Premier African Minerals Regulatory News (PREM)

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

For immediate release

28 September 2018

Premier African Minerals Limited('Premier' or 'the Company')

Unaudited Interim Results for the six months ended 30 June 2018

Premier African Minerals Limited, the AIM quoted multi-commodity mining and resource development Company focused on Southern Africa announces its unaudited interim results for the six months ended 30 June 2018.

CEO'S STATEMENT

The first six months of 2018 (the "Period") was extensively reported as post financial year end events in our annual financial statements and various announcements released via the Regulatory News Service (as summarised further in Note 11 below) and this statement is complementary. We are encouraged with recent events in Zimbabwe and assurances that resolution to the equity issue at RHA Tungsten Mine ("RHA") should be expected. The initial potential investment agreement to continue developments at Zulu Lithium and Tantalum Project ("Zulu Lithium Project") was encouraging but, in the failure to progress to a final agreement, disappointing. But we remain confident on the prospects at Zulu Lithium Project and expect to conclude an alternative strategy for its development. Drilling at the open pit and the underground at RHA has commenced and there is more commentary on this below.

The financial drain on the Company over the past 6 months has been substantial and the costs associated with holding RHA on care and maintenance as well as the uncertainties associated with timing of the Zimbabwean Government's decision has made it very difficult to both hold the Company ready for a quick restart at RHA and cut costs as the situation may indicate. Suffice it to say that the status at RHA must now come to a head. Premier continues to reduce overheads and is pleased to report that executive management have agreed in principle to accept not less than 50% of their already reduced remuneration in the form of equity in Premier and a further announcement will be made in respect of these proposed arrangements. The Board continues to review third party financing for our projects.

Zulu Lithium Project

As reported on 17 September 2018 following the Period end, the Company was unable to reach final terms with Cadence Minerals plc to fully fund the Definitive Feasibility Study for Zulu Lithium Project. Other interested parties have engaged with Premier and indications are that the prospects of concluding a new joint venture agreement to progress Zulu Lithium Project and RHA Tungsten Mine in one agreement are good. It is a time of intense negotiation and further updates will be provided.

RHA Tungsten Mine

In the leadup to resolution of the equity status, Premier has recently commenced further drilling with the dual purpose of establishing conclusively whether or not the open pit should be reopened and to guide the decision in regard to the underground mining future development. The decision the Company needs to take in regard to underground mining is whether to deepen the main shaft or to establish a new decline shaft system. Deepening the vertical shaft is the cheaper option but will limit the mining rate and would likely not see RHA at a mining rate any greater than 10,000 tons per month even after upgrade of the hoist system. The alternative decline, whilst longer term to construct, will allow a much higher mining rate and overall better prospects for higher profit over life of mine. Early indications from deep drilling of mineralisation approximately 70 meters below existing underground workings have returned encouraging intersections of the ore body lode system with massive visible mineralisation. Assay results are expected and will be announced as they become available.

At the same time, careful assessment for a profitable start-up have been undertaken and indications are that historic tailings should be processed simultaneously with ore from underground to restrict peak funding and speed up this process will be covered in a subsequent RNS.

Other Zimbabwe Projects

Premier maintains claims to a number of other prospective projects in Zimbabwe. These include Tinde Fluorspar, Globe multi-element and graphite and Rare Earth Elements at Katete. Whilst RHA and Zulu Lithium Project are taking centre stage in this period under review, these other projects remain potentially attractive.

Board and Management Changes

With effect from 20 July 2018, the Company announced that Mr. Michael Foster had been appointed as Interim Non-Executive Chairman of the Company. Mr. George Roach has remained as CEO of Premier. 

Prior to the AGM and with effect from 9 August 2018, Mr. Russel Swarts did not offer himself for re-appointment as a director of the Company.

Funding

During the six months ended 30 June 2018 the Company raised some $0.563 million through equity subscriptions, at an issue price of 0.16 pence per new ordinary share, the net proceeds were used to cancel all the existing warrants held by Darwin Capital Limited ("Darwin") and for general working capital purposes.

As announced on 4 June 2018, the Company entered into a loan with a company owned by a Trust of which Mr. George Roach is a beneficiary, for a gross value of $0.300 million. The Loan is non-interest bearing and has a maturity date of 30 November 2018, and will provide additional general working capital while the Company looks to bring finality to the negotiations currently underway in respect of both Zulu Lithium Private Limited and RHA Tungsten Private Limited. Further details of the loan agreement and terms thereof are contained in the RNS of same date.

Outlook

Prospects for RHA have improved considerably with the recent improvement in Tungsten pricing and provided there is resolution to the equity ownership of RHA and the limited additional capital to deal with final underground development and plant modifications is available, operations can re-commence.

We expect developments from Circum Minerals Limited and remain confident that this investment will be profitable for shareholders.

The Zulu Lithium Project has potential to develop into a company making asset and we look forward to exploration results as they become available in the near future.

I would like to take this opportunity to thank our shareholders, directors, advisors and consultants for their continued support, commitment and confidence in Premier.

