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(Sharecast News) - Premier African Minerals announced a decision to raise £4m before expenses on Friday, to help with the ongoing development of Zulu.
The AIM-traded firm said the placing and subscription was set at an issue price of 0.35p per new share, with the funds to be used for the continuous advancement of the Zulu Lithium and Tantalum Project.
Its primary target with the initiative was to start revenue-generating production by November.
The board said the ongoing development of Zulu involved significant expenses, the most substantial of which were related to JR Goddard Contracting, responsible for open-pit mining, and Stark International Projects, the company overseeing Zulu's design, procurement, installation, and commissioning.
Those entities, referred to as ' the contractors', had mutually agreed to accept payment in the form of new shares of Premier for a specific number of their upcoming invoices.
Premier said that arrangement would remain in effect until the end of December, with the valuation of the shares determined by the closing middle market price a day before the agreement's settlement.
On Friday Premier launched a placing and direct subscription that would result in the issue of 1,142,857,143 new shares at a price of 0.35p.
Once issued, the shares would have equal rights with the current ordinary shares of the company.
It expected that the placing shares would be approved for trading on AIM around 31 August.
The board said the financial proceedings from the placing would be primarily redirected towards enhancing the plant operations at Zulu, and covering general working capital.
Premier African Minerals said it would allocate funds for the interim mill installation and the associated thickener.
The improvement was projected to boost production to about 50% of the design capacity from October.
Furthermore, the firm said it planned to use the funds for ongoing pit development, especially for clearing the weathered zone, and to meet the general operational costs.
The financial preparation would support the company until the end of November - the time when the first revenue from Zulu was expected.
"Based on current projections this funding and the arrangements set out below is expected to see Zulu pass through the current interim remedial situation and allow the company to reach target nameplate production at Zulu," said chief executive officer George Roach.
"I am appreciative of the support from our investors and from our contractors who effectively are making their own statement of confidence going forward with this investment."
At 1040 BST, shares in Premier African Minerals were up 1.72% at 0.4p.
Reporting by Josh White for Sharecast.com.
