Premier African Minerals Ltd (AIM:PREM) has updated investors on its ongoing, and separate, talks which seek to resolve its offtake dispute and alternate funding arrangements.
At the same time, it confirmed progress at the Zulu lithium project in Zimbabwe where commissioning plant upgrades are continuing, whilst the project remains under its current ‘force majeure’ status.
The company, meanwhile, seeks to call a special general meeting for a new shareholder vote in order to remove certain pre-emption rights – after a similar resolution was rejected at June’s AGM.
In London, Premier African Minerals shares traded 16% lower in Thursday morning’s deals.
Canmax dispute
The company told investors that on 17 July it received written acknowledgement from Canmax that there is a dispute between the parties over the offtake and prepayment agreement. This follows Premier African declaring force majeure in late June.
Now, as a result of the communications, the companies have now triggered a ten-day period in which they are required to undertake good faith negotiations. After ten days, if the matter is still unresolved, either party may refer the dispute to arbitration in Singapore.
These discussions remain ongoing and nothing has been agreed at this time.
Alternate funding
The company said that it continues to be actively involved in alternative funding negotiations to facilitate ongoing development at Zulu.
It also noted, meanwhile, that because Canmax has made it clear that it seeks repayment and cancellation of its arrangement, following the remedy of the force majeure, there is “no certainty at this time that these alternative funding arrangements will be concluded”.
Premier said its cash position remained constrained and was exacerbated by the rejection at last month’s AGM. It pointed to the low volume of proxy votes at that meeting, and, said management believes substantially more shareholders “would have voted in light of recent developments”.
The next vote is slated for the proposed meeting on 12 August and it “strongly encourages” shareholders to vote.
Additionally, Premier said it is exploring potential options to secure interim short-term funding from certain members of the board.
Commissioning continues
The company said that in the past three weeks, it has installed new equipment at the Zulu plant – including UV sorters, a new frame to the EDS mill and the Hydro Sizer – and commissioning is ongoing.
It added that the upgrades “may improve throughput of the plant” but they are “unlikely to resolve the formal state of force majeure as announced on 26 June 2023”.
The period of force majeure is “still expected to endure for approximately 14 weeks,” the company added.
The company’s contractor Stark International Projects, meanwhile, has confirmed that it intends to produce spodumene from the plant at Zulu over the course of July – and, unless informed otherwise, the company anticipates production projections announced in May “remain achievable”.
“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,” the company added.