Premier African Minerals Regulatory News (PREM)

Premier African Minerals Limited / Ticker: PREM / Index: AIM / Sector: Mining

For immediate release

 4 December 2019

Premier African Minerals Limited

Amendment to terms of Loan Agreement to MN Holdings Limited and conversion into an initial direct interest in MN Holdings Limited

The Board of Premier African Minerals Limited ("Premier" or the "Company") is pleased to announce that it has today agreed to amend the terms of the loan agreement concluded on 8 July 2019 ("Loan Agreement") to MN Holdings Limited ("MNH"), the owner and operator of the Otjozondu Manganese Mining Project ("Otjozondu") in Namibia, and has converted the loan into a direct 10% equity interest in MNH.

Highlights:

·; Loan Agreement conversion provides Premier with an equity ownership of 10% in MNH

·; Independent replacement valuation of total mining equipment at Otjozondu of ZAR 326 million (equivalent to US$22 million), of which only the current running mining equipment at Otjozondu amounted to approximately ZAR 221 million (equivalent to US$15 million)

·; Equity interest provides Premier with an important stake in a producing and revenue-generating manganese mine in a stable jurisdiction in Africa

George Roach, Chief Executive of Premier commented, "I expect that this development may be transformational. We believe that Otjozondu is a standout asset in a manganese district. Not only that, there are significant potential synergies and other benefits in this association. Not the least is that Otjozondu is a very well equipped owner-operator open pit mining contractor and this expertise has the potential to complement and reduce operating costs at RHA as soon as RHA is back in production, and Zulu both during exploration and mining phases.

Otjozondu is in the process of increasing production with the integration of the recently acquired additional mining fleet and processing equipment. This production increase builds on a profitable base and Otjozondu will we believe be one of the manganese miners able to lay claim to maintaining ongoing profitable operations and simultaneous production increases at a time when manganese prices are stressed. This is as much a credit to the style of mineralisation that has a high demand, as to the low-cost open pit and high in situ grade of ore and the well managed overhead structure associated with the owner-operator nature of operations.

Furthermore, we believe that the conversion of the Loan Agreement is at an attractive valuation given that the total replacement value of the processing plant and mining equipment at Otjozondu has been independently valued at approximately ZAR 326 million (equivalent to US$22 million), of which only the current running mining equipment at Otjozondu amounted to approximately ZAR 221 million (equivalent to US$15 million), and excluding any other value that may be attributed to mining licences, in situ resources and mining development to date. "

About the Otjozondu Manganese Mining Project

The Otjozondu is located some 450 kilometres east of Walvis bay, a port town on the coast of Namibia which is currently used to ship manganese ores to international markets. The Project is located in a well-known and established manganese district that has been largely consolidated under Otjozondu, whose tenements cover an area of approximately 1,367 square kilometres and more than 114 kilometres of strike, of which only 14 kilometres has been explored to the point of declaration of a JORC resource. The area under tenement encloses an historic and successful manganese mining district. Otjozondu operations are continuous from a number of open pits in an owner-miner environment. Processing to the extent necessary is through a crush screen and jig plant. All plant and equipment are owned by MNH. Otjozondu is wholly owned by MNH. Otjozondu' s current operational profile is as follows:

·; Experienced management and operational team with proven operational success;

·; Currently exporting 5,000 tonnes lump ore per month at better than 35% Mn;

·; Operations generated N$21.0 million (equivalent to US$1,428,000) to the year ending 30 June 2019;

·; Marketing contract in place;

·; Established road/rail route to Walvis Bay;

·; Unused capacity exists in all facets of the operations;

·; Historic JORC resource, as set out further in Table 1 below;

·; Otjozondu has an anticipated Exploration Target of 30 -50 million tonne grading at 23% - 27% Mn; and

·; Further exploration potential with further inclusion of the tenements held by Purity Mining.

