Premier African Minerals set to receive £5 million

Premier African Minerals Limited is expected to receive £5 million cash injection from Chinese investor — Canmax for the Zulu lithium and tantalum development with the lithium-producing firm expressing appreciation and describing it as positive a statement of support.

On Monday, the two entities whose initial deal was on the verge of collapse entered into a conditional subscription agreement under which Canmax conditionally agreed to subscribe £5 million before expenses for 1 428 571 428 new ordinary shares at an issue price of 0,35 pence within 15 business days following the entering into of the Subscription Agreement.

Canmax is a producer of lithium electric materials and other related products. On completion of the subscription, Canmax will be interested in 17,4 percent in the enlarged issued share capital of Premier.

Premier intends to use the proceeds of the subscription principally to provide funding to support the ongoing optimisation of the plant at Zulu and general working capital.

In particular, Premier anticipates using the proceeds of the subscription, together with the proceeds of the placing announced on 25 August 2023, to meet the costs associated both with the interim mill installation that is expected to see production at 1 000 ton per month of spodumene from November 2023 and the installation of a thickener and larger ball mill that is expected to see the plant achieve design throughput from the first quarter of 2024.

Reads part of the update released on Wednesday, “Premier African Minerals Limited is pleased to announce a conditional subscription for new ordinary shares by Canmax Technologies Co Ltd to raise £5 million before expenses at an issue price of 0,35 pence per new ordinary share for the ongoing Zulu Lithium and Tantalum Project Pilot Optimisation where the Company is targeting revenue generating production by November 2023.”

Premier’s chief executive, Mr George Roach said with the £5 million subscription, the lithium plant should “produce now, and we must look to expand the capacity.”

“Our interests are aligned, our intentions are clear. Zulu must produce now, and we must look to expand the capacity.

“We deeply appreciate this subscription, that is as positive a statement of support and alignment as we could ever have asked.”

Premier said its board notes that Canmax, which is expected to maintain its interest in the Company, is listed on the Shenzhen Stock Exchange with a market capitalisation of ¥22,9 Billion (£2,1billion) and has a track record of providing substantial shareholder support.

Recently, Premier Africa Minerals and Canmax managed to mend a contractual disagreement that was threatening the implementation of the Fort Rixon lithium project.

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 notice to China’s Canmax Technologies 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 mended relations.

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 very high mineralisation of lithium.-chronicle