REG - Premier African Min. - Offtake and Prepayment Agreement

Premier African MineralsAnnouncement

15/08/2023 13:30

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230815:nRSO4008Ja&default-theme=true

RNS Number : 4008J  Premier African Minerals Limited  15 August 2023

15 August 2023

Premier African Minerals Limited

Offtake and Prepayment Agreement

 

Premier African Minerals Limited ("Premier" or the "Company") is pleased to
provide a further update on the Zulu Lithium and Tantalum Project ("Zulu"),
and the agreement reached between Premier and Canmax Technologies Co., Ltd
("Canmax") to amend and restate the Offtake and Prepayment Agreement which the
parties had previously agreed in August 2022 ("Amended Agreement").

Offtake and Prepayment Agreement

The Amended Agreement restores the working arrangements between Premier Canmax
and therefore the Force Majeure and default notices have been withdrawn by the
respective parties.

The essential elements of the Amended Agreement remain the same as the
original agreement entered into in August 2022, save that that the parties
have agreed:

 -            A revised Product supply schedule (and alternative arrangements) in respect of
              the prepayment of US$34.6 million plus accrued interest; and

 -            A revised hybrid pricing agreement with the payment for SC6 supplied by
              Premier based on the SC6 price and a profit share whereby Premier and Canmax
              will share in the profit from production by Canmax of Lithium Hydroxide from
              SC6 supplied by Premier.

As Canmax is currently interested in more than 10 per cent. of the issued
ordinary share capital of the Company, the Amended Agreement is a related
party transaction for the purposes of Rule 13 of the AIM Rules. As previously
announced, as Dr Luo Wei was nominated by Canmax as a director of the
Company, he is not independent for the purposes of the AIM Rules and the
Agreement has therefore been considered by the Independent Directors (being
the Board other than Dr Luo Wei). The Independent Directors of the Company
consider, having consulted with the Company's nominated adviser, Beaumont
Cornish, that the terms of the Amended Agreement are fair and reasonable
insofar as Shareholders are concerned.

The Independent Directors have in particular taken into account that the
Amended Agreement provides an agreed timetable and process for the supply of
Product pre-purchased under the Amended Agreement with alternative
arrangements in the event of a delay in delivery, resolves the dispute between
Canmax and Premier, and provides a basis for the parties to work together to
resolve the plant issues at Zulu and achieve all parties' production
objectives.

Further details on the Amended Agreement are set out below.

Plant update and funding

Operations at Zulu have been temporarily suspended to allow for the
installation and commissioning of the mill from RHA Tungsten. This is expected
to be completed during the early Autumn and within sufficient time to meet the
revised Product delivery schedule which has been agreed at an initial rate of
1,000 tons of product shipped to Canmax by the end of November.

Plant optimisation is ongoing and, largely as a result of the delays in
resolving the plant issues, Premier needs immediate funding. In addition,
while the plant fixes are the acknowledged responsibility of Stark, Premier
will need to ensure that adequate funds are available to avoid any further
delays. As announced earlier today, the Company has also now elected to draw
down on the entire £2 million Amended Facility entered into with George Roach
(as previously announced on 9 August 2023) immediately following this
announcement.

Restated and Amended Offtake and Pre-Payment Agreement

Premier and Canmax have agreed the terms of a deed of release pursuant to
which the parties have: (i) entered into the Amended Agreement; (ii) Premier
has withdrawn the Force Majeure Notice issued to Canmax pursuant to section 12
of the Agreement; and (iii) Canmax has withdrawn the Termination Notice issued
to Premier pursuant to section 2.7 of the Agreement.

-      The essential elements of the Amended Agreement remain the same as
the original agreement entered into in August 2022, save that that the parties
have agreed a revised Product supply schedule (and alternative arrangements)
in respect of the prepayment amount of US$34.6 million plus accrued interest;
and

 

-      A revised hybrid pricing agreement with the price of SC6 supplied
by Premier based equally on both the SC6 price and a profit share under which
Premier and Canmax will share equally the profit from production by Canmax of
Lithium Hydroxide from SC6 supplied by Premier.

The hybrid pricing structure provides Premier with an exposure to future
market prices of both SC6 and Lithium Hydroxide.

Pre-Payment agreement

As previously announced on 3 August 2022, Canmax have purchased in advance
US$34,644,385 worth of product to be sold by Premier ("Advance Purchase
Amount"), with the proceeds used to construct and commission the plant at
Zulu. Under the Amended Agreement the parties have agreed a new schedule for
the supply of Product for the Advance Purchase Amount plus accrued interest by
Canmax.

The Advance Purchase Amount, plus accrued interest (which has been agreed to
increase from 3.5% per annum to 8% per annum from 31 May 2023, will be settled
from gross sale proceeds from Product shipped to Canmax as follows:

 

-    From 1 November 2023 until 30 May 2024, Canmax will receive 25% of all
gross proceeds due to Premier from the sale of Product.

 

-    From 1 June 2023 and until the Advance Purchase Amount plus accrued
interest has been settled, Canmax will receive 50% of all gross proceeds due
to Premier from the sale of Product.

 

Settlement of the Advance Purchase Amount should commence no later than 1
November 2023 at a minimum rate of 1,000 tonnes per month on a rolling
average basis plus or minus 10% ("Minimum Delivered Product"). If the Minimum
Delivered Product does not occur, then Premier will be required to make a cash
payment to Canmax ("Cash Settlement") for that month as follows:

 

 Period                                                                         Amount

 1 November 2023 - 28 February 2024                                             US$1.5 million per month

 1 March 2024 - 30 May 2024                                                     US$3 million per month

 1 June 2024 until such time as the Advance Purchase Amount plus, interest has  US$4 million per month
 been settled in full.

