Cash-strapped lithium developer raises fresh capital at a steep discount to sustain Zulu operations while negotiating a critical debt extension
Premier African Minerals Ltd. has raised approximately £550,000 (US$715,000) through a share subscription, issuing 4 billion new shares at 0.01375 pence each as the company scrambles to maintain operations at its Zulu lithium project while negotiations with strategic partner Canmax Technologies Co. drag on, Mining Zimbabwe can report.
By Rudairo Mapuranga
The fundraising, conducted through a direct subscription arranged by the company, represents a 7.4% discount to the stock’s most recent trading level of 0.01485 pence. The new shares will rank equally with existing stock and are being issued within the company’s existing share authorities.
Cash Preservation Strategy
The proceeds will be used primarily to support operating expenditure at Zulu, including the continuation of mining and stockpiling activities, the management of essential creditors, and general working capital requirements. The funding comes as Premier awaits the outcome of “constructive” discussions with Canmax regarding an extension of the Long Stop Date under their August 2023 prepayment and offtake agreement.
Managing Director Graham Hill said the funding provides “important working capital to contribute towards ongoing operational requirements at Zulu” while the company progresses its talks with Canmax. The Board believes the subscription will support “continued progress and preparations for the next production and optimisation campaign once a revised operating timetable has been confirmed.”
Dilution Deepens
The issuance compounds an already aggressive expansion of Premier’s share capital. Just last month, the company issued 2.77 billion shares to Canmax after the Chinese group converted US$628,702 in accrued interest into equity. With today’s 4 billion new shares, total issued capital now stands at approximately 50.1 billion, further diluting existing holders.
The latest tranche was priced at 0.01375 pence, a level that reflects ongoing market skepticism about Premier’s ability to resolve its financing challenges. The company’s shares have fallen approximately 93% over the past 52 weeks, with the stock recently trading at 0.01485 pence.
Zulu Stalled Amid Canmax Negotiations
Premier had previously targeted July for restarting plant operations at Zulu following a truncated June commissioning run that delivered encouraging concentrate grades of up to 5.58% Li₂O. However, the company now says it will not resume operations until concluding negotiations with Canmax over extending the Long Stop Date, the deadline by which Premier must deliver sufficient spodumene concentrate or provide a cash settlement to repay Canmax’s approximately US$46 million advance.
The company remains “confident that a positive outcome can be achieved,” but cautioned that there can be no guarantee an extension will be agreed upon or on what terms. The proposed extension, alongside the successful completion of the next production and optimisation campaign, would represent “an important step in demonstrating sustained plant performance and supporting the Company’s ongoing engagement with potential strategic investors” for Zulu’s continued development.
Going Concern Risks
Premier’s auditor has expressed “significant doubt” about the company’s ability to continue as a going concern, highlighting the critical importance of securing additional financing. The company’s market capitalization has dwindled to approximately £7.2 million (US$9.3 million) from more than £100 million at its peak in 2023.
Engineering improvements undertaken following the June processing campaign have enhanced plant reliability, with modifications, upgrades, and maintenance carried out across the processing circuit. Mining and stockpiling activities are continuing at a reduced scale, with the company building ore inventories ahead of the planned restart.
