JOHANNESBURG (miningweekly.com) – Aim-listed Premier African Minerals has concluded the principle terms of a conditional interest-free, term loan of $2.5-million that would enable it to acquire 30% of the Danakil potash project, in Ethiopia, the company said on Friday.
Premier had previously entered into a C$4.9-million option agreement with Toronto-listed AgriMinco, through which the company had the exclusive option to buy the entire issued share capital of Mandalore Development, a wholly owned subsidiary of AgriMinco, which owned a 30% interest in Danakil.
Premier would lend the funds to exercise the option from AgriMinco’s joint venture partner in the project, Circum Minerals.
On exercise of the option agreement, in addition to acquiring Mandalore, Premier would cancel all the common shares it held in AgriMinco for no consideration, settle a portion of AgriMinco’s debt obligations up to C$1.5-million and issue C$1-million worth of premier ordinary shares to the group.
Meanwhile, Premier had also granted Circum an option, valid until June 5, stipulating that in the event that Premier exercised the Mandalore purchase option, Circum could subsequently acquire Mandalore from Premier.
The Circum call option was exercisable at the sole discretion of Circum and was subject to conditions precedent, which included the completion of due diligence by Circum.
Under the Circum call option, Premier would receive an amount in cash on completion equal to the amount advanced to Premier under the bridge loan, new Circum shares and further deferred consideration payable in either cash or Circum shares, which was anticipated, in aggregate, to be no less than the consideration paid by Premier to AgriMinco.
Commenting on the transaction, Premier CEO George Roach said, while it was still incomplete, the prospect of closing the transaction would significantly assist the company in advancing its Zimbabwe projects, in particular bringing the RHA tungsten project, in which Premier held 49%, closer to production, which together with the retained interest in Circum had significant potential benefit for all Premier’s shareholders.
Premier on Thursday announced a 152% resource tonnage increase to 2.73-million tonnes at the RHA project, while the project’s measured and indicated resource increased by 975% to 1.55-million tonnes at a composite grade of 8 kg/t of tungsten trioxide.
"This resource upgrade, coupled to completion of the mineralogical and metallurgical studies, deals with the main requirements identified in our mining study. We look forward, with confidence, to [the] finalisation of the updated study and, subject to finance, the start of mine construction," Roach said.
Premier also added that it was engaged in substantial negotiations related to offtake partners and potential debt finance partners for the RHA project.