Arcadia Lithium Deposit

Prospect Resources is prioritizing exploration and technical work to fast track the development of the Arcadia Mine into production.

Results of Scoping Study *

Mineral Resource within Conceptual Pit stands at:

23.4Mt at 1.42% Li2O and 123ppm Ta2O5
(70% Measured and Indicated, & 30% Inferred)
Shallow flat lying, high grade (1% Li2O cut-off)

SUMMARY OF SCOPING STUDY *

  • 70% increase in Measured Resources - JORC 2012 classification
  • Company priority is focusing on early production (anticipated to commence mid 2017)
  • Conceptual pit design indicates potential for a mine life of some 15 - 25years
  • Conceptual pit design supports extraction of near surface, high grade lithium Mineral Resource of 23Mtat 1.42%Li2O and 123ppm Ta2O5 with a favourable stripping ratio of 2.98:1
  • Off-take discussions continuing
  • 9 metallurgical holes drilled for production process analysis in South Africa with two additional holes beingsent to Western Australia for validation
  • Abundant water on site
  • All Mineral Resources covered by Mining Claims
  • First Environmental approvals in place
  • Surface (farm) rights secured and maize farming has commenced
  • Strengthening in-house process and production team via new hires
  • Additional Exploration Target** of 80-100Mt @ 1.2%-1.5% Li2O, within flat lying pegmatites.

 

* The Scoping Study referred to in this report is based on low level technical and economic assessments, and is insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Scoping Study will be realized.

** The potential quantity and grade stated by the Exploration Target is conceptual in nature and there has been insufficient exploration to estimate a Mineral Resource over the exploration target area and that it is uncertain if further exploration will result in the estimation of a Mineral Resource.

Prospect Resources (ASX: PSC) is pleased to provide a Scoping Study and development update at the Company’s Arcadia Lithium Deposit in Zimbabwe.

The Company’s priority is early production – mid 2017.  The current mining plan envisages a series of open pits with production commencing from the first high grade pit, anticipated to commence mid 2017, with the second larger pit coming into production thereafter.

This update relates to the Mineral Resource expected to be targeted in the first production phase.  The infill and metallurgical drilling completed during October and November was successful in increasing the Measured Resource by 70% to 4.1Mt at 1.44 % Li2O (>1% Li2O cut off) as well as defining a high grade zone (>1% Li2O cut off) comprising 16.2Mt grading 1.39% Li2O (Measured and Indicated), all of which are incorporated within the initial pit design of 23Mt at 1.42% Li2O and 123ppm Ta2O5 (Figures 1,2 and Table 1).  All Mineral Resources, to date, are shallow and flat lying.  

The delineation of this zone provides Prospect Resources with a well-defined and robust block model in which to support and complement the metallurgical testwork and mine design aspects of the Scoping Study. 

Regional field work has identified several follow up targets, with all identified pegmatites being shallow dipping, are open along strike and down dip with at least 3km of strike length being identified to date.

Table 1: Mineral Resource included in Conceptual Pit Design

1% Li2O Cut-off

Category

tonnes

Li2O %

Ta2O5 ppm

Li2O Tonnes

Ta2O5 lbs

Measured

4,100,000

1.44%

145

59,600

1,317,400

Indicated

12,100,000

1.37%

118

166,600

3,146,700

Inferred

7,100,000

1.47%

123

104,700

1,927,600

GRAND TOTAL

23,400,000

1.42%

123

331,000

6,391,700

 

Figure 1a – Arcadia Li Deposit, Li2O Block Model and Conceptual Pit Design incorporating 23.4Mt at 1.42% Li2O and 123ppm Ta2O5

 

Figure 1b – Arcadia Li Deposit, showing Conceptual Pit Design and Mineral Resource Classification

Figure 2 – Plan showing location of conceptual open pit and drilling completed to date

Figure 3 – Arcadia LithiumDeposit – Dip Section

Figure 4 – Arcadia LithiumDeposit – Strike Section

Conceptual Mine and Pit Design

Based on the geometries, thicknesses and depths to which the pegmatites have been modelled, plus their estimated grades, open pit mining will be the logical method being assessed during feasibility studies.

