Premier African Minerals Ltd (LON:PREM) is poised to buy a 52% interest in a Mozambique firm with a substantial limestone deposit for a total of US$2.1mln and has raised £1.1mln in a discounted share placing.
TCT's deposit is near the railway in the Sofala province and the firm also holds a 24,821 ha hardwood forestry concession, valid for another 35 years, in central Mozambique, with associated milling and furniture manufacture, the firm said.
Premier's chief executive George Roach said the deal was attractive and expected to positively impact group cash flows.
"This, together with developments at RHA where recommissioning of the vertical shaft remains on target for completion this month, adds substantially to Premier's future," he said.
Early test work on surface shows the limestone could be used in cement production and for aggregates. The board believes that there is local demand for lime for cement production, agricultural applications and aggregates.
Premier intends to start an initial work programme to provide a maiden resource and preliminary scoping study late in 2016. The approved exploration programme is fully funded.
Meanwhile, the forestry operations are expected to contribute significantly to funding development of the limestone deposit after an initial capital injection by Premier and TCT is expected to contribute positively to Premier's group cash flows in the current year.
Premier has agreed to acquire an initial 26% interest in TCT from Transport Commodity Trading Mozambique Limitada (TCTM) for US$1.1 million in four tranches in either shares or cash and a further initial 26% interest from GAPI Sociedade de Investimentos S.A. (GAPI) for a total of US$2.1 million.
In the placing, Premier issued around 146,6mln shares at 0.75 pence per subscription share to fund TCT's projected exploration, operating and development expenditure and the initial cash acquisition cost.
Yesterday's closing share price was 1.025p.
Premier shares fell 14.63% to 0.875p.