Premier African Minerals Ltd (LON: PREM) share [rice fell 17.4% after updating its Zulu lithium and RHA Tungsten projects.
The company noted that it had completed a new conceptual underground Conceptual Mine Plan for RHA based on a revised underground mineral resource estimate to determine if returning the RHA Tungsten mine to production will be profitable.
The new plan is based on an underground production rate of 6,000 tons monthly, with the mine being expected to last for ten years.
Premier revealed that it would need to invest an additional $2.5 million into the project, which it could recoup in 16 months.
However, the mining company clarified that it had decided not to invest any more funds in the mine and that the additional funds would have to come from a separate entity.
Premier suggested that the National Indigenisation and Economic Empowerment Fund (“NIEEF”) or other interested parties are welcome to take over the project.
Investors reacted negatively to the announcement given that RHA owes Premier approximately $20 million, and all concentrate produced will repay the debt until it is fully settled.
The number of investors willing to invest $2.5 million into a project and then wait for another party to recoup their $20 million investment before they can start reaping from their investment is quite limited.
Premier African Minerals also revealed that the drilling programme at its Zulu mine had commenced despite significant delays occasioned by the coronavirus pandemic.
George Roach, Premier’s CEO, commented, “Surging Covid-19 in the SADC region is not helping at Zulu where travel and other restrictions are impacting the drilling programme. Despite this, the rigs continue to operate, and our lab equipment is now only awaiting import clearance to Zimbabwe. The drilling is underway at Zulu and is just one component of the Definitive Feasibility Study.”
*This is not investment advice.
Premier African Minerals share price.
Premier African Minerals share price plunged 17.39% to trade at 0.19p, falling from yesterday’s closing price of 0.23p.
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