A provisional mining plan and design at Arcadia has been formulated by McDhui Mining in Johannesburg, and describes an open pit operation with an estimated life of mine of approximately 12-25 years and contains the following characteristics:

  • The shallow dipping nature of the pegmatites has resulted in a stripping ratio of  2.98:1 (waste: ore)
  • The lithium bearing pegmatite would be extracted from the top of the hill, downwards and north-eastwards towards the valley below.
  • The approximate dimensions of the proposed pit are: 650m (length) x 850m (widest point), with the deepest portion of the pit being 120m below surface, equating to approximately 12, 10m high benches.
  • The final pit slope angle is estimated to be approximately 52 degrees, and this has been supported by ongoing geotechnical logging and work

 

Metallurgical Test Work

To date a total of nine dedicated metallurgical drillholes comprising 1,600kg of pegmatite has been submitted to FT Geolabs in Centurion, South Africa, with the aim of assessing spodumene and petalite upgradeability and recovery. 

Additional two samples are also being delivered to a Perth based laboratory in order to carry tandem verification testwork. Figure 6, below, shows location of the metallurgical drill holes.

FT Geolabs undertakes most of the laboratory scale chemical, metallurgical and mineralogical testing for the Bikita Mine, in Zimbabwe, the largest operating hard-rock lithium mine in Southern Africa. The work is on-going, but initial Heavy Liquid Separation (HLS) test work has demonstrated that the lithium specification for both spodumene (>6.5% Li2O) and petalite can be obtained through simple Dense Media Separation (DMS) methods. Testwork on iron concentrations in the spodumene and petalite concentrates were successful in producing concentrates with Fe2O3 levels of 0.17% Fe2O3 (spodumene) and 0.03% Fe2O3 (petalite) respectively.

The next phase of testwork is focusing on additional communition and floatation testwork on representative samples drawn from the metallurgical drilling program. This ongoing testwork is focusing on further optimising spodumene and petalite recoveries, and to provide the basis for the design criteria, process flow and equipment specification for the metallurgical process.

Figure 6 – Location of Metallurgical holes and Mineralogical/XRD sampling

Mineralogical Testwork – Petrography and XRD Studies

Petrography

To date, a total of 43 thin and polished thin sections have been investigated by MSA, University of Witwatersrand, University of Pretoria, CSA Global and Townend& Associates in Perth.

Sixteen of these samples were taken from the Main Pegmatite exposed in the old open cast pit (Figure 5). The balance was drawn from a variety of different pegmatite intersections from eight diamond drill holes. There are no significant observable mineralogical differences between the various pegmatite bands. The dominant lithium minerals in order are spodumene, then petalite followed by smaller quantities of eucryptite, and occasional lepidolite.

 

Gangue minerals are predominantly microcline, albite, quartz, muscovite with minor amounts of dravite, ferro-holmquistite and garnet. The ferro-holmquistite (an iron lithium amphibole) (and hornblende – an iron amphibole) are localised and are typically found located on the upper and lower pegmatite contacts, and are the results of reaction of the lithium-rich pegmatite melt and the basalt host rocks.

XRD Studies

To date, six batches (comprising 245 samples)have been analysed by XRD at ALS Chemex Laboratories in Johannesburg. Samples were drawn from both the Main Pegmatite as well as the Lower Pegmatite, and from within the conceptual pit design (Figure 6).

XRD analyses to date show that the Lower Pegmatite (primary focus of mining) contains five times more spodumene (15%) than petalite (3%), and has similar gangue mineralogy to the Main Pegmatite. The XRD results completed to date on the Lower Pegmatite show a broad mineralogical zonation through the Lower Pegmatite based on the spodumene - petalite ratio and quartz content.  Sampled holes located within the modeled Lower Pegmatite display higher spodumene - petalite ratios along the edges and towards the upper contacts and a higher spodumene - petalite ratio in the central and lower portions of the Lower Pegmatite. The quartz content tends to be higher in the high spodumene zones; this can be ascribed to the re-equilibration post crystallization of the petalite to form spodumene-quartz intergrowths (SQI) in the slower cooling central, and to a lesser extent in the lower portions, of the pegmatite.

