Prospect Resources has been awarded special economic zone (SEZ) status for its flagship Arcadia lithium mining project, which will grant the project generous tax breaks and other concessions.
The licence is valid for 10 years, with the ability to renew and extend the licence prior to expiry, the Australia Stock Exchange-listed firm said in a statement on Thursday.
“SEZ status at Arcadia provides Prospect with an extensive list of benefits that includes; tax relief and exemptions and the ability to hold and operate foreign currency accounts, as well as exemptions and reductions of costs and trade barriers associated with the import of raw materials and capital goods through to the exportation of the concentrates,” Prospect said.
The incentives and benefits to be received from the status, reinforces the financial outcomes of the project outlined in the Definitive Feasibility Study, the company said. In November, Prospect announced results of a definitive feasibility study that confirmed Arcadia would be profitable, with forecast life of mine revenue of US$2.93 billion and average annual EBITDA of US$106 million over a 12-year mine life. The company expects the lithium plant at Arcadia commissioned by the end of 2020.
Added Prospect: “With Arcadia now securing SEZ, Prospect will have greater abilities to hold and transact in foreign currency. This simplifies Prospect’s ability to make payments to and from suppliers and customers, as well as providing potential financiers confidence that the company can manage its currency freely to meet its operational and capital management requirements.”
Prospect Resources Managing Director, Sam Hosack, said: “SEZ status at Arcadia is a substantial milestone for the company as it demonstrates the Zimbabwe Government’s commitment to attract foreign investment, the Project’s significance within Zimbabwe and the opportunity that Arcadia presents to all stakeholders.”
The financial and non-financial benefits to Prospect Resources in achieving SEZ status at Arcadia will greatly assist in the financing, development and operation of the mine, Hosack said.
Prospect broke ground at the Arcadia site in November, at a ceremony presided over by President Emmerson Mnangagwa, who spoke of Zimbabwe’s “pursuit to be a significant global player in the lithium mining industry”.
In December, Prospect shipped Africa’s first battery-grade lithium carbonate, as it steps up efforts to produce and find markets for a compound that is in high demand for use in rechargeable batteries. Although lithium demand is primarily driven by the battery market, Prospect is also looking to tap into rising demand for lithium use in the manufacture of glass, ceramics, glass-ceramics and metallurgical products.