Prospech Faces Funding Pressure Despite Resource Milestone and EU Grants

A Landmark Resource Estimate for Korsnäs

Prospech Limited (ASX: PRS) has delivered a pivotal update in its December 2024 quarterly activities report, announcing a JORC Code 2012 compliant Inferred Mineral Resource Estimate (MRE) of 7.1 million tonnes grading 1.08% Total Rare Earth Oxides (TREO) at its Korsnäs project in Finland. This milestone represents the EU's newest REE resource estimate and underscores the project's strategic importance amid growing geopolitical supply chain concerns.

The resource estimate is based on a comprehensive 2024 drilling campaign combined with extensive sampling of historic drill core dating back to the 1950s through the 1970s, preserved by the Geological Survey of Finland (GTK). Prospech's modern drilling has validated these historic results, providing a robust foundation for the maiden resource.

Exploration Target and Upside Potential

Beyond the Inferred MRE, Prospech has delineated an Exploration Target of 10 to 12 million tonnes at grades between 1.0% and 1.2% TREO. While this target remains conceptual pending further drilling and metallurgical testing, it signals significant upside potential for resource growth. The company plans additional drilling and metallurgical test work, including advanced mineralogical analyses and processing trials, to convert this target into a JORC-compliant resource.

Notably, assay results continue to impress, with intervals exceeding 15 metres at 1.8% TREO and historic core samples showing grades up to 5.1% TREO. These high-grade intersections reinforce the project's quality and prospective scale.

Strategic EU Support and Capital Raising

Prospech has secured critical financial support through the European Union's REMHub initiative, receiving the first tranche of €208,920 (~A$346,000) from a total grant of up to €432,250 (~A$718,000). This funding underpins drilling, assaying, and metallurgical testing activities, aligning with the EU's strategic push to secure critical mineral supply chains.

Complementing this, the company successfully completed a 1-for-4 entitlement offer, raising $785,944. The rights issue proceeds will bolster ongoing exploration and development efforts at Korsnäs and other projects.

Expanding Footprint and Future Prospects

Prospech also expanded its Jokikangas REE project area by more than doubling its size, driven by the discovery of valuable high field strength elements such as hafnium and niobium. These elements have seen dramatic price increases, enhancing the project's economic potential.

Meanwhile, in Slovakia, the company is preparing to test copper-gold porphyry targets at the Zlatno project, leveraging historical drilling data that revealed substantial copper mineralisation. This diversification highlights Prospech's broader strategy to build a portfolio of critical mineral assets across Europe.

Operational and Financial Position

Exploration expenditure for the quarter totaled $749,064, with no production or development costs incurred. Cash and cash equivalents stood at $796,000 at quarter-end, supported by the recent capital raise and EU funding. The company anticipates further EU grant receipts and retains the option to place shortfall shares from the rights issue to extend its funding runway.

Managing Director Jason Beckton emphasised the importance of the historic drill core preserved by GTK, describing it as a valuable asset worth over $10 million. He also highlighted the collaborative environment fostered by EU support and the strategic imperative of advancing Europe's rare earth supply chain resilience.