Auditors doubt Premier’s going concern status

PREMIER African Minerals (Premier) auditors MAH Chartered Accountants have cast doubts on the lithium miner’s ability to continue as a going concern after it incurred heavy losses and net current liabilities.

The group reported a loss before and after tax of US$5,803 million for the year ended December 31, 2022 against a profit of US$2,29m realised in 2021. The loss before and after tax includes administration expenses amounting to US$4,622m.

The total comprehensive loss for the year was US$13,646m against a profit of US$2,150m realised in the prior period. Again, the firm’s financial position was made worse by the termination of the offtake agreement it had with Canmax Technologies Co. Under the deal, Premier secured US$35m prefunding to enable the construction and commissioning of a large-scale pilot plant which has capacity to produce nearly 50 000 tonnes of spodumene concentrate annually. The mining firm was required to supply spodumene concentrate to Canmax by May 30, 2023, but failed due to various reasons. Again, it failed to meet the June 25, 2023 deadline. This resulted in the company issuing the force majeure notice to Canmax, effectively suspending all obligations under the agreement, including those associated with Premier and any consequences associated with it.

“We draw attention to note 5 in the financial statements, which indicates that the group is loss making and has net current liabilities,” the auditors said in their audit report accompanying the firm’s financial results.

“In addition, the group is in dispute with Canmax, who have submitted a purported notice of termination of the offtake agreement and have required the group to settle the prepayment amount of US$34,7 million within 90 days of June 25, 2023. However, the group has been advised that this notice of termination has no force or effect.

“As stated in note 5, these events or conditions, along with the other matters as set forth in note 5, indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.”

Going concern refers to a company’s ability to make enough money to stay afloat or to avoid bankruptcy.

In his statement contained in the report, Premier acting chairperson and chief executive George Roach said the group would use its reasonable endeavours to work with Canmax during the period of force majeure to seek a remedy. However, he said any dispute pertaining to the offtake agreement, including the force majeure, will be resolved in Singapore through arbitration which is expected to take over 12 months for the matter to be both heard and adjudicated on based on the nature of the dispute.

“In the event that the group is unable to either resolve the status of Canmax or find an alternative offtake and marketing partner to settle the Canmax prepayment amount plus interest and Zulu fails to meet its revised production targets, then a material uncertainty exists which may cast significant doubt on the ability of the group to continue as a going concern and therefore be unable to realise its assets and settle its liabilities in the normal course of business,” he said.

Premier owns RHA Tungsten, Zulu lithium and tantalite projects in Zimbabwe. It also has assets in Namibia and Ethiopia.-newsday