It seems two key updates aren’t enough to entice investors today.
The post Why is the Prospect Resources (ASX:PSC) share price plunging 10% today? appeared first on The Motley Fool Australia. –
The Prospect Resources Ltd (ASX: PSC) share price is sliding into the red today and is now changing hands at 35.5 cents.
That’s a 10.13% drop from the open for the Australian lithium company despite it releasing two key updates today.
Let’s cover each update in a bit more detail.
What did Prospect Resources Announce?
The Prospect Resources share price is on the move today after the company advised its 87% owned Arcadia lithium project in Zimbabwe is now “confirmed as (a) world class deposit”.
It draws this conclusion from a staged optimised feasibility study (OFS) that confirmed the “strong technical and economic viability of Arcadia under a staged development pathway”.
These results indicate the potential of the Arcadia site to become a compelling long life and large scale open pit lithium mine, according to the company.
It also confirms the project is “among the best in the world for scale and cost of production when compared to existing operations”.
The update notes that one key contributor is the quality of lithium concentrate products at the site. They are described as high in grade and very low in impurities.
For reference, the price of lithium has come off an all-time high of 177,000 Chinese Yuan (A$37,440.54) per tonne since September, although is still up 254% since January 1.
The company says a so-called staged development pathway now indicates a lower required rate of return on the project to achieve profitability.
As such, the project’s economics are expected to be “further improved in (a) direct-to-2.4 Mtpa Optimised Feasibility Study (Direct OFS)” due for completion in Q4 2021.
The company says there is strong interest from several groups focused on the direct OFS’s outcomes.
Prospect is “now completing the work on the direct OFS pathway case before funding decisions are made” on its next steps.
The company also held an investor briefing and released an investor presentation regarding the staged OFS results alongside the headline announcement.
Investors have sold on the news, pushing the Prospect Resources share price lower today. It hit 33.5 cents just before midday.
What did management say?
Speaking on the announcement, Prospect Resources Managing Director Sam Hosack said:
The OFS details our clear differentiation with a range of potential product markets and customers versus traditional spodumene projects. Even at the smaller initial scale, the Lycopodium results demonstrate a highly competitive forecast [regarding] operating costs and margins, reflecting prices for technical petalite at a significant premium to traditional chemical grade spodumene concentrate pricing.
Prospect Resources share price snapshot
The Prospect Resources share price has soared this year to date and climbed 111% since January 1.
Despite sliding 17% this past week, it has also gained 89% in the last 12 months.
Should you invest $1,000 in Prospect Resources right now?
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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.