Premier African Minerals Regulatory News (PREM)

15 August 2023

Premier African Minerals Limited 

Offtake and Prepayment Agreement

Premier African Minerals Limited ("Premier" or the "Company") is pleased to provide a further update on the Zulu Lithium and Tantalum Project ("Zulu"), and the agreement reached between Premier and Canmax Technologies Co., Ltd ("Canmax") to amend and restate the Offtake and Prepayment Agreement which the parties had previously agreed in August 2022 ("Amended Agreement").

Offtake and Prepayment Agreement

The Amended Agreement restores the working arrangements between Premier Canmax and therefore the Force Majeure and default notices have been withdrawn by the respective parties.

The essential elements of the Amended Agreement remain the same as the original agreement entered into in August 2022, save that that the parties have agreed:

As Canmax is currently interested in more than 10 per cent. of the issued ordinary share capital of the Company, the Amended Agreement is a related party transaction for the purposes of Rule 13 of the AIM Rules. As previously announced, as Dr Luo Wei was nominated by Canmax as a director of the Company, he is not independent for the purposes of the AIM Rules and the Agreement has therefore been considered by the Independent Directors (being the Board other than Dr Luo Wei). The Independent Directors of the Company consider, having consulted with the Company's nominated adviser, Beaumont Cornish, that the terms of the Amended Agreement are fair and reasonable insofar as Shareholders are concerned. 

The Independent Directors have in particular taken into account that the Amended Agreement provides an agreed timetable and process for the supply of Product pre-purchased under the Amended Agreement with alternative arrangements in the event of a delay in delivery, resolves the dispute between Canmax and Premier, and provides a basis for the parties to work together to resolve the plant issues at Zulu and achieve all parties' production objectives.

Further details on the Amended Agreement are set out below.

Plant update and funding

Operations at Zulu have been temporarily suspended to allow for the installation and commissioning of the mill from RHA Tungsten. This is expected to be completed during the early Autumn and within sufficient time to meet the revised Product delivery schedule which has been agreed at an initial rate of 1,000 tons of product shipped to Canmax by the end of November.

Plant optimisation is ongoing and, largely as a result of the delays in resolving the plant issues, Premier needs immediate funding. In addition, while the plant fixes are the acknowledged responsibility of Stark, Premier will need to ensure that adequate funds are available to avoid any further delays. As announced earlier today, the Company has also now elected to draw down on the entire £2 million Amended Facility entered into with George Roach (as previously announced on 9 August 2023) immediately following this announcement.

Restated and Amended Offtake and Pre-Payment Agreement

Premier and Canmax have agreed the terms of a deed of release pursuant to which the parties have: (i) entered into the Amended Agreement; (ii) Premier has withdrawn the Force Majeure Notice issued to Canmax pursuant to section 12 of the Agreement; and (iii) Canmax has withdrawn the Termination Notice issued to Premier pursuant to section 2.7 of the Agreement.

- The essential elements of the Amended Agreement remain the same as the original agreement entered into in August 2022, save that that the parties have agreed a revised Product supply schedule (and alternative arrangements) in respect of the prepayment amount of US$34.6 million plus accrued interest; and

- A revised hybrid pricing agreement with the price of SC6 supplied by Premier based equally on both the SC6 price and a profit share under which Premier and Canmax will share equally the profit from production by Canmax of Lithium Hydroxide from SC6 supplied by Premier.

The hybrid pricing structure provides Premier with an exposure to future market prices of both SC6 and Lithium Hydroxide.

Pre-Payment agreement

As previously announced on 3 August 2022, Canmax have purchased in advance US$34,644,385 worth of product to be sold by Premier ("Advance Purchase Amount"), with the proceeds used to construct and commission the plant at Zulu. Under the Amended Agreement the parties have agreed a new schedule for the supply of Product for the Advance Purchase Amount plus accrued interest by Canmax.

The Advance Purchase Amount, plus accrued interest (which has been agreed to increase from 3.5% per annum to 8% per annum from 31 May 2023, will be settled from gross sale proceeds from Product shipped to Canmax as follows:

- From 1 November 2023 until 30 May 2024, Canmax will receive 25% of all gross proceeds due to Premier from the sale of Product.

- From 1 June 2023 and until the Advance Purchase Amount plus accrued interest has been settled, Canmax will receive 50% of all gross proceeds due to Premier from the sale of Product.

Settlement of the Advance Purchase Amount should commence no later than 1 November 2023 at a minimum rate of 1,000 tonnes per month on a rolling average basis plus or minus 10% ("Minimum Delivered Product"). If the Minimum Delivered Product does not occur, then Premier will be required to make a cash payment to Canmax ("Cash Settlement") for that month as follows:

If Premier fails to make a second Minimum Delivery Product, the revised interest rate will be adjusted further to 10% per annum from the first date of the next month.

If in any month Premier is unable to supply the Minimum Delivered Product, or make the Cash Settlement set out above, then Canmax will have the following options:

Settlement of all amounts of Product due under the Amended Agreement will be subject to a new Long Stop Date of 1 April 2025, and should Premier have not delivered the required Product or provided Cash Settlement to settle the Advance Purchase Amount in full, and provided that Canmax has not elected to take settlement in new ordinary shares (the "Outstanding Amount"), then Canmax will be entitled to receive as settlement of the Outstanding Amount, a direct interest in Zulu Lithium based on a project valuation of US$200 million.

Marketing

Under the Amended Agreement the sale by Premier of SC6 will be priced on a hybrid pricing structure. Payment for 50% of SC6 supplied by Premier will be based on the SC6 price, and the balance as a profit share whereby Premier and Canmax will share equally in the profit from production by Canmax of Lithium Hydroxide from SC6 supplied by Premier.

The proceeds which Premier will receive under these arrangements will therefore be determined as follows:

Under the Amended Agreement, Canmax will continue to have the right to acquire the first three years of production of SC6, which will only commence once Premier has supplied a minimum of 4,000 tonnes of SC6 in a month ("Term"). The Term of the Amended Agreement can be increased by a further three years, subject to the mutual agreement between the parties.

Market Abuse Regulation

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018.

The person who arranged the release of this announcement on behalf of the Company was George Roach.

A copy of this announcement is available at the Company's website, www.premierafricanminerals .com

Enquiries:

Beaumont Cornish Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as nominated adviser to the Company in relation to the matters referred herein. Beaumont Cornish Limited is acting exclusively for the Company and for no one else in relation to the matters described in this announcement and is not advising any other person and accordingly will not be responsible to anyone other than the Company for providing the protections afforded to clients of Beaumont Cornish Limited, or for providing advice in relation to the contents of this announcement or any matter referred to in it.

Forward Looking Statements:

Certain statements in this announcement are or may be deemed to be forward looking statements. Forward looking statements are identied 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 reect 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.

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 and lithium and gold in Mozambique, encompassing brownfield projects with near-term production potential to grass-roots exploration. The Company has accepted a share offer by Vortex Limited ("Vortex") for the exchange of Premier's entire 4.8% interest in Circum Minerals Limited ("Circum"), the owners of the Danakil Potash Project in Ethiopia, for a 13.1% interest in the enlarged share capital of Vortex. Vortex has an interest of 36.7% in Circum.

In addition, the Company holds a 19% interest in MN Holdings Limited, the operator of the Otjozondu Manganese Mining Project in Namibia.

  Ends