Mr. George Roach CEO27 September 2018

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.

This announcement contains inside information for the purposes of Article 7 of EU Regulation No. 596/2014 on market abuse. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain. The person who arranged the release of this announcement on behalf of the Company was George Roach.

For further information please visit www.premierafricanminerals.com or contact the following:

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

EXPRESSED IN US DOLLARS

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

EXPRESSED IN US DOLLARS

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

EXPRESSED IN US DOLLARS

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

EXPRESSED IN US DOLLARS

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. GENERAL INFORMATION

Premier African Minerals Limited ('Premier' or 'the Company'), together with its subsidiaries (the 'Group'), was incorporated and domiciled in the Territory of the British Virgin Islands under the BVI Business Companies Act, 2004. The address of the registered office is Craigmuir Chambers, PO Box 71, Road Town, Tortola, British Virgin Islands. Premier's shares were admitted to trading on the London Stock Exchange's AIM market on 10 December 2012.

The Group's operations and principal activities are the mining, development and exploration of mineral reserves, primarily on the African continent. The presentational currency of the condensed consolidated interim financial statements is US Dollars.

2. BASIS OF PREPARATION

These unaudited condensed consolidated interim financial statements for the six months ended 30 June 2018 were approved by the Board and authorised for issue on 27 September 2018.

These interim financial statements have been prepared in accordance with the recognition and measurement principles of the International Financial Reporting Standards ("IFRS") as endorsed by the EU. 

The accounting policies applied in the preparation of these consolidated interim financial statements are consistent with the accounting policies applied in the preparation of the consolidated financial statements for the year ended 31 December 2017.

The figures for the six months ended 30 June 2018 and 30 June 2017 are unaudited and do not constitute full accounts. The comparative figures for the year ended 31 December 2017 are extracts from the 2017 audited accounts. The independent auditor's report on the 2017 accounts was qualified relating to Provision - rehabilitation and included an emphasis of matter - relating to a material uncertainty related to going concern.

Going Concern

The Directors have prepared cash flow forecasts for the next 12 months, taking into account forecast operating cash flow and capital expenditure requirements for its RHA Tungsten mine, exploration activities at Zulu, available working capital and forecast expenditure for the rest of the Group including overheads and other development costs. The forecasts include additional funding requirements which the directors believe will be met.

3. SEGMENTAL REPORTING

Segmental information is presented in respect of the information reported to the Directors.

The RHA Tungsten Mine segment derives income primarily from the production and sale of wolframite concentrate. All other segments are primarily focused on exploration and on administrative and financing segments.

For the purposes of the current period, segmental information has been changed to separately report the revenue generating segments of RHA that operates the RHA Tungsten Mine and TCT IF.

Segmental results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

* Represents 100% of the results and financial position of RHA Tungsten (Private) Limited ("RHA") whereas the Group owns 49%.

** Represents 100% of the results and financial position of TCT Industrias Florestais Limitada ("TCT IF") whereas the Group controls 52%.

4. INTANGIBLE EXPLORATION AND EVALUATION ASSETS

Exploration and evaluation assets at 30 June 2018 relate to the Zulu Lithium and Tantalite Project located in Zimbabwe (30 June 2017: Zulu Lithium and Tantalite Project and TCT IF Limestone, 31 December 2017: Zulu Lithium and Tantalite Project only).

During the period to 30 June 2018 $0.135 million was capitalised to the Zulu Lithium and Tantalite Project (six months to 30 June 2017: $0.180 million, year to 31 December 2017: $0.276 million.

Exploration work conducted on Zulu during the period indicated that both lithium and tantalum recovery may be a viable option. The Group views this project as strategic and exploration work will be continued in the future, cash flow permitting.

5. INVESTMENTS

Premier's investment in Circum Minerals Limited ('Circum') is classified as an available-for-sale investment and as such is required to be measured at fair value at each reporting date. As Circum is unlisted there are no quoted market prices.

On 6 November 2017, Arc Minerals (formerly known as Ortac Resources Limited) announced that it would make an offer to acquire all of the outstanding shares in Casa ("Sale Shares") for a consideration of 14.85 shares in Arc Minerals for each Sale Share (the "Casa Offer"). he Casa offer closed on 10 May 2018 and Premier converted 412,500 Casa shares into 6,128,822 new Arc Minerals shares. As at 30 June 2018, the fair value of the investment in Arc Minerals increased by $0.144 million.

6. PROPERTY, PLANT AND EQUIPMENT

7. BORROWINGS

Borrowings comprise loans from a related party and a non-related party.

1) On 15 September 2015, George Roach provided a $0.300 million loan direct to Premier for the use at RHA Tungsten (Pty) Limited ("RHA"). The loan is unsecured and accrues interest at a rate of 3% per annum. As at 28 March 2017, the loan and accrued interest totalled $0.309 million. On 28 March 2017 the Company announced that it had amended the terms of the existing loan agreement ("Loan") with George Roach through the grant of conversion rights. The Board granted conversion rights in respect of the Loan, which can now be converted into new ordinary shares at a price of 0.5p per new ordinary share.

