Premier weighs sale of Zim lithium mine

LONDON-listed Premier African Minerals is mulling the sale of its Zulu lithium and tantalum project in Insiza due to operational and funding challenges.

Group chief executive officer Mr George Roach revealed in a note to shareholders that he could not predict a date for profitable production at Zulu due to poor recoveries and grade of spodumene concentrate (SC6) from the Zulu lithium plant achieved to date.

The poor design of the comminution circuit delayed, by a year, the commissioning of the float plant section at Zulu, which came on line in March this year.

Despite the mica recovery section of the float plant being fully operational currently, the spodumene section is yet to function — while the Original Equipment Manufacturer (OEM) for the floatation plant has provided different parameters for the operation of the spodumene section.

The OEM has identified the significant difference between laboratory test work and plant operating protocols that see a substantially reduced residence time in laboratory work as opposed to the operation of the cleaner cells in the plant.

“Premier is now following a multi-option approach on how best to move the Zulu forward, which includes a possible sale of Zulu, either in its entirety, partially or as a joint venture, or the potential installation of an additional spodumene float plant based on self-funding and retention of ownership.

“In the board’s opinion, recommencing production should be seriously considered if the alternative strategic options for Zulu under investigation and negotiation fail,” said Mr Roach.

Premier has been in discussions with an unnamed Chinese engineering, procurement and construction management company that has built floatation plants internationally, with one of these plants currently in operation within Zimbabwe and which has processed ore similar to that at Zulu.

“An additional floatation plant is available, and Premier would need to fund the purchase price, civils and integration costs that are estimated at US$400 000 and three months from the date of order to operation,” he said.

In terms of funding, Mr Roach said Zulu has incurred significant debt — while much of the debt could be structured over a period, a recommencement of operations requires further funding.

“Also at group level, we have significant creditors which need to be dealt with now and therefore we plan to utilise the remainder of our existing disapplication authorities to deal with these immediate requirements to provide us with breathing space to progress the strategic options outlined above.

“In addition, to meet our longer-term requirements and settle creditors at Zulu, the company will need additional funding and we are proposing to seek additional disapplication authorities at a general meeting to be convened shortly,” he said.

“Whilst disapplication will be sought, it should be clear that these authorities will only be used to the extent necessary pending the outcome of the strategic alternatives.”

In its unaudited interim financial results for the six months ended June 30, 2024, Premier incurred an operating loss of US$12 million — and this was principally due to the ongoing overheads and administration costs associated with the construction, installation and optimisation of Zulu.

Cash at hand as at the period under review, the group’s cash at hand amounted to US$0,243 million.

Last week, Premier announced a subscription of over 1,7 billion new ordinary shares to raise an estimated £550 000 (equivalent to US$719 000) before expenses.

Early this year, the mining group announced that it was seeking £2,4 million (US$3,15 million) to fund the Zulu project that has been undergoing plant modification.-herald