TIDMPREM
RNS Number : 8680D
Premier African Minerals Limited
26 June 2023
26 June 2023
Premier African Minerals Limited
Offtake and Prepayment Agreement Update
Update on Audited Accounts
Premier African Minerals Limited ("Premier" or the "Company"),
provides a further update on the progress of the revision of the
Offtake and Prepayment Agreement ("Agreement") entered into between
Premier and Canmax Technologies Co., Ltd. ("Canmax") as announced
on 6 June 2023 for spodumene concentrate produced at Zulu Lithium
and Tantalum Project ("Zulu").
Offtake and Prepayment Agreement amendments
Whilst Canmax and Premier continue to engage, and both parties
continue to express their intention to reach agreement and to
proceed with the conclusion of a suitable amendment to the
Agreement, no amendment has been signed to date, nor will an
amendment containing certain of the terms now currently proposed by
Canmax, be acceptable to Premier. In particular, Canmax's proposal
received on 23 June 2023 includes:
-- The effective conversion of the Pre-Payment Amount into
either (i) a convertible debt instrument in the event
that Zulu is unable to meet its delivery obligations
under the amended Agreement, with no floor to the conversion
price or (ii) a proportionate amount of the equity of
Zulu; and
-- The sale to Canmax of all concentrate produced at Zulu,
not only that from the Pilot Plant, at fixed prices with
limited ability for Premier to accommodate cost variations.
Premier remains committed to an equitable solution and will
continue to engage with Canmax to the extent to which Canmax is so
prepared. As previously announced, Canmax previously confirmed that
their intention was to continue to support Premier and not to
terminate the Agreement providing that an addendum between the
parties is entered into on or before 25 June 2023. As above, the
addendum has not been agreed to date.
Zulu plant modification update
In regard to plant modification progress at Zulu, Premier
reports that Stark International Projects Limited ("Stark") has
advised that civil preparatory works associated with the
installation of the hydro sizer and now for the installation of the
UV sorters is complete and installation is expected to commence
this coming week. Stark is acting as the design, procurement,
installation, and commissioning contractor on behalf of Premier,
and prior to completion of commissioning, remains as the operator
the Zulu plant. Stark has further advised that the installation of
the hydro sizer is expected to see concentrate production at or
near 50% of design throughput. In addition, Stark has advised
Premier that, with the exception of the initial shipment in June
2023 which has been delayed to circumstances beyond Stark and
Premier's control, and which are discussed further below, the Stark
production projections included in the announcement dated 25 May
2023 remain achievable. Shareholders should note that there can be
no assurance or guarantee that Stark's projections will be achieved
and that there will not be further delays to Stark's completion of
plant modification and final commissioning.
Notice of Force Majeure by Premier under the Agreement
As previously announced, Premier had been advised that the
milling and sizing component of the plant required certain limited
modifications to allow for full optimisation to design capacity
throughput. In particular, Premier had been informed by Stark that
the plant is unable to provide material correctly sized and in
sufficient tonnage from the comminution section to the floatation
plant to meet the concentrate production contemplated under the
Agreement. Inter alia, the bearing seal assemblies in the EDS mill
are unable to prevent dust and liquid ingress into the bearing
assembly and consequentially must be redesigned. Accordingly, and
for reasons set out more fully in the Force Majeure notice ("FM
Notice") that Premier served on 25 June 2023 under its agreement
with Canmax dated 28 July 2022, a formal state of Force Majeure
("FM") is now in effect. The full text of the FM Notice is set out
in the appendix to this announcement and provides greater technical
information about the events which have led to Force Majeure under
the Agreement.
The immediate effect of the FM is the suspension of all
obligations under the Agreement including those associated with
delivery of Product by Premier and any consequences associated with
it. Specifically, this suspends for the duration of the FM event,
any consequence, notice, interest, or the like associated with the
delivery of Product. The existing Agreement makes provision for
such an event of FM and contemplates a maximum time of six months
during which the cause or causes of the FM should be rectified. In
Premier's current opinion, in the light of recent developments, a
de facto state of FM has therefore been in existence from 25 May
2023.
Of further significance under the FM are the following:
-- Canmax may dispute the declaration of FM, but such dispute
would be resolved under Arbitration in Singapore; and
-- A notice period is not abridged by the duration of FM.
Funding update and AGM
Shareholders should note that Premier's Zulu project comprises a
built and installed processing plant undergoing modification as
previously announced and optimisation. Based on current Spodumene
prices and costs estimates there has been no change to the Board's
expectation that Zulu, when fully operational will operate
profitably. Zulu is and remains debt free and currently
unencumbered by the Agreement.
Premier has received approaches from competing hydroxide
producers based out of China and from European based entities
intending to complete their own hydroxide and other downstream
lithium operations. To date, Premier has resisted serious review of
any of these approaches in the light of the Agreement with Canmax.
However, in the context of the current stage of discussions with
Canmax in respect of the Amended Agreement, Premier will now engage
with these other interested parties.
Premier has previously stated that cash is constrained, and the
plant modifications and optimisation timeline will mean further
funding is expected to be required. At the Annual General Meeting
("AGM") scheduled for later today, Premier is seeking, inter alia,
shareholder approval for the disapplication of pre-emption for an
issue of shares for cash. Shareholders should note that whether or
not the enabling resolution is passed at the AGM, Premier has in
any event the general authority to issue shares on a pre-emptive
basis such as an open offer or rights issue. In these
circumstances, and if Premier remained unable to resolve the status
with Canmax and /or no other party concludes any further offtake
agreement on terms considered fair and reasonable to Premier
shareholders as a whole, then the Board consider that alternative
funding options remain available to Premier.