2) On 4 June 2018, the Company entered into a loan with a company owned by a Trust of which George Roach is a beneficiary, for a gross value of $0.300 million. 

The Loan is non-interest bearing and has a maturity date, 30 November 2018, and will provide additional general working capital while the Company looks to bring finality to the negotiations currently underway in respect of both Zulu Lithium Private Limited and RHA Tungsten Private Limited. The Company will repay the entire Loan, including all fees within five days following the maturity of the Loan. The Loan carries an implementation fee of $0.015 million (5%) and a redemption fee of $0.015 million (5%), collectively the fees ("Fees"). The terms and conditions of the Loan contain a negative pledge provision in respect of the Company relating to certain types of indebtedness and standard events of default. The Loan is not convertible, nor does it include share-based repayment or warrants.

8. SHARE CAPITAL

Authorised share capital

At the AGM held on 9 August 2018, the shareholders approved the increase in authorised share capital to 9 billion (30 June 2017 and 31 December 2017: 7 billion) ordinary shares of no par value.

Issued share capital

Reconciliation to balance as stated in the consolidated statement of financial position

9. TAXATION

There is no taxation charge for the period ended 30 June 2018 (30 June 2017 and 31 December 2017: Nil) because the Group is registered in the British Virgin Islands where no corporate taxes or capital gains tax are charged. However, the Group may be liable for taxes in the jurisdictions of the underlying operations.

The Group has incurred tax losses in West Africa and Zimbabwe; however a deferred tax asset has not been recognised in the accounts due to the unpredictability of future profit streams. 

Contingent liability

The Group operates across different geographical regions and is required to comply with tax legislation in various jurisdictions. The determination of the Group's tax is based on interpretations applied in terms of the respective tax legislations and may be subject to periodic challenges by tax authorities which may give rise to tax exposures.

10. LOSS PER SHARE

The calculation of loss per share is based on the loss after taxation attributable to the owners of the parent divided by the weighted average number of shares in issue during each period.

As the Group incurred a loss for the year, there is no dilutive effect from the share options and warrants in issue or the shares issued after the reporting date.

11. EVENTS AFTER THE REPORTING DATE

11.1 On 27 June 2018 the Company announced that the repayment date in respect of the director loan it entered into with a company owned by a trust of which Mr. George Roach is a beneficiary has been extended to the 30 November 2018.

11.2 On 20 July 2018 the Company announced the appointment of Mr. Michael Foster, a Senior Non-Executive Director on the Board as Non-Executive Chairman.

11.2 The Company further announced on the 29 July 2018 that it had RHA's management undertake an in-depth assessment of alternatives to reopen RHA. The first three original options are based on a limited drilling programme ("Drill Programme") being completed. The Drill Programme is broken down into two parts, the first part will include fifteen 50-meter boreholes to establish at what depth below the current pit floor, previously predicted ore grades are likely to materialise, and whether or not the open pit can be profitably brought back into production.

There has been a substantial and sustained increase in the Price of Wolframite ("APT") after the reporting period. This increase, with the fact that RHA can brought back into production at short notice has resulted in a potential fourth option. These options are summarised below;

The Company has engaged an independent consultancy to review Option 4 as this does not require the Drill Programme, and the Company considers that it is in the best interests of the Company and its shareholders if mining and processing operations are restarted at RHA.

11.3 Prior to the AGM held on 9 August 2018, Mr. Russel Swarts decided not to stand for reappointment as a director of the Company.

11.4 On 13 August 2018 the Company announced that it had received written confirmation from the Ministry of Mines and Mining Development (the "Ministry of Mines") that under the amended Indigenisation and Economic Empowerment Act, RHA is no longer required to comply with indigenisation policies and that the proposed restructuring of RHA can proceed without approval from the Ministry of Mines. In the same announcement, the Company confirmed that it had received a letter from the Ministry of Industry, Commerce and Enterprise Development of Zimbabwe (the "Ministry"), which has responsibility for indigenisation, confirming inter alia that: 

i. Premier's proposal for the restructuring of RHA had been favourably received by the relevant Ministry and relevant stakeholders; and

ii. Progress has been made and our continued support has been requested by the Ministry.

In light of the reassurances received, Premier has continued to work with the Ministry while the procedural Governmental approvals are dealt with.

11.5 On 14 August 2018 the Company announced a placing to raise £750,000 before expenses at an issue price of 0.18 pence per new ordinary share. Following the reassurance received on by the Ministry of Mines and Ministry, the Company commissioned a drilling programme at RHA of up to 2,750 meters with the objective of expanding the Resource base as well as increasing the confidence levels of both the open pit and underground Resources with the target of de-risking the future development of RHA.

11.6 On 17 September 2018, the Company reported that it has been unable to reach final terms with Cadence Minerals plc to fully fund the Definitive Feasibility Study of the Zulu Lithium and Tantalum Project as announced on 27 June 2018.