Initial results from the Main Pegmatite suggest approximately equal quantities of spodumene and petalite (around 11 – 13%), with 39% quartz, 33% feldspar, and the balance largely muscovite.

Geotechnical Engineering

A detailed slope stability study has been commissioned, based on the existing detailed structural logging and on-going rock strength and plane failure tests. Initial investigations by PractaraLtd, a South African based minerals economics consulting firm, has concluded that there are no fatal flaws or critical risk factors to the pit design.

Any localised geological structures and broken ground can be managed during operations by applying sound rock engineering methods and techniques to monitor and support. 

The upper part of the pit will likely require a more conservative slope angle, and a maximum bench height of 5m will be utilised to cater for any eventualities and to ensure design within the required factor of safety. The deeper portions of the pit will likely have significantly steeper sidewalls, with bench heights of 10m due to the more competent lithology observed. 

Hydrological Studies

A preliminary in-house hydrological study has confirmed that there is sufficient fault hosted ground water supply for the planned flotation plant. Discussions are underway with several Southern African consultancies for a more detailed investigation in the New Year. This will focus on the effects of the planned operation on the water table, and the water bearing faults on the planned pit.

Environmental Impact Assessment

An Environmental Impact Assessment (EIA) certificate, approving the company’s planned work has been granted by the Environmental Management Agency (EMA).  This followed a series of meetings with stakeholders, including local landowners, ZINWA (Zimbabwe National Water Authority) and the Mazowe (water) Catchment Authority, and the compilation of an approved environmental impact mitigation plan.

The EIA certificate covers all of Prospect Resources’ drilling, sampling and line clearing activities. An application has been made to modify this to cover the planned plant and office construction activities in the New Year. The certificate will be valid for two years, and is based on an appendix to the existing report.

Exploration Target and Regional Exploration Program

The Company continues to identify and evaluate the Arcadia pegmatite field, with discoveries of Lithium bearing pegmatites located to the north as well as along strike to the east where at least 3km of strike of the Lower Main Pegmatite has been identified. An aggressive field mapping and drilling program is ongoing to delineate as well as validate these resources as the company aims to achieve the  stated Exploration Target of 80 – 100Mt grading 1.2 – 1.5% Li2O.

The potential quantity and grade stated by the Exploration Target is conceptual in nature and there has been insufficient exploration to estimate a Mineral Resource over the exploration target area and that it is uncertain if further exploration will result in the estimation of a Mineral Resource.

Community and Local Farming

The Company has secured the surface rights to most of the arable land covered by its mining claims via a Government approved, standard form farm lease agreement.   Maize (sweetcorn crops) is currently being sowed to support the local community through employment and provision of maize as a staple crop

Figure 7 –RC Drilling at Arcadia and Company tractor ploughing

Strengthening In-house Management and Technical Personnel

As the Company moves from the exploration to the production phase, new skills are required.  The Company is actively working to secure these key hires to enable a seamless transition from exploration to production over the coming year.

Ongoing Off-take Discussions

Off-take discussions are ongoing.  As the first ore delivery date becomes more certain so can off-take discussions be completed.  We believe that Arcadia’s early production and early delivery of lithium oxide concentrate will command a premium in today’s supply constrained environment.  

Table of Material Assumptions & Modifying Factors to the Scoping Study

Sensitivity Analysis

Analysis has related to mine production rates, capital required for mining rate, process type, process capacity, capital associated with process capacity, variations of ore composition from Spodumene to Petalite, environmental impacts, social impacts to community and local farming, access to power and water and market demand for product*

Tantalum

The Mineral Resource within the conceptual pit includes 23.4Mt at 1.42% Li2O and 123ppm Ta2O5.  Process flow sheets and plant design have to date not incorporated the extraction of Ta2O5 and accordingly, it is not considered a determining factor to the project’s viability.

