The Premier African Minerals Ltd (LON: PREM) share price fell 36% after issuing an update on the Offtake and Prepayment Agreement entered into with Canmax Technologies Co., Ltd regarding the Zulu Lithium and Tantalum Project.
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The company noted that Canmax issued a notice to terminate its contract with Premier African Minerals following the service of a Force Majeure Notice on Canmax on 25 June 2023. The two companies have been asked to resolve their issues amicably over the next ten days, or they will be referred to arbitration in Singapore.
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PREM received the notice from Canmax regarding the “friendly negotiation” to resolve the dispute in good faith, but nothing has been agreed so far. Canmax had demanded the Company settle the prepayment of US$34.7 million within 90 days, which PREM disputed.
The company also issued an update regarding the modification of the Zulu plant, which is currently ongoing. The company’s project contractor, Stark International Projects Limited, has installed various upgrades at the plant, including UV sorters, a new frame to the EDS mill and the Hydro Sizer.
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 the recovery of correctly sized milled ore.
However, PREM warned that despite the upgrades improving the throughput at the Zulu mine, they would not affect the formal state of Force Majeure as announced on 26 June 2023, which is still expected to extend for approximately 14 weeks.
The Zulu plant is expected to continue producing spodumene during July 2023, with the production delay only affecting the month of June. PREM reminded shareholders that it was still working under the guidance of Stark International Projects Limited regarding the ongoing optimisation and modification of the plant.
The company promised to communicate when Stark formally signs off on the plant, including operational control back to Premier. Based on current Spodumene prices and cost estimates, there has been no change to the Board’s expectation that Zulu, when fully operational, will be profitable.
*This is not investment advice.
Premier African Minerals (PREM) share price.
The Premier African Minerals (PREM) share price plunged 36% to trade at 0.32p, from Wednesday’s closing price of 0.50p.
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