George Roach, the chairman and chief executive of Premier African Minerals Limited (LON:PREM), has agreed to underwrite amounts owing to contractor JR Goddard Contracting (JRG).
In effect, Roach will agree to buy enough of the Circum Minerals Limited shares Premier owns, at US$2 a share, to pay off the amount owed to JRG if asked to do so by Premier.
Premier has agreed to pay off the US$851,312 it owed JRG when it terminated its open pit mining contract at Premier’s RHA tungsten mine in Zimbabwe, at the rate of US$54,626 a month for 20 months.
Premier is paying interest at the rate of 12% a year on the money it owes JRG.
If the company recommences open pit mining operations through the direct engagement of JRG during the 20-month repayment period, Premier will recover US$247,000 from JRG by way of equal monthly instalments during the term of the new contracting agreement.
As George Roach is a director of the company, the proposed surety and Circum put option agreement constitutes a related party transaction for the purposes of the AIM rules. The board of Premier, other than George Roach, having consulted with the company's nominated adviser, considers that the terms of the surety and Circum agreement are fair and reasonable.
Shares in Premier were little changed on the news.