 

If Premier fails to make a second Minimum Delivery Product, the revised
interest rate will be adjusted further to 10% per annum from the first date of
the next month.

 

If in any month Premier is unable to supply the Minimum Delivered Product, or
make the Cash Settlement set out above, then Canmax will have the following
options:

 

 -            the outstanding balance of the Cash Settlement will be carried forward to the
              following month, and the interest rate applicable to the outstanding balance
              of the Advance Purchase Amount will increase to 12% per annum from the first
              day of the next month; or

 -            the monthly payment will be settled in new ordinary shares in Premier at a
              conversion price that will be a twenty daily volume-weighted average trading
              prices of ordinary shares during the last twenty trading days of the month
              where the Minimum Delivered Product was not delivered (VWAP Period).

              The conversion rate will be equal to 90% of the average of the twenty daily
              volume-weighted average trading prices of ordinary shares during the VWAP
              Period. The conversion price shall, subject to standard customary adjustments
              inter alia for changes in Premier's capital structure, be no lower 0.32p per
              ordinary share.

Settlement of all amounts of Product due under the Amended Agreement will be
subject to a new Long Stop Date of 1 April 2025, and should Premier have not
delivered the required Product or provided Cash Settlement to settle the
Advance Purchase Amount in full, and provided that Canmax has not elected to
take settlement in new ordinary shares (the "Outstanding Amount"), then Canmax
will be entitled to receive as settlement of the Outstanding Amount, a direct
interest in Zulu Lithium based on a project valuation of US$200 million.

 

Marketing

Under the Amended Agreement the sale by Premier of SC6 will be priced on a
hybrid pricing structure. Payment for 50% of SC6 supplied by Premier will be
based on the SC6 price, and the balance as a profit share whereby Premier and
Canmax will share equally in the profit from production by Canmax of Lithium
Hydroxide from SC6 supplied by Premier.

The proceeds which Premier will receive under these arrangements will
therefore be determined as follows:

 -            In respect of the SC6 delivered by Premier, a price based on the average
              middle price of all contract prices for 6.0% Spodumene concentrate (CIF)
              quoted by Fastmarkets less an agreed discount; and

              -
 -            In respect of the profit share, the net profit after deducting Premier and
              Canmax's agreed costs of production and based on average prices of Lithium
              Hydroxide and Lithium Hydroxide Monohydrate.

 

Under the Amended Agreement, Canmax will continue to have the right to acquire
the first three years of production of SC6, which will only commence once
Premier has supplied a minimum of 4,000 tonnes of SC6 in a month ("Term"). The
Term of the Amended Agreement can be increased by a further three years,
subject to the mutual agreement between the parties.

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.

 

A copy of this announcement is available at the Company's website,
www.premierafrican (http://www.premierafrican) minerals .com

 

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
 Toby Gibbs/Rachel Goldstein         Shore Capital Stockbrokers Limited  Tel: +44 (0) 20 7408 4090

 

Beaumont Cornish Limited, which is authorised and regulated in the United
Kingdom by the Financial Conduct Authority, is acting as nominated adviser to
the Company in relation to the matters referred herein. Beaumont Cornish
Limited is acting exclusively for the Company and for no one else in relation
to the matters described in this announcement and is not advising any other
person and accordingly will not be responsible to anyone other than the
Company for providing the protections afforded to clients of Beaumont Cornish
Limited, or for providing advice in relation to the contents of this
announcement or any matter referred to in it.

 

Forward Looking Statements:

Certain statements in this announcement are or may be deemed to be forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'' ''could'' "should" ''envisage''
''estimate'' ''intend'' ''may'' ''plan'' ''will'' or the negative of those
variations or comparable expressions including references to assumptions.
These forward-looking statements are not based on historical facts but rather
on the Directors' current expectations and assumptions regarding the Company's
future growth results of operations performance future capital and other
expenditures (including the amount. Nature and sources of funding thereof)
competitive advantages business prospects and opportunities. Such forward
looking statements reflect the Directors' current beliefs and assumptions and
are based on information currently available to the Directors. A number of
factors could cause actual results to differ materially from the results
discussed in the forward-looking statements including risks associated with
vulnerability to general economic and business conditions competition
environmental and other regulatory changes actions by governmental authorities
the availability of capital markets reliance on key personnel uninsured and
underinsured losses and other factors many of which are beyond the control of
the Company. Although any forward-looking statements contained in this
announcement are based upon what the Directors believe to be reasonable
assumptions. The Company cannot assure investors that actual results will be
consistent with such forward looking statements.

 

 Glossary
 "Product"    "Product" means spodumene concentrate derived from any ores produced from the
              plant at Zulu;
 "SC6"        An important economic concentrate of spodumene, known as spodumene concentrate
              6 or SC6, is a high-purity lithium ore with approximately 6 percent lithium
              content being produced as a raw material for the subsequent production of
              lithium-ion batteries; and
 "Spodumene"  A white to pink coloured lithium bearing mineral (LiAlSi2O6).
 "Stark"      The Zulu design, procurement, installation, and commissioning contractor,
              Stark International Projects Limited

 

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

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCNKPBBBBKDAFD