eBusiness Weekly
Business Writer
Premier African Minerals Limited is seeking to raise approximately £2,5 million (US$3.15 m) for the Zulu Lithium and Tantalum Project with the announcement coming amid reports that some contractors have paused service delivery due to outstanding payments.
Zulu Lithium and Tantalum project located 80 kilo-meters from and is widely considered potentially the largest undeveloped lithium-bearing pegmatite in the Zimbabwe.
In a statement yesterday, the Premier board announced the intention to raise £2,475,000 (before expenses) at an issue price of 0,275 pence per new ordinary share.
Premier intends to use the proceeds of the subscription to assist with the ongoing mining activities and working capital. Zulu is scheduled to start work next week.
George Roach, chief executive said the placement would assure Zulu of plant startup, subject “only to suppliers meeting their obligations and undertakings”. “This has and remains Premier 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.
However, Business Weekly understands that some contractors involved in the Zulu Lithium project have reportedly paused their work activities over nonpayment.
A contractor involved in the Zulu project, speaking on condition of anonymity due to the sensitive nature of the information, highlighted funding challenges as a factor in some work stoppages.
The contractor indicated unpaid dues for services, including drilling and supplies, estimated at roughly US$2,2 million as of last week.
“For the services rendered including mining works such as drilling and the supply of consumables, contractors were owed about US$2,2 million as of last week,” said one source who requested not to be named because the matter is private.
“Funding has been a challenge and contractors are finding it difficult to sustain service provision.”
According to Premier, the funds raised would be used specifically for operating expenses at the Zulu Lithium project that includes the final payments related to the thickener purchase and installation, final payments related to the ball mill and associated hydrosisers, transport and installation, plant operating spares and reagents mining costs, and day to day operating expenses including diesel.
Premier will continue to engage with Zimbabwean-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 that 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 believe that 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 offering entails issuance of 900 million new ordinary shares at a price of 0,275 pence per share.
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 the Alternative Investment Market (AIM), a sub-market of the London Stock Exchange (LSE) with admission expected to take place on or around 21 February 2024.
The subscription has been arranged within the company’s existing share authorities.
Premier 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 for the exchange of Premier’s entire 4.8 percent interest in Circum Minerals Limited, the owners of the Danakil Potash Project in Ethiopia, for a 13,1 percent interest in the enlarged share capital of Vortex.
Vortex has an interest of 36,7 percent in Circum.
