daniel chigunwe
Oliver Kazunga
The dispute between Premier African Minerals and CanMax Technologies is raging on with the former expressing optimism that a mutual understanding between the two parties will be reached.
Last year, CanMax provided US$34,7 million in prefunding to facilitate the construction and commissioning of a large-scale pilot plant at the Zulu lithium and tantalum project in Fort Rixon, Matabeleland South Province.
Under the agreement, Premier, which has developed the Zulu project, was expected to start shipping spodumene concentrate to CanMax operation in China by end of March this year.
Conversely, Premier announced that the massive plant that recently commenced production is not able to process sufficient spodumene to meet the conditions of its offtake agreement due to unforeseen operational challenges encountered at the Zulu plant.
When fully operational, the Zulu project is projected to produce 4 000 tonnes of lithium concentrate per month, but due to the prevailing operational shortcomings at the lithium asset, Premier towards the end of June issued a Force Majeure notice to CanMax.
Force Majeure is a French term that is a common clause in contracts and it exonerates parties involved in a binding agreement from suffering any liability when an extraordinary event beyond the control of the parties occurs.
Despite serving the Force Majeure, CanMax has demanded that Premier settles the prepayment amount of US$34,7 million within 90 days.
Against this background, Premier recently announced that it disputed the appropriateness of the notice of termination based on legal advice.
In an update released this week, Premier said: “The board is pleased to report that these discussions, which remain ongoing, are at an advanced stage and have been constructive.
“The board’s expectation is that there is a common understanding between the parties and they are close to a satisfactory resolution.”
Furthermore, it stated that shareholders should note that as CanMax is interested in more than 10 percent of the issued ordinary share capital of Premier, any addendum to the agreement will be a related party transaction.
On Zulu plant modification update, Premier said while certain of the required fixes have been installed, optimisation and full commissioning has not yet been concluded and the plant supplier, Stark International Projects Limited (Stark) has not been able to deliver spodumene concentrate as expected and production projections will need to be reviewed.
“The plant has demonstrated its ability to produce concentrates from both the mica and spodumene sections of the floatation plant.
The ongoing optimisation will focus on the following key aspects: increase in density of material provided to the floatation plant; installation as an intermediate upgrade of redundant RHA Tungsten rod mill at Zulu; and refinement of the spodumene concentrate to eliminate mica and lepidolite minerals.
“Spodumene concentrates produced to date contain in the region of 50 percent spodumene as determined by XRD analysis, but also up to 30 percent in mica minerals that cause a dilution of the spodumene grade.
“With improvements through ongoing optimisation and a refloating of concentrates produced to date, we expect that the plant will produce spodumene to SC6 grade as we have already demonstrated in our on-site laboratory,” said the company.
Premier chief executive officer, George Roach, was quoted as saying he was pleased with how the two companies were handling their discussions to reach a common understanding.
“I am deeply appreciative to our team at Premier and the team from CanMax for the work being undertaken in an effort to find a satisfactory outcome.
“In regard to spodumene concentrate production, it is most encouraging to note that we are able to produce high grade spodumene concentrates from the plant material in our laboratory and to note that we expect to re-float concentrates produced to date with the intention of having saleable material in the coming weeks,” he said.
Lithium is a mineral used in the production of batteries and its demand has arisen sharply because of the global demand in electric vehicles, especially in developed countries that are forging ahead with plans to phase out fossil fuels like petrol and diesel in the coming years.
The Zulu project is generally regarded as potentially the largest undeveloped lithium bearing pegmatite in Zimbabwe, covering a surface of about 3,5 kilometres that are prospectively of lithium and tantalum mineralisation.
Bongani Ndlovu