George Roach, CEO of Premier African Minerals, was downcast yet defiant in a call with shareholders on Monday, as shares in his London-listed company went into freefall.
The company announced that it has missed key production deadlines and declared force majeure at Zulu Lithium, sending its stocks down almost 50%.
Premier completed the pilot plant in April, cheering shareholders who had taken a bet on the first mid-tier UK company to build a lithium plant in Zimbabwe.
But the mood has turned. Defects at Premier’s new plant have left the company unable to produce the spodumene needed to meet the terms of its offtake agreement with Canmax Technologies, which is part of a global leader in battery manufacturing.
Last year, Canmax put up US$35 million for Premier to build the plant. In exchange, Canmax would get 50,000 metric tonnes of spodumene concentrate.
But Premier says it has failed to meat deadlines for the Canmax deal, because of defects in the mine plant. It has now issued a force majeure notice to Canmax, a legal shield that allows terms of a legally binding agreement to be ignored when something unavoidable happens.
“The company is unable to deliver product within the stipulated dates as set out in the agreement,” Premier said.
Canmax, already a 13.38% shareholder, now wants the US$35 million turned into debt or shares in the project. Premier CEO George Roach finds this proposal unacceptable, saying it would erode shareholder value.
“The issues at Zulu have been acknowledged by the plant contractor to be beyond the control of Premier, and could not have been foreseen by Premier. Whilst I am deeply upset and committed to finding an equitable way forward with Canmax, that solution should strive to be fair and reasonable and in the best interests of all Premier shareholders as whole,” Roach said.
The plant, built by UK’s Stark Resources, has had problems in the milling section.
“In our view, this is a latent defect. We believe that it was known and was not disclosed.”
Premier is even considering selling its lithium to other buyers and lithium developers who had previously approached the company. This would end its exclusive agreement with Canmax.
“We could approach other industry players who have at various times expressed very strong interest in involvement with us,” Roach says. “We’re not without options.” – (NewZWire)