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Business Reporter
Premier African Minerals may declare force majeure at its Zimbabwe lithium mine in a move aimed at temporarily suspending contractual obligations amid ongoing financial difficulties, multiple sources have said.
The sources suggest Zulu lithium mine is struggling to meet its financial commitments and reportedly owes some contractors huge amounts of money.
Force majeure is a legal term that exempts a party from liability or obligation under a contract due to an extraordinary event or circumstance beyond their control.
In the context of Zulu, the declaration of force majeure means that the company is temporarily relieved of its contractual obligations.
According to sources, the force majeure is expected to run until January 8, 2025.
The previous force majeure declaration by the company in 2023 was due to plant issues that prevented the company from fulfilling its lithium concentrate delivery obligations to an off-taker, Canmax, a Chinese lithium battery maker.
The offtake agreement is for the supply of spodumene concentrate to Canmax in exchange for a cash injection Canmax, the single largest shareholder in Premier made towards the construction of the Zulu processing plant.
“The company notified its stakeholders last week that it (may) declare force majeure, citing an inability to continue incurring operational obligations. This decision was made due to the company’s current financial constraints,” said a source who requested anonymity due to their lack of authorisation to speak to the press.
No comment could be obtained from Premier by the time of going to print yesterday.
Zulu Mine has been facing financial challenges, which occasionally led to some contractors withdrawing their services citing non-payment
Yesterday, Premier reported an important upgrade to the SAMREC (South African Mineral Reporting Codes) compliant Mineral Resource Estimate (MRE) on Zulu.
This MRE is only concerned with the spodumene and tantalum that are contained in the deposit and with those areas of the Zulu tenements that are expected to be mined and processed through the present plant only.
It excludes the greater Exclusive Prospective Orders (EPO) area.
The MRE estimates lithium oxide (Li2O) that is contained in spodumene, specifically that is attributable to spodumene at 131 627 tonnes and the direct conversion of the contained Li2O to spodumene concentrate 6 (SC6) is 2,2 million tonnes.
Primier said the mineral resource development drilling was ongoing to identify extensions to the current MRE, with the potential to add additional Mineral Resources.
“This updated MRE represents a 23 percent increase in contained spodumene, a 17 percent increase in contained tantalum and an improved grade at a 0 percent cutoff of 0,54 percent Li2O compared to e MRE published in February 2024.
“The increases are attributable to several reasons that include the fact that mining development and grade control indicates in situ grade estimates are understating the actual grades being mined, an adjustment in ore body density, and additional data now included. The updated MRE has been prepared on a depleted basis following mining conducted to date.
“It should be noted that with ongoing mining activities, further sections of the ore body are expected to be reclassified into a measured category that will be supported by close-spaced in pit grade control assessments from time to time.
The MRE is based on assay results from 236 surface drill holes totalling 46,355 metres, 856 grade control holes totalling 5 640 m and 123 surface trenches totalling 4 055 m between September 2016 and December 2023.
The MRE was carried out by an independent qualified person, Mr Charles Muller of Shango Solutions (Shango).
The geological model has been developed from extensive drilling, which was undertaken on a nominal 50 m x 50 m drill spacing, as well similarly spaced surface trenches.
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