HARARE -- Australian mining company Prospect Resources expects the net revenue from its Arcadia lithium mine in Zimbabwe to reach 2.6 billion US dollars over a 22-year period, based on the results of an updated pre-feasibility study, which shows that this will be achieved at an operating cost of 287 USD per tonne of concentrate.

Prospect Resources is developing the Arcadia mine, which is located about 38 kilometres east of the capital, Harare. The Zimbabwe government has declared the project, which is expected to start production in the third quarter of 2018, a priority, to take advantage of growing global lithium demand.

Prospect said the updated data confirmed Arcadia as a significant future supplier of lithium to the global market. The results showed increased ore reserves of 26.9 million tonnes, up from 15.8 million tonnes, which support a mine life of over 20 years.

"The pre-feasibility study financial model estimates net revenue of 2.6 billion USD over a 22-year mine life," the company said, adding that the anticipated revenue had increased because of product pricing improvements based on a pricing formulae linked to the seven-year off-take agreement with Hong Kong-based Sinomine Resources.

"The revenue was further improved due to the higher ratio of Spodumene to Petalite mineralisation identified by the X-ray diffraction work on the ore body, resulting in more lithium reporting to the higher value Spodumene concentrate."

Prospect said the updated data had been incorporated into the project's financial model resulting in a pre-tax Net Present Value (NPV) of 340 million USD and an Internal Rate of Return (IRR) of 77 per cent.

NPV is a calculation technique used to estimate the value over the lifetime of a particular project, often for long-term investments, while the IRR is a method of calculating the rate of return on investment.

Estimated capital expenditure remained the same at $52.5 million following ongoing discussions with equipment and infrastructure suppliers.

Zimbabwe is targeting to produce at least 10 percent of global lithium output within the next four years, following the discovery of new deposits of the mineral in different parts of the country.

The discovery of new deposits in areas including Kamativi, in Matabeleland North province and Mashonaland Central has resulted in the country experiencing a scramble for lithium exploration and extraction by foreign investors.

Apart from the Arcadia project, another venture, the Zulu Mine located about 80 kilometres outside Bulawayo, Zimbabwe's second largest city, is at an advanced stage of development.

Lithium is used to make special glasses and ceramics as well as lithium batteries and can also be alloyed with aluminium and copper to make strong, lightweight metals for aircraft.