Offtake and Prepayment Agreement Update

Premier African Minerals Limited

20 July 2023

 

20 July 2023

Premier African Minerals Limited

Offtake and Prepayment Agreement Update

Zulu Update

Premier African Minerals Limited ("Premier" or the "Company"), provides a further update on both the progress at the Zulu Lithium and Tantalum Project ("Zulu") and the Offtake and Prepayment Agreement ("Agreement") entered into between Premier and Canmax Technologies Co., Ltd ("Canmax") as announced on 6 June 2023.

Offtake and Prepayment Agreement

On 28 June 2023, the Company received a purported notice of termination of the Agreement from Canmax (following service of a Force Majeure Notice on Canmax on the 25 June 2023) which demanded the Company settle the prepayment amount of US$34.7m within 90 days. The Company has disputed the appropriateness of the notice of termination based on legal advice.

Subsequently, the Company has received, and acknowledged, a further written notice from Canmax on 17 July 2023 that there is a dispute under the Agreement and notes that both parties are now required to seek to resolve the dispute in good faith by "friendly negotiation". To the extent that the parties are unable to resolve the dispute in 10 days, then either party may then refer the dispute to arbitration in Singapore. These discussions remain ongoing and nothing has been agreed at this time.

Zulu plant modification update

In regard to plant modification progress at Zulu, the past three weeks have now seen the installation of the UV sorters, a new frame to the EDS mill and the Hydro Sizer (collectively the "Upgrades"). The commissioning of the Upgrades remains ongoing with the UV Sorters expected to increase feed grade with resultant efficiency enhancements to recovery and production; furthermore, the Hydro Sizer is expected to improve efficiency in recovery of correctly sized milled ore.

Whilst the above Upgrades may improve throughput of the plant at Zulu, it is unlikely to resolve the formal state of Force Majeure as announced on the 26 June 2023, that is still expected to endure for approximately 14 weeks.

The Zulu design, procurement, installation, and commissioning contractor, Stark International Projects Limited ("Stark"), have confirmed that they intend to produce spodumene from the plant at Zulu over the course of July 2023. At this stage and unless Premier is advised otherwise by Stark, the Stark production projections included in the announcement dated 25 May 2023 remain achievable apart from the month of June 2023 as advised on 26 June 2023.

Shareholders are reminded that Premier is working under the guidance of Stark on the ongoing optimisation and modification of the plant and that Premier will formally communicate when sign -off of the plant including operational control of the plant has moved onto Premier.

Funding update and Special General Meeting

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 provisions of the Agreement.

In particular, whilst the Company is actively involved in alternative funding negotiations to facilitate ongoing development at Zulu and the substitution of the Agreement with Canmax who have made it clear that they seek repayment and cancellation following the remedy of the Force Majeure, there is no certainty at this time that these alternative funding arrangements will be concluded.

Premiers' cash reserves remain constrained, and this has been exacerbated following rejection of the special resolution proposed to shareholders at the Company's Annual General Meeting ("AGM") to disapply pre-emption rights, as announced on 26 June 2023. The Board noted the limited number of proxy votes cast at the AGM, and in particular, the Board believes that substantially more shareholders would have voted at the AGM in light of recent developments. Accordingly, the Board intends to call a special general meeting to be held on or around the 12 August 2023 in London where shareholders are strongly encouraged to vote in either person or through the proxy of the Chairman of the meeting. A further announcement will be made in due course.

The Company is also exploring potential options to secure interim short-term funding from certain members of the Board.

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: [phone]
Michael Cornish / Roland Cornish	Beaumont Cornish Limited (Nominated Adviser)	Tel: [phone]
Douglas Crippen	CMC Markets UK Plc	Tel: [phone]
John More/Toby Gibbs	Shore Capital Stockbrokers Limited	Tel: [phone]

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.

 
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