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Premier African Minerals drops Zimbabwe spin-off plan

Zimbabwe has also been wracked by civil strife over the past months
RHA is proving a major sticking point

Premier African Minerals Limited (LON:PREM) has abandoned plans to de-merge its Zimbabwe assets and list them in London.

Instead, it will acquire a 50% share of the assets of KME, its contractor at the RHA tungsten and Zulu lithium projects. Under the original plan, KME’s assets were to be combined with RHA and Zulu to form a new company but that idea has now been abandoned. The ownership structure of RHA has been a sticking point.

READ: Premier African Minerals says Zimbabwean Government has indicated it is willing to inject funds required to resuscitate the RHA tungsten mine

Premier has been trying to get the Zimbabwe authorities to agree on a debt-for-equity swap that will see its holding in RHA rise to 90% from 49%.

That has yet to happen, though Premier said talks with the Ministry of Industry over recommissioning RHA had now started.

Zimbabwe has also been wracked by civil strife over the past months.

Premier will issue US$1.4mln worth of shares for the stake in KME.

The explorer is also buying 50% of a potential gold producer, Honey Badger Resources, for US$3.7mln also to be settled in Premier shares.

George Roach, Premier African’s chief executive, said he understood there would be considerable dilution to existing shareholders from the deals but the overall value created should outweigh the dilutive effect.

"Existing Premier shareholders are likely to retain a substantially greater interest in our projects going forward than may have been the case with the previously announced November KME Transaction."

HBR already has a JORC-compliant Resource greater than 500,000 ounces and a further internal resource in a semi-developed and previously mined deposit, he said.

“We believe there is potential to develop a significant gold mine in this region of Zimbabwe that already hosts major gold production. Our initial exploration target is 2 million ounces.” 

On the KME deal, Roach said: “The proposed terms of the New KME Transaction has reduced the overall acquisition cost to Premier while retaining the key benefit of being able to carry out the further drilling required for the definitive feasibility study for Zulu at significantly reduced cost and while still allowing Premier to hold 100% of Zulu.”

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