TIDMPREM
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have been withdrawn by the respective parties.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 GBP2 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 US$1.5 million per month
2024
1 March 2024 - 30 May 2024 US$3 million per month
1 June 2024 until such time as US$4 million per month
the Advance Purchase Amount plus,
interest has 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 minerals .com
Enquiries:
George Roach Premier African Minerals Tel: +27 (0) 100
Limited 201 281
Michael Cornish Beaumont Cornish Limited Tel: +44 (0) 20
/ Roland Cornish (Nominated Adviser) 7628 3396
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Douglas Crippen CMC Markets UK Plc Tel: +44 (0) 20
3003 8632
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Toby Gibbs/Rachel Shore Capital Stockbrokers Tel: +44 (0) 20
Goldstein Limited 7408 4090
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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
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. 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;
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"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
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"Spodumene" A white to pink coloured lithium bearing mineral
(LiAlSi2O6).
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"Stark" The Zulu design, procurement, installation, and
commissioning contractor, Stark International Projects
Limited
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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 a ccepted 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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