Premier, Canmax in extensive talks

Premier African Minerals and China’s Canmax Technologies have held initial talks over a contractual disagreement that was threatening the implementation of the Fort Rixon lithium project in Matabeleland North.

The talks have been described as extensive and candid with both parties’ intentions being to resolve the dispute amicably.
The parties agreed to engage over 10 days in their bid to resolve the dispute.

Last year, Canmax provided US$35 million in pre-funding to enable the construction and commissioning of a large-scale pilot plant. Its chairman Mr Pei Zenzhue visited the site last year.

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.

Premier African minerals lithium plant

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, which recently commenced production of spodumene concentrate is not 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, Premier African Minerals chief executive officer Mr George Roach said challenges faced are “beyond the control of Premier” and could not have been foreseen by the investor.

He disputed the appropriateness of the notice of termination based on legal advice.
Subsequently, Premier Africa indicated that it received further written notice from Canmax on 17 July 2023 stating that there is a dispute under the Agreement and notes that both parties are now required to seek to resolve the dispute in good faith by “friendly negotiation”.

Zulu Lithium

If the parties fail to resolve the dispute in 10 days, then either party may then refer the dispute to arbitration in Singapore.
Speaking during a StockBox chat, a media platform for listed companies to connect with investors monitored by Business Chronicle, Mr Roach said positive, extensive and candid negotiations with China’s Canmax Technologies are ongoing saying the dispute was not necessary.

“In my personal view, we did not need to get to this stage with Canmax, I think it’s a case of inappropriate knee-jerk reactions in some ways. My understanding is that Canmax wants the product and from Premier’s perspective we said we want to produce it, we want to receive a fair price for it,” said Mr Roach.

He added, “Canmax pre-purchased the product and they are entitled to it and its Premier’s obligation to supply them with the product as per the pre-purchase or pre-payment.

“The force majeure is in situ and the force majeure effectively stays any other action and stays our requirements under the agreement and their ability to cancel the agreement. That’s where we are at this stage. If parties do not agree and there is a dispute that arises, under the agreement there is an obligation that the parties enter into a 10-day period of friendly negotiations intended to resolve the dispute.

“So Canmax advised us last week that clearly there was a dispute, we clearly should enter into friendly negotiations with a view to try and resolve this. So an initial meeting has been held, it was extensive and I think it was productive. Subsequent to that there has been an initial set of potential proposals put on the table for evaluation. There is friendly negotiation that is ongoing as per the undertaking and as per what we are doing.

“We are still within that 10-day period and I think that with the intention of both parties being to see it resolved, so that Premier can produce as per the agreement, Canmax can receive the product as per agreement, we can liquidate the pre-payment as was intended.

“Our intentions are aligned, we are at a point where there is potential to resolve the dispute, that has always been the case and we are talking.”

Last week, Premier African Minerals entered into an unsecured £1,7 million loan facility agreement to fund some operations with the firm saying it is “exploring potential options to secure interim short-term funding from certain members of the board.”

The Board intends to call a special general meeting to be held on or around the 12 August 2023 in London.
The loan will be used for general working capital purposes including funding ongoing operational expenses at Zulu Lithium and Tantalum Project in Fort Rixon.

If Premier is unable for any reason to issue the Settlement Shares by whatever means, repayment of the Loan may be made in cash in an amount that is equal to the amount of the Loan plus compounded accrued interest at eight percent per annum from the date of the Utilisation Request.

No arrangement or other fees are payable under the loan, it said.
Zimbabwe is envisioning a US$12 billion mining industry, which is a key enabler of Vision 2030 of achieving an upper-middle-income economy by 2030.-chronicl