TIDMPREM
RNS Number : 6673U
Premier African Minerals Limited
03 August 2022
3 August 2022
Premier African Minerals Limited
Zulu Lithium Project Pilot Plant Update
Premier African Minerals Limited ("Premier" or the "Company"),
is pleased to announce that it has concluded the definitive
transaction documents in respect of the Marketing and Pre-Payment
Agreement ("Agreement") as set out in the announcement dated 24
June 2022 and is in receipt of approximately US$18.1 million of the
pre-payment required to have been paid to date. This payment will
be utilised for the Zulu plant fabricators and site contractors.
Fabrication and site construction is well underway, with a
projected completion date for commercial production expected in Q1
of 2023.
George Roach, CEO commented ," I am pleased to confirm the
signing of this Agreement and the receipt of funds. Fabrication,
site design and construction are underway and projected
commencement of commercial production is now scheduled for Quarter
1 of 2023. T he pre-payment is expected to be fully offset against
future shipments inside of twelve months at the prevailing SC6
pricing.
We have recently appointed independent project and construction
management teams to assist in ensuring compliance with timelines
and budgets.
At the same time, there has been an improved turn around in
assays and we expect to release significant results as they come to
hand. Further updates on the construction of the pilot plant will
be provided in due course ."
The Pilot Plant
The pilot plant to be commissioned will utilise state of the art
sensor-based ore sorting technologies that will facilitate the
separation of run of mine material into components and in so doing,
likely increase available capacity in the flotation recovery
circuits, where lithium minerals are recovered. Ultimate production
and recoveries are a factor of many variables, and the pilot plant
is likely to assist in dealing with these variables due to the
inherent flexibility of the use of multiple ore sorters. Stockpiles
of tantalum, petalite and Mica/lepidolite rich material will
facilitate further test work and flow sheet development to ensure
that this material is truly inventory for later profitable
recovery.
The pilot plant has a nameplate through put of up to 190 tonnes
per hour, however it is planned to run at a more conservative 140
tonnes per hour at inception. At this rate and based on a 3-year
life of the pilot plant operations only, excluding plant upgrades,
tantalum recovery, petalite production and any other revenue, a
series of sensitivities indicate a robust project and an assurance
that Premier will become cash generative from the time of first
shipment.
Terms of Marketing and Pre-Payment Agreement
Pre-Payment Agreement
As previously set out in the binding heads of terms announced on
24 June 2022, under the terms of the Agreement entered into between
Premier and Suzhou TA&A today, Suzhou TA&A has agreed to
purchase, in advance, US$34,644,385 of product to be sold by
Premier ("Advance Purchase Amount") to enable the construction and
commissioning of a large-scale pilot plant at the Zulu Project and
to date, Suzhou TA&A has made approximately US$18.1 million
available to Premier. Under the Agreement, Premier has now agreed
to become directly the Seller of the product from the pilot plant
at the Zulu Project.
Repayment of the Advance Purchase Amount will be made by Premier
from all residual funds from invoices raised by Suzhou TA&A
from each monthly Accounting Period following the deduction of
agreed Deductible Expenses (being all costs and expenditures
incurred including government royalties) and management fees to be
paid by Zulu Lithium to Premier, until such time as the Advance
Purchase Amount has been fully offset. Premier has agreed to
conclude a management agreement with Zulu Lithium within 30 days of
the signing of the Agreement.
Offset of the Advance Purchase Amount through invoices raised by
Suzhou TA&A for shipped SC6 should commence no later than 31
March 2023 at a minimum rate of 4,000 tonnes per month on a rolling
average basis plus or minus 10% ("Minimum Delivered Product")
following first Concentrate Production ("Supply Commencement
Date"). If the Supply Commencement Date does not occur by 31 March
2023 or there is a substantive delay in the subsequent supply of
SC6, or there is a shortfall in the Minimum Delivered Amount, then
Premier will pay interest to Suzhou TA&A at a reasonable
interest rate that represents Suzhou TA&A's actual funding cost
for the delay or shortfall.
If the Supply Commencement Date does not occur on or before 30
May 2023, then Suzhou TA&A may terminate and seek repayment of
the Advance Purchase Amount. Premier has the right to settle the
Advance Purchase Amount at any point.
Marketing
Under the Agreement, Suzhou TA&A will have the right to
acquire the first three years of production of SC6, or until such
time as the Advance Purchase Amount has been offset in full or the
first 50,000 tonnes have been shipped to Suzhou T&A, whichever
occurs later ("Term"). The Term of the Agreement can be increased
by a further three years, subject to the mutual agreement between
the parties.
