REG - Premier African Min - Offtake and Prepayment Agreement Update

Premier African MineralsAnnouncement

20/07/2023 07:00

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RNS Number : 5866G  Premier African Minerals Limited  20 July 2023

20 July 2023

Premier African Minerals Limited

 

Offtake and Prepayment Agreement Update

 

Zulu Update

 

Premier African Minerals Limited ("Premier" or the "Company"), provides a
further update on both the progress at the Zulu Lithium and Tantalum Project
("Zulu") and the Offtake and Prepayment Agreement ("Agreement") entered into
between Premier and Canmax Technologies Co., Ltd ("Canmax") as announced on 6
June 2023.

Offtake and Prepayment Agreement

On 28 June 2023, the Company received a purported notice of termination of the
Agreement from Canmax (following service of a Force Majeure Notice on Canmax
on the 25 June 2023) which demanded the Company settle the prepayment amount
of US$34.7m within 90 days. The Company has disputed the appropriateness of
the notice of termination based on legal advice.

Subsequently, the Company has received, and acknowledged, a further written
notice from Canmax on 17 July 2023 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". To the extent that the parties are
unable to resolve the dispute in 10 days, then either party may then refer the
dispute to arbitration in Singapore. These discussions remain ongoing and
nothing has been agreed at this time.

Zulu plant modification update

In regard to plant modification progress at Zulu, the past three weeks have
now seen the installation of the UV sorters, a new frame to the EDS mill and
the Hydro Sizer (collectively the "Upgrades"). The commissioning of the
Upgrades remains ongoing with the UV Sorters expected to increase feed grade
with resultant efficiency enhancements to recovery and production;
furthermore, the Hydro Sizer is expected to improve efficiency in recovery of
correctly sized milled ore.

Whilst the above Upgrades may improve throughput of the plant at Zulu, it is
unlikely to resolve the formal state of Force Majeure as announced on the 26
June 2023, that is still expected to endure for approximately 14 weeks.

The Zulu design, procurement, installation, and commissioning contractor,
Stark International Projects Limited ("Stark"), have confirmed that they
intend to produce spodumene from the plant at Zulu over the course of July
2023. At this stage and unless Premier is advised otherwise by Stark, the
Stark production projections included in the announcement dated 25 May 2023
remain achievable apart from the month of June 2023 as advised on 26 June
2023.

Shareholders are reminded that Premier is working under the guidance of Stark
on the ongoing optimisation and modification of the plant and that Premier
will formally communicate when sign -off of the plant including operational
control of the plant has moved onto Premier.

Funding update and Special General Meeting

Based on current Spodumene prices and costs estimates there has been no change
to the Board's expectation that Zulu, when fully operational, will operate
profitably. Zulu is and remains debt free and currently unencumbered by the
provisions of the Agreement.

In particular, whilst the Company is actively involved in alternative funding
negotiations to facilitate ongoing development at Zulu and the substitution of
the Agreement with Canmax who have made it clear that they seek repayment and
cancellation following the remedy of the Force Majeure, there is no certainty
at this time that these alternative funding arrangements will be concluded.

Premiers' cash reserves remain constrained, and this has been exacerbated
following rejection of the special resolution proposed to shareholders at the
Company's Annual General Meeting ("AGM") to disapply pre-emption rights, as
announced on 26 June 2023. The Board noted the limited number of proxy votes
cast at the AGM, and in particular, the Board believes that substantially more
shareholders would have voted at the AGM in light of recent developments.
Accordingly, the Board intends to call a special general meeting to be held on
or around the 12 August 2023 in London where shareholders are strongly
encouraged to vote in either person or through the proxy of the Chairman of
the meeting. A further announcement will be made in due course.

The Company is also exploring potential options to secure interim short-term
funding from certain members of the Board.

MAR (Market Abuse Regulation)

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018.

 

The person who arranged the release of this announcement on behalf of the
Company was George Roach.

 

Enquiries:

 

 George Roach                        Premier African Minerals Limited    Tel: +27 (0) 100 201 281
 Michael Cornish / Roland Cornish    Beaumont Cornish Limited            Tel: +44 (0) 20 7628 3396

                                     (Nominated Adviser)
 Douglas Crippen                     CMC Markets UK Plc                  Tel: +44 (0) 20 3003 8632
 John More/Toby Gibbs                Shore Capital Stockbrokers Limited  Tel: +44 (0) 20 7408 4090

 

Notes to Editors:

Premier African Minerals Limited (AIM: PREM) is a multi-commodity mining and
natural resource development company focused on Southern Africa with its RHA
Tungsten and Zulu Lithium projects in Zimbabwe.

 

The Company has a diverse portfolio of projects, which include tungsten, rare
earth elements, lithium and tantalum in Zimbabwe and lithium and gold in
Mozambique, encompassing brownfield projects with near-term production
potential to grass-roots exploration. The Company has accepted a share offer
by Vortex Limited ("Vortex") for the exchange of Premier's entire 4.8%
interest in Circum Minerals Limited ("Circum"), the owners of the Danakil
Potash Project in Ethiopia, for a 13.1% interest in the enlarged share capital
of Vortex. Vortex has an interest of 36.7% in Circum.

 

In addition, the Company holds a 19% interest in MN Holdings Limited, the
operator of the Otjozondu Manganese Mining Project in Namibia.

 
Ends

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