Premier African Minerals PLC (LON:PREM) is to spin off its Zimbabwe assets into a new vehicle that it intends to list in London.
Tungsten mine RHA and the Zulu lithium deposit will be part of the new company alongside the assets of mining contractor KME Group, which will be acquired in shares for US$4mln.
All that will remain within Premier once the deal completes is a 5% stake in Ethiopian potash mine developer Circum.
A funding round of US$6mln in debt or shares is planned to finance the new company with Premier shareholders to receive shares once the de-merger goes ahead.
KME is the contractor working at the RHA mine and its management team will head the merged company.
George Roach, Premier’s chief executive, said: "This proposed transaction is intended to accelerate a return to production at RHA and commencement of the work needed to complete the proposed Definitive Feasibility Study at the Zulu Lithium Project.
“In effect, when the equity in RHA Tungsten Mine is adjusted as is indicated by the Zimbabwean Government, Premier and Premier shareholders will on completion hold a substantially similar stake in RHA Tungsten Mine and Zulu Lithium Project whilst ongoing operating costs at Premier will be reduced and Premier effectively ring-fences its shareholding in Circum.
KME’s Management has a proven track record to successfully operate mines and develop exploration projects under Zimbabwean working conditions, he added.
Shares fell 38% to 0.14p.