Zimbabwe-focused diversified mining group Premier African Mineral intends to raise £2,4 million (about US$3,15 million) to fund its Zulu Lithium and Tantalum project in Matabeleland South Province.
The United Kingdom-headquartered mining firm also owns mining claims for rare earth elements and a tungsten project in the province. Zimbabwe has seen significant investment in lithium, a battery mineral whose demand has grown substantially as the world shifts to cleaner energy energy electric cars.
Lithium is also a strategically important mineral for Zimbabwe the Government expects to contribute to the attainment of a US$12 billion mining.
Premier suspended operations at the Zulu project in November last year to allow civil construction to commence in preparation for the installation of its 55 tonnes per hour ball mill and other associated structures.
The mining group said last week that it was in the market to raise £2,4 million (about US$3,15 million) from shareholders on before expenses at an issue price of 0,275 pence per new ordinary share.
The funds are intended specifically for direct operating expenses at Zulu.
These include final payments related to the thickener procurement and installation, final payments related to the ball mill and associated hydrosizers, procurement of transportation vehicles, plant operating spares and reagents, mining costs, and day-to-day operational expenses including fuel.
Group chief executive officer Mr George Roach said: “This placement assures Zulu of plant start-up, subject only to suppliers meeting their obligations and undertakings. This has and remains Premier’s single most important objective at this stage. That is targeted for next week (this week) and remains on target at this time.”
Premier remains confident that it will start commercial production late this month with first shipments expected in March.
The mining entity, which has set a monthly production target of up to 1 000 tonnes of spodumene, has in recent weeks taken delivery of an assortment of strategic plant components and upscaling installation.
Spodumene is a battery-grade product that is significant for the future of electric motors.
So far, Premier has installed the new ball mill at the site, which is presently undergoing a test run.
“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,” he said. Last year, Canmax Technologies Co Limited provided US$35 million in pre-funding to enable the construction and commissioning of a large-scale pilot plant. Canmax is the producer of lithium electric materials and other related products.
After missing the production commencement timelines in June last year, Premier issued a force majeure notice to Canmax citing unforeseen operational glitches encountered at Zulu.
A force majeure is a clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance is beyond the control of the parties.
As a result of the unforeseen operational hurdles, Premier could not supply spodumene concentrate to Canmax as per the set timelines stipulated in the offtake agreement.
The mining group said as announced on 18 January 2024, it elected to make a significant expansion in the mining operations to facilitate delivery of ore with less country waste to ensure against any residual issues with the sorters (which continue to be optimised) when plant production recommences at Zulu.
“And while the mill has now been delivered and installed at Zulu, there was a delay with the delivery which further constrained Premier’s cash resources,” said the mining group.
It said it continues to engage with Zimbabwean based lenders for working capital facilities at Zulu – these potential lenders need to see production from Zulu and 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.
Based on the above, Premier believes that securing funding through the above subscription is the best immediate solution to securing further project funding to see Zulu commencing production in late this month. Once production has commenced, Premier believes that this 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,” it said.