Accounts update
Premier still expects to publish the audited annual financial
statements for the year ended December 2022 ("Accounts") on or
before 30 June 2023. The implications of the FM Notice and status
of discussions with Canmax will be further reviewed with the
Company's auditors. Should there be any change to current timeline,
and in particular any possible delay to publication to beyond 30
June 2023, an immediate notification would be made at that point.
Shareholders should note that pursuant to AIM Rule 40, should
publication of the Accounts be delayed beyond 30 June 2023, the
Exchange would suspend trading in the Company's shares with effect
from 07.30 on 3 July 2023.
George Roach, CEO commented : "The issues at Zulu have been
acknowledged by the plant contractor to be beyond the control of
Premier, and could not have been foreseen by Premier. Whilst I am
deeply upset and committed to finding an equitable way forward with
Canmax, that solution should strive to be fair and reasonable and
in the best interests of all Premier shareholders as whole.
Whilst my focus is squarely on resolution of the plant issues
during this period of FM and production at Zulu, I will diligently
strive to resolve the issues with Canmax and will actively pursue
alternative strategies."
Related Party
As Canmax is interested in 13.14 per cent. of the Company's
issued share capital and therefore a related party under the AIM
Rules, any revised Agreement will be dealt with in accordance with
AIM Rule 13.
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 Tel: +27 (0) 100
Limited 201 281
Michael Cornish Beaumont Cornish Limited Tel: +44 (0) 20
/ Roland Cornish (Nominated Adviser) 7628 3396
--------------------------- -----------------
Douglas Crippen CMC Markets UK Plc Tel: +44 (0) 20
3003 8632
--------------------------- -----------------
John More/Toby Shore Capital Stockbrokers Tel: +44 (0) 20
Gibbs Limited 7408 4090
--------------------------- -----------------
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.
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.
APPENDIX
Copy of Notice of Force Majeure
The following sets out in the full the Force Majeure notified on
25 June 2023 by Premier to Canmax Technologies Co., Ltd:
"Premier African Minerals Limited (the "Company"), hereby gives
on its own behalf and on behalf of Zulu (as defined below) the
following notice in accordance with Article 12 of the Offtake and
Prepayment Agreement made as of the 28th of July 2022 between,
among others, SUZHOU TA&A ULTRA CLEAN TECHNOLOGY CO. LTD
("Buyer"), Zulu Lithium Private Limited ("Zulu") and the Company
(the "Offtake").
Terms in initial capital letters not otherwise defined in this
notice have the meaning ascribed to such term in the Offtake.
The Company and Zulu hereby advise the Buyer that the
performance or part performance of the Agreement by the Company and
Zulu has been, directly and indirectly, prevented, suspended, and
delayed due to a Force Majeure. Specifically, the following Force
Majeure's are being provided pursuant to this notice both of which
fall within the terms of Section 12.1 of the Offtake:
(viii) disruption or breakdown of storage plants, terminals,
equipment, machinery, or other facilities, which are not
in the ordinary course of business.
(vii) Shortages, failure, unavailability, or inability to obtain
machinery, materials, supplies, plant or equipment, water,
fuel, transportation or power, which are not in the ordinary
course of business.
(collectively, the "Force Majeures")
Explanation of Force Majeures
The Company is unable to deliver Product within the stipulated
dates as set out in the Agreement as the comminution circuit is
inter alia dependent on the continuous performance of the EDS mill
to deliver sufficient ore milled to less than 150 microns to
support the floatation section of the plant. A latent defect in the
bearing seal assembly has been discovered. The bearing seal
assembly is unable to prevent dust and liquid ingress into the
bearing assembly, and that the mill is unable to operate with a
feed moisture content greater than 10% when return feed causes the
moisture content of the feed to exceed this limit. For Product to
be produced at the contracted quantity, 37,5 ton of ore at 150
microns needs to be transferred to the floatation section of the
plant in a continuous supply stream. Given the foregoing, the
disruption, breakdown and failure of the components of the plant
constitute the Force Majeures. The Force Majeures could not have
reasonably foreseen by the Company when the design and construction
of the plant was taking place, and the inability of the plant to
operate with the elevated moisture content and the latent defect
discovered is not an ordinary course disruption, breakdown or
failure.
The latent defect in the bearing seal assembly will mean waiting
until the specialist parts are available and, to this end, the
Company has worked diligently with the main contractor responsible
for the design and construction of the plant, Stark Resources, both
to identify the issues with the plant which has caused the
disruption, breakdown and failure and to ensure that the repair
which is not in the ordinary course of business, can take place
expeditiously. Stark has confirmed the defect and has undertaken to
remedy it. In support thereof, I refer to correspondence from Stark
Resources dated 23 May 2023 (the "Stark Letter"). The proposed
remedy is set out by Stark Resources, as is the timeline in the
Stark Letter. It is anticipated that up to 50% of required Product
may become available from Late July 2023.
The remedy to the Force Majeures requires either the supply and
installation of new EDS mills, or the addition of an additional
conventional ball mill that is not immediately available. The
specific remedies are set out in the Stark Letter, and it is
expected that implementing a complete remedy is expected to require
16 weeks.
In accordance with Article 12 of the Offtake, this notice
confirms that no liability for damage or delay will arise against
either the Company or Zulu on account of its failure to perform its
obligations under this Agreement or on account of any disruption or
delay due to the Force Majeure or the consequences of it.
As the Force Majeure will likely defer or prevent future
deliveries of a Parcel of Product, we look forward to discussing
revisions to the Company's shipping schedule with you in due
course, all as contemplated by Section 12.5 of the Offtake."
Ends
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UPDEASKKAAEDEEA
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June 26, 2023 02:00 ET (06:00 GMT)
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