Chronicle Editor
Acting Business Editor
PREMIER Africa Minerals (Premier) board plans to call for a special general meeting next month in London at a time when the lithium mining entity is exploring potential options to secure interim short-term funding from some board members to shore up operations.
The development comes as the impasse with the Chinese investor — Canmax Technologies could be headed for arbitration in Singapore in the event the parties are unable to resolve the dispute in 10 days.
The dispute arose after Premier missed spodumene concentrate production deadlines as spelled out in the off-take agreement with Canmax.
Last year, Premier secured pre-funding from Canmex to enable the construction and commissioning of a large-scale pilot plant.
In June, the mining entity issued a force majeure notice to China’s Canmax Technologies citing unforeseen operational hurdles encountered at its Zulu Lithium plant in Fort Rixon, Matabeleland South province.
Force majeure is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance is beyond the control of the parties.
That led to Canmax notifying Premier of its intention to terminate the agreement demanding repayment of US$34,7 million within 90 days.
Last year, Premier secured pre-funding to enable the construction and commissioning of a large-scale pilot plant at the project.
In an off-take and Prepayment Agreement update on Thursday, Premier Africa says based on legal advice it “disputed the appropriateness of the notice of termination.”
“Subsequently, the Company has received, and acknowledged, a further written notice from Canmax on 17 July 2023 that there is a dispute under the Agreement and notes that both parties are now required to seek to resolve the dispute in good faith by ‘friendly negotiation’.
“To the extent that the parties are unable to resolve the dispute in 10 days, then either party may then refer the dispute to arbitration in Singapore. These discussions remain ongoing and nothing has been agreed at this time.”
Meanwhile, the mining entity said in the past three weeks installation of the UV sorters, a new frame to the EDS mill and the Hydro Sizer have been done as part of the plant modification.
“The commissioning of the Upgrades remains ongoing with the UV sorters expected to increase feed grade with resultant efficiency enhancements to recovery and production, furthermore, the Hydro Sizer is expected to improve efficiency in recovery of correctly sized milled ore,” it noted.
It added that while the upgrades may improve throughput of the plant at Zulu, it is unlikely to resolve the formal state of force majeure as announced on June 26, which is still expected to endure for approximately 14 weeks.
“The Zulu design, procurement, installation, and commissioning contractor, Stark International Projects Limited have confirmed that they intend to produce spodumene from the plant at Zulu over the course of July 2023.
“At this stage and unless Premier is advised otherwise by Stark, the Stark production projections included in the announcement dated 25 May 2023 remain achievable apart from the month of June 2023 as advised on 26 June 2023.”
Premier added that while it is actively involved in alternative funding negotiations to facilitate ongoing development at Zulu and the substitution of the Agreement with Canmax who have made it clear that they seek repayment and cancellation following the remedy of the force majeure, there is no certainty at this time that these alternative funding arrangements will be concluded.
Premiers’ cash reserves remain constrained, and this has been exacerbated following rejection of the special resolution proposed to shareholders at the Company’s Annual General Meeting to disapply pre-emption rights, as announced on 26 June 2023.
The Board noted the limited number of proxy votes cast at the AGM, and in particular, the Board believes that substantially more shareholders would have voted at the AGM in light of recent developments, it said.
“Accordingly, the Board intends to call a special general meeting to be held on or around the 12 August 2023 in London where shareholders are strongly encouraged to vote in either person or through the proxy of the Chairman of the meeting. The Company is also exploring potential options to secure interim short-term funding from certain members of the Board.”
Zimbabwe is envisioning a US$12 billion mining industry, which is a key enabler of Vision 2030 of achieving an upper-middle-income economy by 2030.
Lithium has already proved its position as a strategic mineral given its role in the storage, use and transfer of energy, which has touched the globe through use of smartphones for global communication, laptops, electric grid stability, and storage to power homes, and electric vehicles.
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