JOHANNESBURG (miningweekly.com) – Aim-listed Premier African Minerals on Monday announced a series of funding agreements that will allow the multicommodity mining and natural resources development company to increase its stake in Ethiopia-based Circum Minerals and fast-track exploration efforts at its wholly-owned Zulu lithium and tantalum project, in Zimbabwe.
In an update to shareholders, the company said it had secured a new $2.9-million loan agreement, a direct subscription at 0.7p per new ordinary share to raise £4.8-million, before costs, and a £3.3-million equity sharing agreement.
“This new funding, completed at a significantly higher share price since our last placing, allows us to secure the working capital requirements for Premier for the immediate future, as well as secure a further interest in Circum at an improved price based on a cash settlement,” said Premier CEO George Roach.
The $2.9-million loan, to be made in two tranches, was agreed with YA II PN, with a repayment date of April 27, 2018, and an interest rate of 18% payable on the outstanding loan amount.
The first tranche of $1.65-million will be paid on the signing of the loan agreement, repayable at rates of $235 714.29 a month from October 28, 2017.
The balance of $1.25-million is to be paid when the RHA tungsten mine, in Zimbabwe, achieves a production run rate of at least 30 t of saleable wolframite per month or 30 days after the first tranche and upon mutual consent of the parties.
The equity funding facility comprised two parts, with Delta-Beta One EQ subscribing for 685.7-million ordinary shares of 0.7p apiece, equating to 13% of the enlarged ordinary share capital of Premier, and raising £4.8-million.
Out of these proceeds, Premier will return £3.3-million to Delta-Beta as payment under the equity sharing agreement and the balance of £1.5-million will be retained to fund the 1.3-million increase in Premier’s shares, or 1% in its interest, in Circum at a cash value of $1.25 a share, as well for use for general working capital.
Circum is a privately owned potash development company which operates the Danakil potash project, in Ethiopia.
Following completion of the purchase, Premier's holding in Circum will amount to an aggregate 3.68-million Circum shares, representing about 3.7% of issued share capital of Circum.
“Today's purchase of additional shares in Circum is part of a broader proposal that Premier made to certain small Circum shareholders,” said Roach.
“Premier proposes to acquire, at its discretion, up to a further 9.3% interest in aggregate in Circum at a price of $1.50 in exchange for Premier shares or $1.25 a share for a cash consideration, which together with Premier's existing 3.7% interest in Circum, will increase Premier's holding in Circum to 12%,” he explained, noting that the maximum consideration paid for the additional stake would be about $14.5-million.
Premier was optimistic of the demand growth for fertiliser products and that Circum’s Danakil project was well placed to benefit from this.
Part of the finance will also be used to expedite the exploration effort, as well as continue further metallurgical testwork and engineering studies, at the Zulu lithium and tantalum deposits, ultimately forming a part of a preliminary economic assessment.
“This deposit has the potential to be a tier-one lithium project and the board has been advised to progress the project further before accepting any of the approaches that have been made to either acquire the project or to joint venture,” Roach said.
“Negotiations will be ongoing and our objective remains to maximise shareholder value,” he concluded.