Premier African Minerals Regulatory News (PREM)

3 August 2022 

Premier African Minerals Limited

 Zulu Lithium Project Pilot Plant Update

Premier African Minerals Limited ("Premier" or the "Company"), is pleased to announce that it has concluded the definitive transaction documents in respect of the Marketing and Pre-Payment Agreement ("Agreement") as set out in the announcement dated 24 June 2022 and is in receipt of approximately US$18.1 million of the pre-payment required to have been paid to date. This payment will be utilised for the Zulu plant fabricators and site contractors. Fabrication and site construction is well underway, with a projected completion date for commercial production expected in Q1 of 2023.

George Roach, CEO commented," I am pleased to confirm the signing of this Agreement and the receipt of funds. Fabrication, site design and construction are underway and projected commencement of commercial production is now scheduled for Quarter 1 of 2023. The pre-payment is expected to be fully offset against future shipments inside of twelve months at the prevailing SC6 pricing.

We have recently appointed independent project and construction management teams to assist in ensuring compliance with timelines and budgets.

At the same time, there has been an improved turn around in assays and we expect to release significant results as they come to hand. Further updates on the construction of the pilot plant will be provided in due course."

The Pilot Plant

The pilot plant to be commissioned will utilise state of the art sensor-based ore sorting technologies that will facilitate the separation of run of mine material into components and in so doing, likely increase available capacity in the flotation recovery circuits, where lithium minerals are recovered. Ultimate production and recoveries are a factor of many variables, and the pilot plant is likely to assist in dealing with these variables due to the inherent flexibility of the use of multiple ore sorters. Stockpiles of tantalum, petalite and Mica/lepidolite rich material will facilitate further test work and flow sheet development to ensure that this material is truly inventory for later profitable recovery.

The pilot plant has a nameplate through put of up to 190 tonnes per hour, however it is planned to run at a more conservative 140 tonnes per hour at inception. At this rate and based on a 3-year life of the pilot plant operations only, excluding plant upgrades, tantalum recovery, petalite production and any other revenue, a series of sensitivities indicate a robust project and an assurance that Premier will become cash generative from the time of first shipment.

Terms of Marketing and Pre-Payment Agreement

Pre-Payment Agreement

As previously set out in the binding heads of terms announced on 24 June 2022, under the terms of the Agreement entered into between Premier and Suzhou TA&A today, Suzhou TA&A has agreed to purchase, in advance, US$34,644,385 of product to be sold by Premier ("Advance Purchase Amount") to enable the construction and commissioning of a large-scale pilot plant at the Zulu Project and to date, Suzhou TA&A has made approximately US$18.1 million available to Premier. Under the Agreement, Premier has now agreed to become directly the Seller of the product from the pilot plant at the Zulu Project.

Repayment of the Advance Purchase Amount will be made by Premier from all residual funds from invoices raised by Suzhou TA&A from each monthly Accounting Period following the deduction of agreed Deductible Expenses (being all costs and expenditures incurred including government royalties) and management fees to be paid by Zulu Lithium to Premier, until such time as the Advance Purchase Amount has been fully offset. Premier has agreed to conclude a management agreement with Zulu Lithium within 30 days of the signing of the Agreement.

Offset of the Advance Purchase Amount through invoices raised by Suzhou TA&A for shipped SC6 should commence no later than 31 March 2023 at a minimum rate of 4,000 tonnes per month on a rolling average basis plus or minus 10% ("Minimum Delivered Product") following first Concentrate Production ("Supply Commencement Date"). If the Supply Commencement Date does not occur by 31 March 2023 or there is a substantive delay in the subsequent supply of SC6, or there is a shortfall in the Minimum Delivered Amount, then Premier will pay interest to Suzhou TA&A at a reasonable interest rate that represents Suzhou TA&A's actual funding cost for the delay or shortfall.

If the Supply Commencement Date does not occur on or before 30 May 2023, then Suzhou TA&A may terminate and seek repayment of the Advance Purchase Amount. Premier has the right to settle the Advance Purchase Amount at any point.

Marketing

Under the Agreement, Suzhou TA&A will have the right to acquire the first three years of production of SC6, or until such time as the Advance Purchase Amount has been offset in full or the first 50,000 tonnes have been shipped to Suzhou T&A, whichever occurs later ("Term"). The Term of the Agreement can be increased by a further three years, subject to the mutual agreement between the parties.

The sale of SC6 will be priced at a discount conditional on the approval of the Minerals Marketing Corporation of Zimbabwe on the first 50,000 tonnes of SC6 shipped ("First Delivery") or until the Advance Purchase Amount has been fully offset whichever occurs first. Following completion of First Delivery, the parties will agree to negotiate a discount based upon market conditions for the remaining Term. The purchase price will be subject to a floor price until such time as either the Advance Purchase Amount has been fully offset or 31 December 2023.

The purchase price is also subject to target product specifications, with industry standard adjustment for variations.

Following full payment of the Advance Purchase Amount, Suzhou TA&A shall have the right of first refusal to match any offer from another interested party to acquire SC6 from the Zulu Project should the parties not agree to a renewal of the Term. This right is subject to standard regulatory requirements, Commercial Best Practice, and the reasonable agreement of commercial terms.

The Agreement also includes standard events of default and warranties from both Premier and Suzhou TA&A.

Related Party Transaction

Following completion of the subscription agreement by Suzhou TA&A (the "Subscription") as announced on 8 March 2022, Suzhou TA&A is interested in 13.38 per cent. of the issued share capital of the Company. Accordingly, as Suzhou TA&A is currently interested in more than 10 per cent. of the issued ordinary share capital of the Company, the 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 Suzhou TA&A 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 as announced on 24 June 2022, the terms of the binding head of terms and now incorporated into the definitive transaction documents (the Agreement) are fair and reasonable insofar as Shareholders are concerned. As previously announced, the Independent Directors have in particular taken into account that the Agreement provides the immediate funding to enable the construction and commissioning of a large-scale pilot plant at Zulu which the Independent Directors believe provides a significant opportunity at a time when Spodumene prices are expected to remain high given current supply-demand imbalances. The Agreement also provides funding without the issue of any ordinary shares and therefore avoids dilution to shareholders at the current time. Furthermore, in current market conditions, the Independent Directors do not believe that alternative funding would be currently available on acceptable terms to the Company.

The Independent Directors have also taken into account the technical assessment and pilot plant proposal prepared by Stark International Projects Ltd ("Stark") and which is based on a relatively straightforward ore sorting and flotation circuits without the need for any large-scale chemical processing to isolate and produce the lithium bearing spodumene. The Company has a fixed price contract with Stark for the pilot plant, and an economic assessment has been prepared by Bara Consulting (Pty) Ltd (based on the updated scoping study as announced on 16 August 2021) which also reflects that the mineralisation for the pilot plant is near surface. Based on this technical work, the Independent Directors are of the view that while the Advance Purchase Amount under the Agreement is an unsecured obligation of the Company, offset of the Advance Purchase Amount to Suzhou TA&A through production at Zulu can be made in a timely way.

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. Several 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.

MAR (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.

Enquiries

Glossary of Technical Terms

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