Table 1: Summary Historic Resource at Otjozondu using a 15% Mn cut-off:

Notes:

1. Mineral Resources have been rounded.

2. Otjozondu is the operator and owns 100% of the Otjozondu licence such that gross and net attributable Mineral Resources are the same. The historic Mineral Resources estimate was independently prepared for the previous owner, Shaw River Manganese Limited, by Cube Consulting Pty in December 2012 who classified and reported the resource in accordance with Reporting of Mineral Resources and Ore Reserves (JORC Code 2004).

3. Premier has not independently verified or updated the Cube historic resource estimate. No adjustment or update has been made to the historic resource statement for any production by Otjozondu since the historic resource statement was prepared in December 2012.

Addendum of the Loan Agreement

Premier and Cambrian Limited entered into the secured loan agreement ("Loan Agreement") with MNH as announced on 8 July 2019. The total loan amounted to US$1.35 million ("Principal Amount"). The annual interest rate payable by MNH on the outstanding loan amount is 10% per annum. In accordance with the Loan Agreement, Cambrian had already provided US$350,000 in cash to MNH and Premier agreed to provide the remaining US$1 million (as lender) in the form of new ordinary Premier Shares issued to the equivalent value of US$1,000,000 at an issue price of 0.045p, being the Premier closing share price on 5 July 2019 ("Loan Shares").

Premier, Cambrian Mining and MNH have now agreed to amend the terms of the Loan Agreement accordingly and simultaneously exercise the rights awarded under the addendum to the Loan Agreement whereby:

·; Premier has the right to accept repayment of Premier's proportion of the Principal Amount by the issuance of new shares in MNH such that Premier would hold 10% of the shares in issue of MNH ("Conversion Right"). Premier has exercised the Conversion Right today.

·; Premier agreed that on exercise of the Conversion Right, any accrued interest under the Loan Agreement shall be forgiven, waived, or otherwise dealt with such that MNH shall not be obliged to Premier in respect thereof;

·; Premier may appoint one director to serve on the board of MNH;

·; MNH may appoint one director to serve on the board of Premier; and

·; Premier and MNH shall conclude a shareholder's agreement to govern their relationship as shareholders of MNH (the "Shareholders Agreement"). The parties hereby agree to conclude a Shareholders Agreement within 30 days following the date of this announcement.

·; MNH shall not without the prior written consent of Premier, undertake any such actions that will result in any material change of business or ownership of MNH, until such time as the Shareholders Agreement is concluded.

Consultants and Board appointments

MNH has confirmed that Mr. Brent Stanton ("Mr. Stanton") shall be nominated to join the Board of Premier in accordance with the addendum to the Loan Agreement. Mr. Stanton's appointment will remain subject to the satisfactory completion of all standard regulatory checks in compliance with the AIM Rules.

As announced on the 8 July 2019, Premier had previously invited Mr. Peter Cunningham ("Mr. Cunningham") to join the Board of Premier. Given Mr. Stanton's proposed appointment as described above, Mr. Cunningham shall continue to act as an independent consultant to Premier but will not now join the Board.

Independent Valuation

Premier commissioned independent South African mine engineering consultants, Bara Consulting (Pty) Limited ("Bara Consulting") to prepare an asset replacement valuation for MNH on a like for like basis. The total replacement value is estimated at US$22,149,572.

The sources for the costing include budget pricing from suppliers, internet-based research and estimates, with the summary of the costs provided in Table 1 below. Where specific supplier equipment costs could not be obtained, the costs were based on similar specification of that equipment costs that were obtained.

Table 1. Summary Valuation of the Otjozondu Manganese Operation

Note:

Bara Consulting's valuation, dated 26 November 2019, is based on the following principal assumptions:

1. The mine asset inventory includes operational and non-running/damaged equipment. For the purposes of the evaluation, the major equipment and fleet has been extracted from the inventory and costed.

2. The operational equipment and non-running equipment have been separated and replacement costs calculated for both running and non-running assets.

3. An allowance of 20% of the equipment replacement capital has been allowed to cater for spares and miscellaneous equipment of the mine.

