite that Prospect will produce from Arcadia lithium mine in the first seven years now has guaranteed buyers.

The agreement will see Prospect supply Sibelco with 100,000 dry metric tonnes (dmt) of high petalite concentrate every year from Arcadia, under development at Goromonzi. The two companies signed an MoU on talks towards this deal in April, but they had missed their initial July 1 deadline to reach an agreement.

“The seven-year agreement is for up to 100,000 dmt per annum of high quality, ultra-low iron petalite concentrate, resulting in a total of up to 700,000 dmt over the lifetime of the contract,” Prospect, listed on the Australian Stock Exchange (ASX) said in a notice Monday.

“Sibelco is the largest distributor of ultra-low iron petalite in Europe and possibly the world and we believe that this is the largest ultra-low iron petalite offtake agreement ever signed. Sibelco is a global industrial minerals business, with annual turnover of some €3.5 billion. Once in production, Prospect is expected to be the largest ultra-low iron petalite producer in the world,” said Prospect Managing Director Sam Hosack.

Arcadia’s petalite is aimed at the glass and ceramics industry. Earlier this month, Prospect said the mine had achieved a lithium-to-iron ratio that is suitable for the premium glass and ceramics market.

The glass and ceramics industry consumes over 130 000 tonnes per annum equivalent of ultra-low iron petalite.

Offtake agreements are usually done even before production at a mining operation starts, in order to secure a market for the output.

In 2018, Hong Kong and Shenzhen-listed company, Sinomine, bought a stake in Prospect and agreed to buy up to 390 000 tonnes of spodumene concentrate and over one-million tonnes of petalite over seven-years.

In December, Prospect signed an MoU 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. Uncertainty on the world markets, due to COVID-19, has delayed progress on the Uranium One talks and on a separate funding agreement with Afreximbank.

A definitive feasibility study (DFS) – an evaluation of whether mineral resources at a proposed project can be mined profitably – estimated that the proposed mine would last beyond 15 years. this makes Arcadia potentially the seventh largest hard-rock lithium asset in the world.

Prospect’s shares rose as much as 52.8% to A$0.275 on the ASX on the news, its highest since October 9, 2018. The stock was up 11.1% this year, as at last close.