eBusiness Weekly
Martin Kadzere
PREMIER African Minerals Limited, the anchor shareholder of the Zulu lithium and tantalum project, has pledged to settle outstanding payments to its contractors, prompting them to resume operations and putting the project back on track.
The Zulu lithium project, located about 80 kilometres east of Bulawayo, is widely considered potentially the largest undeveloped lithium-bearing pegmatite in the Zimbabwe.
However, operations at the Zulu project were recently halted by contractors due to payment delays.
This threatened to jeopardise the planned production target for the end of the month.
Unpaid dues for services rendered at the Zulu project, including drilling and supplies, escalated to approximately US$2,2 million as of last week, leading to recent work stoppages, according to one source who preferred to remain anonymous.
“The US$2,2 million in outstanding payments is what pushed the contractors to this point,” said the source. “This project cannot move forward until contractors are paid.
“In response to the concerns, Premier pledged to initiate payments by the end of next week. This promise secured an agreement from contractors to resume operations.”
Last Thursday, Premier, an Alternative Investment Market-listed company, sought to raise approximately £2,5 million (US$3,1 million) through a share issuance to its shareholders. The offering entails issuance of 900 million new ordinary shares at a price of 0,275 pence per share.
Premier intends to use the proceeds of the subscription to assist with the ongoing mining activities and working capital.
Mr George Roach, the chief executive of the company, said the placement would assure Zulu of plant startup, subject “only to suppliers meeting their obligations and undertakings”.
“This has and remains Premier’s single most important objective at this stage,” he said.
“That is targeted for next week and remains on target. Early indications are that subsequent working capital finance will be available from commercial lenders at Zulu when production is underway as Zulu must begin to fund its operations without the assistance of Premier once commercial production has commenced.”
According to Premier, the funds raised would be used specifically for operating expenses at the Zulu lithium project, including final payments related to the thickener purchase and installation, final payments related to the ball mill and associated hydrosisers, transport and installation, plant spares and reagents mining costs, and day-to-day operating expenses.
Premier will continue to engage with Zimbabwe-based lenders for working capital facilities for the project but the potential funders need to see production starting.
“While Premier strongly believes that Zulu will be able to source a working capital facility, this is now largely dependent on Zulu being in production,” said the board.
As such, Premier believes securing funding “is the best immediate solution to securing further project funding in order to see Zulu commence production in late February 2024.”
“Once production has commenced, Premier believes it should see one or more of the alternatives to equity-based funding materialise. “On this basis, Premier’s current expectation is that it is now fully funded to first production at Zulu.”
The new shares will be admitted to trading and will have equal rights with existing ordinary shares once issued.
Application will be made for the subscription to be admitted to trading on AIM, a sub-market of the London Stock Exchange. Admission is expected to take place on or around February 21, 2024.
The subscription has been arranged within the company’s existing share authorities.
Premier is a multi-commodity mining and natural resource development company focusing on Southern Africa, with its RHA tungsten and Zulu lithium projects in Zimbabwe.
The firm has a diverse portfolio of projects, which include tungsten, rare earth elements, lithium and tantalum in Zimbabwe; and lithium and gold in Mozambique.
