Premier Africa Minerals expect to meet production target for shipments

Premier Africa Minerals chief executive, Mr George Roach has described the six months to June as a difficult phase for the lithium mining house impacting on its relationship with a Chinese investor- Canmax Technologies .

However, with the commencement of production, he expressed confidence of meeting production target for shipments in November.

Canmax is a producer of lithium electric materials and other related products.

Last year, Canmax provided US$35 million in pre-funding to enable the construction and commissioning of a large-scale pilot plant.

After missing production timelines in June, Premier Africa Minerals issued a force majeure to Canmax citing unforeseen operational hurdles encountered at its Zulu Lithium plant.

This meant that it could not supply spodumene concentrate to Canmax as per the set timelines stipulated in the offtake agreement.

Force majeure is a clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance is beyond the control of the parties.

The plant was said not to be able to produce sufficient spodumene to meet the quantities of the off-take agreement with Canmax.

Canmax wanted to terminate the agreement, a development that could have negatively affected the Zulu Lithium project.

In one of the off-take and prepayment agreement updates, Mr Roach said challenges faced are “beyond the control of Premier” and could not have been foreseen by the investor.

After extensive talks, both firms managed to mend a contractual disagreement that was threatening the implementation of the Fort Rixon lithium project.

In recent unaudited interim results for the six months ended 30 June 2023, Mr Roach said having ironed out issues, the completion of the installation of the RHA mill and restarting operations in the latter part of September, they expect to meet the production target for shipments in November 2023.

The mining entity has set monthly production of up to 1 000 tonnes of spodumene from November.

Premier Africa Minerals

Spodumene is a battery-grade product, which is key for the future of electric cars.

“The six months to 30 June 2023 have been difficult and this has been widely reported in various announcements over the past four months. The plant did not achieve name plate throughput production as per the original design and our relationship with Canmax Technologies Co. Ltd (“Canmax”) came under severe duress.

“That said, the outcome in the past month has the hallmarks of setting aside all that disappointment and with the completion of the installation of the RHA mill and restarting operations in the latter part of September 2023, we expect to meet the production target for shipments in November 2023.

“At the same time, this use of the RHA mill only allows for up to 50 percent of target production and the supply of a new mill to meet full design throughput is expected ex works in Q4 of 2023. This is expected to be installed and commissioned in early Q1 of 2024 following a two-week installation shutdown that we plan to coincide with the festive break,” noted Mr Roach.

On financial performance, he noted that the group incurred an operating loss of US$7,166 million for the six months ended 30 June 2023. The loss was principally due to the on-going overheads and administration costs associated with the construction, installation and optimisation of the Zulu Lithium mine in Zimbabwe.

Cash at hand on 30 June 2023 was $0,231 million noting that Premier received continued financial support from its shareholders and Canmax throughout the period.

Commenting on the going concern issues, he noted that the directors prepared cash flow forecasts for the next 12 months, taking into account working capital, Zulu revenue and expenditure forecasts for the rest of the group including overheads and other exploration costs.-chronicle