Leading Chinese cobalt supplier, Zhejiang Huayou Cobalt, has revealed plans to acquire the Arcadia hard-rock lithium mine in Zimbabwe from Prospect Resources (Prospect) in a deal valued at $422 million.
Prospect is a battery minerals company with a focus on lithium in and around Zimbabwe.
The company is led by Zimbabwean mining tycoon Sam Hosack, a leading executive who has mining experience in North and South Africa, Europe, Australia and Central America.
The Arcadia hard-rock lithium mine located on the outskirts of Harare in Zimbabwe is Prospect’s flagship project. The mining project is 87-percent owned by the Australia-listed minerals company.
Hosack, who is charged with delivering the Arcadia Project and building Prospect into a diversified mining business, is set to make a strategic decision that will see the mineral company unlock value from its mining assets.
Huayou revealed that it will pay $388.8 million to the Australia-listed mining company in exchange for an 87-percent stake in Arcadia.
The offer for the mining project represents Huayou’s second investment in lithium in less than a week as it looks to shore up raw material supplies for batteries to meet the demand spiked by the burgeoning electric vehicles sector.
The Chinese company will also pay $44.2 million for the six-percent stake held by Zimbabwean Professor Kingston Kajese and the seven-percent stake held by Paul Chimbodza, the executive director of Prospect Lithium Zimbabwe.
The Arcadia project is considered to be one of the world’s largest hard-rock lithium reserves. It process 2.4 million tonnes of ore per year when it becomes operational.
The Zimbabwe government granted Arcadia “national project” status in October 2017 for a five-year period.
In 2018, the government selected the Arcadia lithium project as a priority project under its Rapid Results Initiative, which is aimed at improving ease of doing business in the country and reducing complicated administrative procedures for the development of projects.