AFRICAN lithium company, Prospect Resources (Prospect) has received subscriptions for 4,84 million new ordinary shares at 20 cents per share to raise US$968 000 before costs for working capital.

The Australia Stock Exchange-listed firm says the new shares will be issued on Monday next week and the proceeds of the placement will be used as working capital in line with its announcement of December last year.

Prospect executive chairman, Hugh Warner said “the March 2020 quarter has a number of key initiatives with a clear focus on advancing the Arcadia Lithium project through: off-take discussions of the premium ultra-low iron petalite product for supply into Europe, Japan and Korea; discussions with Uranium One Group; and project finance discussions with Afreximbank.”

The company said whilst it had previously advised of its intention to offer a rights issue to shareholders, it was determined that a small placement was a more prudent funding mechanism.

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“This is because of the rapid rise in Prospect’s share price over the last 30 days (53% rise) and the expected continued revaluation, due to the positive global sentiment for lithium in general and the corporate activities previously announced,” it said.

“It was deemed that fixing a rights issue price now may mean a significantly larger dilution to shareholders who are not able to participate in the rights issue due to financial reasons or their jurisdiction.”

Prospect achieved a critical milestone in its development plan for Arcadia Mine when it entered into a project finance debt facility with Afreximbank in December last year.

The regional bank is expected to arrange and manage the primary syndication of a US$143m project finance debt facility, out of which it is proposing to fund US$75m of the facility.

Prospect said the US$143m facility should be sufficient to fund 90% of the project costs for the Arcadia Mine.

Arcadia lithium project is one of the largest hard-rock lithium resources in the world, with about 808 000 tonnes of the resource located on the outskirts of Harare.
It represents a globally significant hard rock lithium resource.