Lifeline for Premier African Minerals

CHINESE investor — Canmax Technologies Co Ltd has offered mining and natural resource development company Premier African Minerals which has an outstanding balance of US$3 million for the non-delivery of products in November and December last year, a lifeline as it has pushed forward the payments.

This has given the lithium firm a financial breathing space.

Premier, which has lithium mining operations in Fort Rixon in Matabeleland South failed to deliver at least 1,000 tonnes of product per month for November 2023 and December as per the amended agreement.

The amended agreement was reached last year after a string of extensive talks following a contractual disagreement that threatened the spodumene concentrate supply deal.

Canmax wanted to terminate the agreement, a development that could have negatively affected the Zulu Lithium project. Canmax is a producer of lithium electric materials and other related products.

In 2022, Canmax provided US$35 million in pre-funding to enable the construction and commissioning of a large-scale pilot plant.

However, in June last year, the Chinese entity said it would scrap the agreement reached after Premier Africa Minerals missed the May 2023 timeline to supply spodumene concentrate.

Premier Africa Minerals then issued a force majeure notice, citing milling problems at the plant.

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

After extensive talks to salvage the deal, the two parties reached an agreement.

The amended agreement restored the arrangements between the two companies, withdrawing force majeure and default notices.

Essential components of the amended deal are the same as the original, with the companies agreeing on a new schedule for product delivery tied to the advance purchase amount and accrued interest.

Force majeure is a clause in contracts that essentially frees both parties from liability or obligation when an extra-ordinary event happens.
In the latest update, Premier African Minerals said it received a notice of election under the agreement from Canmax following its failure to deliver at least 1,000 tonnes of product per month in November and December 2023 to have the current outstanding balance owed to Canmax of US$3 million (US$1.5 million per month) of the monthly payment carried forward.

Under the agreement, the interest rate for the outstanding balance of the prepayment amount will be increased to 12 percent per annum with effect from 1 December 2023.

Premier chief executive officer, Mr George Roach said Canmax’s move is a clear indication that it requires delivery of spodumene concentrate as soon as possible.

“Premier is pleased that Canmax has elected to carry forward the monthly payments in respect of the non-delivery of product in the months of November and December 2023.

“The effect of this is that the monthly payment contemplated is rolled forward and clear indication that Canmax requires delivery of spodumene concentrate as soon as possible,” noted Mr Roach.

With Canmax’s move, Premier said it is deeply appreciative for the understanding and assistance Canmax has provided.

Mr Roach said they remain committed to start production in late February provided only that all commitments made by contractors are met.

In recent weeks, the firm has been taking delivery of an assortment of strategic plant components and up-scaling instalment.

A thickener is under installation and this is expected to complement the floatation circuit by improving the density and flow of slurry to the floatation plant. The new ball mill that has been custom-built for Zulu is expected to depart from South Africa by month end.

Due to the emerging electric motor vehicle industry, there is increased international demand for the lithium mineral known as “white oil”, which is used for manufacturing batteries.

Zimbabwe has the largest lithium reserves in Africa and the fifth-largest worldwide.

The Zulu project is generally regarded as potentially the largest undeveloped lithium bearing pegmatite in Zimbabwe, covering a surface of about 3,5 square kilometres, which are prospectively for lithium and tantalum mineralisation.

It produces a rare high-value spodumene, a rock that has a high mineralisation of lithium. Spodumene is a battery grade product, which is key for the future of electric cars. —chronicle