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Premier African Minerals (LSE:PREM), a multi-commodity natural resource company with mineral projects located in Western and Southern Africa, has announced that RHA Tungsten Private Limited (‘RHA’) has simultaneously concluded a shareholder agreement and a management agreement with the National Indigenisation and Economic Empowerment Fund (‘NIEEF’), representing and acting for and on behalf of the Government of Zimbabwe.
RHA owns Premier’s RHA Tungsten Project in north-west Zimbabwe. In accordance with Indigenisation policy, NIEEF will hold 51% of the issued share capital of RHA. Significantly, Premier’s wholly owned subsidiary, ZimDiv Holdings Limited, which in turn controls the remaining equity in RHA, is appointed as the Manager of the Project for an initial 5 year term.
Principal terms of the agreements include:
- Total expenditure incurred by RHA prior to 1 September 2013 will accrue as an interest bearing loan due to Premier.
- From 1 September 2013, RHA became responsible for its own funding and neither Premier nor NIEEF shall be under any obligation to contribute to its exploration and development costs. Premier will provide interim assistance for on-going operations until alternative finance is in place.
- Once RHA has obtained sufficient committed finance to enable it to develop and construct the mine and the Project has achieved commercial production, Premier will issue to NIEEF such number of new ordinary shares of nil par value in the capital of Premier as are equal in value, on the basis of a 20 day volume weighted average price prior to such issue, to US$750,000.
- An Entrenched dividend policy that proportions profit distribution to meet agreed debt repayment terms firstly, and thereafter equally to future development and dividend payment.
Premier’s CEO George Roach commented, “RHA has been an indigenised Zimbabwean company since Premier first entered into a letter of intent described in our Admission Document, and the early completion of the Agreements is indicative of the excellent relationship and mutual understanding that we have enjoyed with NIEEF for some time now. In particular, that RHA is responsible for its own development costs both eases the burden on Premier and broadens the sources from which finance will be available to develop the Project into a low-capex tungsten mine in the near-term.
“We are in advanced negotiations on an off-take and project finance and we have committed to the additional confirmatory work suggested in the recently published Mining Study and Preliminary Economic Assessment that highlighted the robust economics of the Project with an undiscounted NPV of US$120 million and IRR before tax of 378% projected.”
