This is really some sensational news: The Australian lithium company Prospect Resources (WKN A1JW80 / ASX PSC) has a deal with the Belgian group Sibelco N.V. completed, which shoots the still small project developer to a whole new level!
As Prospect announces today, the negotiations have been concluded and a definitive, long-term purchase agreement for the petalite to be extracted on the Arcadia project has been made from a declaration of intent with the world’s leading industrial metal supplier!
The deal, with a term of seven years, has a volume of up to 100,000 tons of high-quality petalite concentrate with extremely low iron contents per year – and thus of up to 700,000 tons over the duration of the agreement. This covers all of Arcadia’s Petalit production estimated in the Final Feasibility Study published in 2019!
By the way: Anyone who has watched the latest GOLDINVEST.de interview with Prospect Resources (click here), for whom this development was not entirely surprising. Ultimately, Prospect’s Managing Director Sam Hosack stated back then that negotiations with Sibelco were well advanced.
In light of today’s announcement of the closing of the deal, Mr. Hosack noted that Sibelco is the largest supplier of ultra-low iron petalite in Europe and possibly worldwide, with annual sales of around EUR 3.5 billion. As the Prospect boss further explained, the deal announced today is, to his knowledge, the largest purchase agreement for petalite with extremely low iron content of all time! When the Arcadia mine is then in production, it is assumed that Prospect will become the largest producer of this product in the world.
In today’s press release, Prospect also published the main terms of the purchase agreement with Sibelco:
– Duration: 7 years from the announcement of commercial production.
– Annual delivery: Up to 100,000 tons of ultra-low iron petalite concentrate per year.
– Specification: 4.1% Li2O, 0.05% Fe2O3, ultra-low iron petalite concentrate.
– Annual meeting: The parties will agree on binding delivery quantities, prices and contractual conditions for end customers for the following year annually.
– Pricing: After reimbursement of their respective costs, the parties will share the proceeds from sales to end customers in agreed proportions.
– Payment: irrevocable letter of credit.
– Right of termination: Prospect may terminate the contract if Sibelco does not purchase at least 10,000 tons of product in any of the two consecutive quarters for no other reason than that the global market price for Petalit is below an agreed price level. Sibelco can terminate the contract if Prospect does not achieve the agreed production quantities for the product in two consecutive quarters.
As I said at the beginning: In our opinion, this purchase deal takes Prospect Resources to a new level and could lead to a reassessment of this exciting lithium company. In addition, Prospect is still in negotiations with Uranium One, a subsidiary of Kazatomprom-Group (WKN A2N9D5Z). This is not only about a purchase agreement for up to 51% of the spodumene concentrate to be produced on Arcadia, but also about a possible takeover of the entire project or the company!
We will definitely keep the readers of GOLDINVEST.de up to date on how things will continue here. However, we also explicitly point out that Prospect is still a high-risk speculation, so that interested investors should always protect themselves accordingly.
In accordance with Section 34b WpHG and Section 48f Paragraph 5 BörseG (Austria), we would like to point out that clients, partners, authors and employees of GOLDINVEST Consulting GmbH hold or can hold shares in Prospect Resources and that there is therefore a possible conflict of interest. Furthermore, we cannot rule out that other stock market letters, media or research firms will discuss the values recommended by us during the same period. Therefore, symmetrical generation of information and opinions can occur during this period. Furthermore, there is a consulting or other service contract between a third party who is in the Prospect Resources warehouse and GOLDINVEST Consulting GmbH, which creates a conflict of interest, especially since this third party pays GOLDINVEST Consulting GmbH for reporting on Prospect Resources. This third party can also hold, sell or buy shares in the issuer and would benefit from a rise in the price of Prospect Resources’ shares. This is another clear conflict of interest.
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