PREMIER African Minerals will now engage with other hydroxide producers based out of China and Europe following the collapse of its deal with Canmax Technologies Co.
Premier, which owns the RHA Tungsten, Zulu lithium and tantalite projects in Zimbabwe, last year signed an offtake and prepayment agreement with China’s Canmax Technologies (formerly Suzhou TA&A).
Under the deal, Premier secured US$35 million pre-funding to enable the construction and commissioning of a large-scale pilot plant which has capacity to produce nearly 50 000 tonnes of spodumene concentrate annually.
The mining firm was required to supply spodumene concentrate to Canmax by May 30, 2023, but failed due to various reasons.
Again, it failed to meet the June 25, 2023 deadline. This resulted in the company this week issuing the force majeure notice to Canmax, effectively suspending all obligations under the agreement, including those associated with Premier and any consequences associated with it.
“Premier has received approaches from competing hydroxide producers based out of China and from Europe-based entities intending to complete their own hydroxide and other downstream lithium operations,” the company said in a shareholder update.
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“To date, Premier has resisted serious review of any of these approaches in the light of the agreement with Canmax. However, in the context of the current stage of discussions with Canmax in respect of the amended agreement, Premier will now engage with these other interested parties.”
While Canmax and Premier continue to engage, and both parties continuing to express their intention to reach agreement and to proceed with the conclusion of a suitable amendment to the agreement, no amendment has been signed to date, nor will an amendment containing certain of the terms now currently proposed by Canmax, be acceptable to Premier.
In particular, Canmax’s proposal received on June 23, 2023 includes the effective conversion of the pre-payment amount into either a convertible debt instrument in the event that Zulu is unable to meet its delivery obligations under the amended agreement, with no floor to the conversion price.
Other proposals include a proportionate amount of the equity of Zulu; and the sale to Canmax of all concentrate produced at Zulu, not only that from the pilot plant, at fixed prices with limited ability for Premier to accommodate cost variations.
In regard to plant modification progress at Zulu, Premier reported that Stark International Projects Limited (Stark) has advised that civil preparatory works associated with the installation of the hydro sizer and now for the installation of the UV sorters is complete and installation is expected to commence this coming week.
Stark is acting as the design, procurement, installation, and commissioning contractor on behalf of Premier, and prior to completion of commissioning, remains as the operator of the Zulu plant.
Stark has further advised that the installation of the hydro sizer is expected to see concentrate production at or near 50% of design throughput.