Margin of Error

30-50%

Production target

No production target is provided in this release

Timeframe of Development & Production

Long lead time capital items to be ordered in January 2017

Civil construction to commence in February 2017

Pre-stripping to commence in February 2017

Starter Pit expected to commence in mid2017

Availability of Project Finance

Project finance to be sourced from existing cash reserves, pre-payments from off-take contracts, new issue of equity and/or debt finance

Sequencing of Resources & Reserves

30% of the Mineral Resource is classified as Inferred.  Conversion of these resources to Indicated Resources will be carried out through further infill drilling early in 2017. The Inferred Mineral Resource as reported in this Scoping Study was not considered as a determining factor in the project’s viability

 

*  A detailed breakdown of the sensitivity analysis is not provided given the above margin of error factor incorporated within the Scoping Study. 

For further information, please contact:

Hugh Warner
Prospect Resources
Executive Chairman
Ph: +61 413 621 652

Harry Greaves
Prospect Resources
Executive Director
Ph: +263 772 144 669

Competent Persons Declaration

The information in this announcement that relates to exploration results and the Exploration Target is based on information compiled by or under the supervision of by Mr Roger Tyler, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy (AUSIMM) and The South African Institute of Mining and Metallurgy (SAIMM). Mr Tyler is the Company’s Senior Geologist.  Mr Tyler has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results. Mr Tyler consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to Mineral Resources is based on information compiled by or under the supervision of Ms Gayle Hanssen of Digital Mining Services, Harare Zimbabwe. Ms Hanssen is registered as Professional Scientist with the South African Council for Professional Natural Scientific Professions (SACNASP) which is a Recognised Professional Organisation (RPO). Ms Hanssen is employed by DMS and has sufficient experience which is relevant to the styles of mineralisation and types of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Mineral Resources.  Ms Hanssen consents to the inclusion in the report of the matters based on her information in the form and context in which it appears.

The information in this announcement that relates to Mineral Resources and exploration results has been reviewed and audited by Mr Michael Cronwright of The MSA Group, Johannesburg. Mr Cronwright is registered as a Professional Scientist with the South African Council for Professional Natural Scientific Professions (SACNASP)which is a Recognised Professional Organisation (RPO). Mr Cronwright is employed by MSA and has sufficient experience which is relevant to the styles of mineralisation and types of deposit under consideration  and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.  Mr Cronwright consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to pit design is based on information compiled by or under the supervision of Mr John Schoeman of McDhui Mining, Johannesburg, South Africa. Mr Schoemanis registered as a Professional Scientist with the South African Council for Professional Natural Scientific Professions (SACNASP) which is a Recognised Professional Organisation (RPO). Mr Schoemanis employed by McDhui Mining and has sufficient experience which is relevant to the styles of mineralisation and types of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Mineral Resources.  Mr Schoeman consents to the inclusion in the report of the matters based on his information in the form and context in which it appears

The above information has been extracted from the Company’s announcement on 13 December 2016.  Click here for the full announcement

Further information on this can be found in in the following ASX Announcements:

7th November 2016
Presentation - Developing Africa's Largest Lithium Project

31st October 2016
JORC Resource at Arcadia confirm large scale Lithium Deposit

25th October 2016
Record High Grade Assay Results - Arcadia Lithium Project

21st October 2016
More High Grade Assay Results - Arcadia Lithium Project

4th October 2016
More High Grade Assay Results - Arcadia Lithium Project

27th September 2016
New Lithium Bearing Pegmatite Discovery

19th September 2016
Very High Grade Assay Results - Arcadia Lithium Project

31st August 2016
High Grade Assay Results - Arcadia Lithium Project

17th August 2016
18 RC Holes Completed - Pegmatites up to 51m Thickness

16th August 2016
Market Update - Pegmatite Intercepts up to 45m

8th August 2016
Additional High Grade Lithium Results

2nd August 2016
16 Drill Holes Completed at Arcadia

22nd July 2016
High grade Lithium Oxide results returned from Arcadia pit

12th July 2016
3rd & 4th Drill Hole Intersects Spodumene Bearing Pegmatites

6th July 2016
2nd Drill Hole intersect Spodumene Bearing Pegmatite over 9mt

4th July 2016
Spodumene Bearing Pegmatite intersected over 12.35m

14th June 2016
Lithium – option exercised, drilling to commence

12th May 2016
Acquisition of option – high grade Arcadia Lithium Deposit