- Binding agreements executed for the sale of Prospect’s 87% interest in the Arcadia Lithium Project (Arcadia) to a subsidiary of new energy lithium-ion battery material producer, Zhejiang Huayou Cobalt Co., Limited (Huayou), for approximately US$377.8 million (A$528.4 million1) in upfront cash consideration (Transaction)
- Attractive outcome for Prospect shareholders, with consideration equating to approximately A$1.23 per Prospect ordinary share,2 representing a premium to Prospect’s 10-day VWAP3 of approximately 78%
- Transaction with a world class partner vindicates the strong support of the Government of Zimbabwe for Arcadia, and highlights the benefits flowing from its Special Economic Zone status, with the potential to put Zimbabwe firmly in the electric vehicle supply chain
- Key conditions precedent to completion of the Transaction include:
-Prospect shareholder approval;
- Requisite Chinese regulatory approvals being obtained by Huayou; and
- Other conditions precedent set out under “Conditions Precedent” below.
- Deposit of US $20 million immediately payable by Huayou, non-refundable in certain circumstances where the Transaction does not complete
- Break fee of US $20 million payable by Prospect in certain circumstances where the Transaction does not complete
- Subject to, and following, completion of the Transaction, Prospect expects to retain a cash balance of up to US$50 million to progress its other battery metals projects in Zimbabwe, and potentially pursue new battery metals growth opportunities globally
- Prospect intends to distribute the remaining net proceeds to its shareholders
- Subject to all conditions precedent being satisfied or waived, Prospect currently anticipates the Transaction completing in late Q1 / early Q2 2022
———————————————————————
Super outcome for all shareholders, although slightly bittersweet, as I saw this turning into a $2-$3 share as we crept closer to production.
It also looks like a large shareholder is dumping its holding on this news (possibly Sinovac?), which is making for excellent buying today. No reason this shouldn’t push over $1 shortly with an estimated $1 unfranked divvie / cap return due in March-ish and a $70m war chest for further exploration and development