4. An allowance of 30% has been included to cater for the auxiliary equipment of the processing plants, whose costs were only provided for the major equipment items.

MNH - Further AIM disclosures

MNH was incorporated in 23 February 2017 in Mauritius. MNH acquired the entire issued share capital of Shaw River Mauritius from Shaw River Manganese Limited for A$4.952 million in early 2018. Shaw River Mauritius indirectly owns the entire issued share capital of Otjozondu Mining (Pty) Limited ("Otjozondu"), a Namibian incorporated entity which owns and operates the Otjozondu Manganese Mining Project.

MNH has not published any results since incorporation as it acts solely as the holding company for purpose of acquiring Shaw River Manganese Limited.

The last audited reported accounts for Otjozondu are for the year ended 30 June 2018, for which revenue amounted to N$27.0 million (equivalent to US$1,836,000, see note below) and the operating profit before tax (and interest charges to group companies) was N$0.3 million (equivalent to US$20,400). Total assets as at the same date amounted to N$(14,277,771) million (equivalent to (US$970,888)).

In its unaudited management accounts for the year ended 30 June 2019, Otjozondu reported revenue of N$71.0 million (equivalent to US$4,828,000) and an operating profit before tax (and interest charges to group companies) of N$21.0 million (equivalent to US$1,428,000). Total assets as at the same date amounted to N$23,630,807 million (equivalent to US$1,606,895).

Note:

The current exchange rate of US$1.00/N$14.7 has been used to translate Otjozondu's results into US Dollars above.

Related Party

Mr. Neil Herbert is both a director of Premier and MNH and has a beneficial interest in Cambrian Mining. In addition, the maximum Loan Shares that Premier agreed to issue to MNH pursuant to the Loan Agreement as announced in July 2019, represented at that time more than 10% of Premier's then issued share capital. Accordingly, the addendum of the Loan Agreement is a related party transaction pursuant to Rule 13 of the AIM Rules for Companies. Accordingly, the Independent directors (comprising the Board of Premier other than Mr. Herbert), having consulted with the Company's nominated adviser, consider that the terms of the addendum to the Loan Agreement are fair and reasonable insofar as the Company's shareholders are concerned.

Consent

Bara Consulting has consented to the inclusion of it name and the references to its valuation report in this announcement in the form and context in which they appear.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014. The person who arranged the release of this announcement on behalf of the Company was George Roach.

Enquiries:

Notes to Editors:

Premier African Minerals Limited (AIM: PREM) is a multi-commodity mining and natural resource development company focused on Southern Africa with its RHA Tungsten and Zulu Lithium projects in Zimbabwe.

The Company has a diverse portfolio of projects, which include tungsten, rare earth elements, lithium and tantalum in Zimbabwe, encompassing brownfield projects with near-term production potential to grass-roots exploration. In addition, the Company holds 5,010,333 shares in Circum Minerals Limited, the owners of the Danakil Potash Project in Ethiopia, which has the potential to be a world class asset.

Glossary

Forward Looking Statements:

Certain statements in this announcement are or may be deemed to be forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'' ''could'' "should" ''envisage'' ''estimate'' ''intend'' ''may'' ''plan'' ''will'' or the negative of those variations or comparable expressions including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth results of operations performance future capital and other expenditures (including the amount. nature and sources of funding thereof) competitive advantages business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions competition environmental and other regulatory changes actions by governmental authorities the availability of capital markets reliance on key personnel uninsured and underinsured losses and other factors many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. The Company cannot assure investors that actual results will be consistent with such forward looking statements.

Qualified Person

Gerard Evans, Resource Geologist for Premier African Minerals, has reviewed and confirmed the technical detail set out herein in respect of Otjozondu is in line with the information provided by MN Holdings Limited. Gerard Evans has 27 years' experience in mining industry specialising in resource geology and holds a B.Sc Hons degree in geology from the University of the Witwatersrand. He is registered member of SACNASP (400015/08), GSSA and GASA.

ENDS