TIDMPREM
RNS Number : 0925Q
Premier African Minerals Limited
24 June 2022
24 June 2022
Premier African Minerals Limited
Zulu Lithium Project Pilot Plant
Premier African Minerals Limited ("Premier" or the "Company"),
is pleased to announce that it has entered into a Marketing and
Prepayment agreement in the form of a binding Heads of Terms with
Suzhou TA&A Ultra Clean Technology Co., Ltd ("Suzhou TA&A")
that will allow Premier to establish a large-scale pilot plant at
Zulu Lithium and Tantalum Project ("Zulu Project") to produce SC6
from Q1 2023 ("Agreement").
Highlights
-- Target annual production from pilot plant of 50,000-ton SC6
-- Take-off for target production committed to Suzhou TA&A
-- Pre-purchase of production pays complete US$35 million construction cost
-- Minimum price undertaking for first 50,000-ton production underwrites repayment capability
George Roach, CEO commented ," I am pleased to be able to
confirm that after our RNS of 13 June 2022, Premier has concluded a
binding Heads of Terms in respect of a Marketing and Pre-Payment
Agreement for the Zulu Project. Whilst full detail is set out
below, the net effect of this is the immediate commencement of
construction activities at the Zulu Project intended to see first
shipments before 31 March 2023 and a steady build up in production
to circa 48,000 ton of SC6 per annum.
It is important to note that this is a pilot plant facility and
will produce SC6 only in the first phase. Three by-product streams
will be stock-piled and will go to inventory, pending completion of
additional test-work and additional plant. These products are a
tantalum concentrate in a magnetic fraction, a petalite rich mixed
ore and a mica/lepidolite concentrate that is likely to contain
Caesium and Rubidium. That this may be immediately saleable remains
a possibility.
The prepayment is expected to fully fund the construction phase
and is interest free provided first shipment occur by 31 March
2023. At present SC6 pricing, the pre-payment is expected to be
fully liquidated inside of twelve months."
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 ton per
hour, however it is planned to run at a more conservative 140 ton
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 the Proposed Marketing and Pre-Payment Agreement
("Agreement")
Pre-Payment Agreement
Suzhou TA&A have agreed to provide a pre-funding amount
US$34,644,385 ("Pre-Payment Amount") to enable the construction and
commissioning of a large-scale pilot plant at the Zulu Project.
Upon the signing of the Agreement, US$3,450,000 has been made
immediately to Premier to commission the securing of the pilot
plant. The remaining balance of the Pre-Payment Amount will be paid
in one lump sum following completion of the transaction documents.
Both Premier and Suzhou TA&A have agreed to use their best
endeavours to complete the definitive transaction documents within
one month of the Agreement failing which on written notice by
Suzhou TA&A, Premier will be required to immediately refund the
amount of US$3,450,000 to Suzhou TA&A from existing funds held
by Premier.
Repayment of the Pre-Payment 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 incurred at the Zulu Project (being all costs
and expenditures incurred including government royalties) and
management fees to be paid to Premier, until such time as the
Pre-Payment Amount has been fully refunded.
Zulu Lithium Private Limited ("Zulu") and Zulu Lithium Mauritius
Limited ("Zulu Lithium") will provide Suzhou TA&A with security
over all existing assets including all the mining claims, and all
other assets, company shares and inventory including SC6. To the
extent that above security fails to cover any outstanding amounts
under the Pre-Payment Amount, Premier has agreed to cover this
shortfall by way of a cross company guarantee.
Repayment 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 tonne per month on a rolling average basis 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, then Premier
shall pay interest to Suzhou TA&A at a reasonable interest rate
that represents Suzhou TA&A's actual funding cost for the
delay. 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 Pre-Payment Amount.
Zulu and Zulu Lithium has the right to repay the Pre-Payment
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 Prepayment Amount has been repaid in full, 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 tonne of SC6 shipped ("First Delivery") or until the
Pre-Payment Amount has been fully liquidated, 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 Pre-Payment Amount has been fully
repaid or 31 December 2023.
Following successful payment of the Pre-Payment 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.
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 the terms of the Agreement are fair and reasonable insofar as
Shareholders are concerned. 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 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 funding under the Agreement is secured on Zulu and is
guaranteed by the Company itself, repayment to Suzhou 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)
----------------------------------- --------------------------
John More/Toby Gibbs Shore Capital Stockbrokers Limited Tel: +44 (0) 20 7408 4090
Matthew Bonner EAS Advisors LLC Tel: +1 646 495 2225
----------------------------------- --------------------------
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.
-----------------------------------------------------
"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
iii. management fees payable under the
management agreement with Premier.
-----------------------------------------------------
"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.
-----------------------------------------------------
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 or visit 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.
END
UPDUSUURUNUNURR
(END) Dow Jones Newswires
June 24, 2022 02:00 ET (06:00 GMT)
Premier African Minerals (LSE:PREM)
Historical Stock Chart
From Mar 2024 to Apr 2024
Premier African Minerals (LSE:PREM)
Historical Stock Chart
From Apr 2023 to Apr 2024