Shares in Premier African Minerals Ltd (AIM:PREM, OTC:PRMMF) dropped 30% in morning trade after the company announced a £1.6 million fundraising to support ongoing work at its Zulu Lithium and Tantalum Project in Zimbabwe.
The new shares were issued at 0.012p, a steep discount to the previous closing price.
In addition to the cash raise, the company said it had settled $1.1 million in contractor invoices by issuing over 6 billion new shares at the same price.
Premier said the funds will go towards improving the performance of its main processing plant, where modifications are being made to enhance the retention of concentrates, thereby boosting grade and recovery.
If that fails to deliver, the money will also support the development of an alternative flotation circuit. Some of the new investment will cover operating costs and debt repayments.
The company also confirmed that talks are set to resume with its major partners, including a FTSE 100-listed party, pending improvements in output quality.
Depending on plant performance, these discussions could restart as early as July or be delayed until later in the summer.
The shares dropped 0.0051p to 0.012p.