Premier African Minerals Ltd (LON:PREM) has reminded investors that it has a 2% stake in potash producer Circum Minerals which owns the potentially huge Danakil project in Ethiopia.
Premier African’s chief executive George Roach has hinted that Circum is close to being granted a mining licence at the project, while a round of funding to help advance it could also be just around the corner.
“The expected sign-off of Circum's mining license and possible liquidity event in the near future, the impending return to production at RHA, ongoing results from Zulu Lithium and the end of all convertible loan notes all support the recent improvements in Premier's market capitalisation,” said Roach.
“To put the Danakil project in context, the much smaller Yara project to the south of Circum was funded on a valuation of US$200 million last year.
“I believe that Circum should warrant a significantly higher valuation on its much bigger project particularly as and when the mining license is granted.”
Back in 2015, a definitive feasibility study suggested the total value of Danakil was in the region of US$2.1bn. If true that means Premier’s stake is worth US$42mln; a sizeable amount given the explorer’s current market value of £23mln.
Circum is targeting annual production at Danakil of 2 million tonnes (Mt) of potassium chloride and 0.75Mt of potassium sulphate for phase I, with the possibility of two or three further expansions.
Seismic data has also suggested the potential total resource of the project is in the region of 12 to 14bn tonnes.
Premier shares were up more than 5% to 0.61p on Friday.