Aim-listed Premier African Minerals on Tuesday reported the signing of a new management agreement with the National Indigenisation and Economic Empowerment Fund of Zimbabwe (NIEEF), which is expected to result in the RHA tungsten project being brought back into production without any further financing from Premier.
Premier holds a 49% interest in RHA and is the operator.
“While it has been a long haul, I am very pleased to be able to report that we have signed a new legally binding agreement with the NIEEF that includes a funding undertaking of $6-million for RHA,” commented Premier CEO George Roach.
He indicated that the use and application of these funds is expected to result in RHA being brought back into production later this year and would allow for required upgrades, including to the project’s connection to the electricity grid, which are expected to result in significant operating cost reductions.
Premier has retained ownership of the plant and equipment and is reappointed as the manager for a further five years with renewal thereafter, he noted.
The investment from the NIEEF will be structured as share capital and Premier will simultaneously capitalise an equivalent amount from Premier’s existing loan account.
“In my opinion, this represents both an equitable solution and a good time for the Zimbabwean government to invest directly in this project. RHA has been significantly derisked over the past four years and is now an operation that is better understood.”
The company has agreed a provisional implementation process with the NIEEF.
The new management agreement replaces the old agreement that had been entered into in September 2013.
Under the terms of the agreement, Premier’s 100%-owned subsidiary ZimDiv Holdings is appointed as the manager for a period of five years. In particular, the manager has full authority and responsibility for the day to day operations of RHA.
The manager will conduct the operations at RHA in accordance with the general terms and conditions of the agreement and the approved budget and will report directly to the RHA board.
The RHA board will agree the management fee that will include a performance-related adjustment, which requires first concentrate shipment within 100 days of receipt of the new investment.