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Nqobile Bhebhe, [email protected]
PREMIER African Minerals, a lithium mining company operating in Fort Rixon, has reaffirmed its strategic partnership with Canmax Technologies Co, following a new agreement that resets their working relationship.
The updated Offtake and Prepayment Agreement, initially signed in August 2023, strengthens the collaboration between the two entities.
Canmax Technologies, a leading producer of lithium electric materials and related products provided US$35 million in pre-funding in 2022 to support the construction and commissioning of Premier’s large-scale pilot plant.
In its latest update, Premier African Minerals outlined the revised settlement terms.
“Premier and Canmax have agreed that in respect of any prepayment amount plus interest, which remains outstanding on April 1, 2025 and if Premier has not delivered the required product or provided cash settlement to settle the prepayment amount plus interest, then Canmax will be entitled to receive, as settlement of the outstanding prepayment amount plus interest, a direct interest in Zulu Lithium based on a project valuation of US$100 million, which more accurately reflects the capital investment in Zulu to date,” read part of the statement.
Alternatively, Canmax may choose to settle by accepting new Premier ordinary shares issued at the twenty-day volume-weighted average share price before the settlement date.
To address delays in production and supply under the original Prepayment Agreement, Premier has agreed to extend Canmax’s security by providing a fixed charge over the shares of Zulu Lithium. However, this security does not extend to Premier’s other assets or projects.
The agreement also allows Canmax to participate in Premier’s fundraising initiatives to maintain its stake in the company. Canmax has the option to receive partial repayment of interest through the issuance of new ordinary shares, enabling it to hold 13,38 percent of Premier’s shares on a fully diluted basis.
“The parties have therefore further agreed that Canmax, at its absolute discretion, will have the right to receive partial repayment of interest owed by the issuance of new ordinary shares in the Company, such that Canmax would hold 13,38 percent of the shares in issue of the Company on a fully diluted basis immediately following the funding,” read the statement.
Furthermore, while amounts remain outstanding under the Prepayment Agreement, Premier has committed to seeking Canmax’s written consent before undertaking new funding initiatives. Canmax retains the right to participate on identical terms to maintain its 13,38 percent shareholding.
Premier African Minerals’ chief executive officer, Mr George Roach, emphasised the company’s commitment to delivering on the Zulu Lithium project.
“The support the company has received from our shareholders will allow completion of the spodumene float commissioning and the installation of an alternative set of floatation cells, which we expect will meet our objective to produce and deliver spodumene at grade and meet recovery targets,” he said.
The relationship between Premier and Canmax faced challenges earlier this year after Premier missed production timelines. The company issued a force majeure notice to Canmax, citing operational hurdles at the Zulu Lithium plant.
This clause, which frees both parties from liability due to extraordinary events, was invoked as the plant was unable to produce sufficient spodumene concentrate to meet the agreed quantities.
Canmax initially sought to terminate the agreement, a move that could have jeopardised the Zulu Lithium project. However, after extensive negotiations, the two firms resolved their differences and strengthened their partnership.
The plant was said not to be able to produce sufficient spodumene to meet the quantities of the off-take agreement with Canmax.