The sale of SC6 will be priced at a discount conditional on the
approval of the Minerals Marketing Corporation of Zimbabwe on the
first 50,000 tonnes of SC6 shipped ("First Delivery") or until the
Advance Purchase Amount has been fully offset whichever occurs
first. Following completion of First Delivery, the parties will
agree to negotiate a discount based upon market conditions for the
remaining Term. The purchase price will be subject to a floor price
until such time as either the Advance Purchase Amount has been
fully offset or 31 December 2023.
The purchase price is also subject to target product
specifications, with industry standard adjustment for
variations.
Following full payment of the Advance Purchase Amount, Suzhou
TA&A shall have the right of first refusal to match any offer
from another interested party to acquire SC6 from the Zulu Project
should the parties not agree to a renewal of the Term. This right
is subject to standard regulatory requirements, Commercial Best
Practice, and the reasonable agreement of commercial terms.
The Agreement also includes standard events of default and
warranties from both Premier and Suzhou TA&A.
Related Party Transaction
Following completion of the subscription agreement by Suzhou
TA&A (the "Subscription") as announced on 8 March 2022, Suzhou
TA&A is interested in 13.38 per cent. of the issued share
capital of the Company. Accordingly, as Suzhou TA&A is
currently interested in more than 10 per cent. of the issued
ordinary share capital of the Company, the 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 Suzhou
TA&A 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 as announced on 24 June 2022, the terms of the binding head of
terms and now incorporated into the definitive transaction
documents (the Agreement) are fair and reasonable insofar as
Shareholders are concerned. As previously announced, the
Independent Directors have in particular taken into account that
the Agreement provides the immediate funding to enable the
construction and commissioning of a large-scale pilot plant at Zulu
which the Independent Directors believe provides a significant
opportunity at a time when Spodumene prices are expected to remain
high given current supply-demand imbalances. The Agreement also
provides funding without the issue of any ordinary shares and
therefore avoids dilution to shareholders at the current time.
Furthermore, in current market conditions, the Independent
Directors do not believe that alternative funding would be
currently available on acceptable terms to the Company.
The Independent Directors have also taken into account the
technical assessment and pilot plant proposal prepared by Stark
International Projects Ltd (" Stark ") and which is based on a
relatively straightforward ore sorting and flotation circuits
without the need for any large-scale chemical processing to isolate
and produce the lithium bearing spodumene. The Company has a fixed
price contract with Stark for the pilot plant, and an economic
assessment has been prepared by Bara Consulting (Pty) Ltd (based on
the updated scoping study as announced on 16 August 2021) which
also reflects that the mineralisation for the pilot plant is near
surface. Based on this technical work, the Independent Directors
are of the view that while the Advance Purchase Amount under the
Agreement is an unsecured obligation of the Company, offset of the
Advance Purchase Amount to Suzhou TA&A through production at
Zulu can be made in a timely way.
Forward Looking Statements
Certain statements in this announcement are or may be deemed to
be forward looking statements. Forward looking statements are
identi ed 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 re ect
the Directors' current beliefs and assumptions and are based on
information currently available to the Directors. Several 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.
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)
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John More/Toby Gibbs Shore Capital Stockbrokers Limited Tel: +44 (0) 20 7408 4090
Glossary of Technical Terms
"Accounting Period" is one calendar month, in respect of
which the Seller shall produce monthly
management accounts from the date of
implementation of this Transaction Document.
"SC6" spodumene concentrate.
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"Deductible Expenses" i. all costs and expenditures incurred
in relation to mining, assaying, treatment,
refining, smelting, transportation, insurance,
and sales;
ii. government royalties in respect
of the SC6 concentrate (or the metals
derived from those Spodumene concentrate)
from which the gross proceeds from Spodumene
concentrate production were derived,
and all taxes, bonding and other amounts
payable to Governmental Bodies, and all
other amounts required to be paid under
Law;
iii. management fees payable under the
management agreement with Premier;
iv. Capital expenditures and replacement
equipment costs required for the Pilot
Plant; and
v. reasonable working capital required
by the Zulu Lithium and Premier and Premier's
Affiliates;
for so long as the Advance Purchase
Amount remains outstanding and to the
extent that the Deductible Expenses are
above $2000 per tonne for any Accounting
Period, the Seller shall seek the consent
of the Buyer for the amount that exceeds
$2000 per tonne, such consent is not
to be unreasonably withheld or delayed.
-----------------------------------------------------------
"First Concentrate means the last day of the month during
Production" which ore has first been processed by
Zulu for a period of two cycles of 4
consecutive days in each cycle.
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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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END
UPDEALPAEDNAEFA
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August 03, 2022 02:00 ET (06:00 GMT)
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