Premier African Minerals has secured an extension of its offtake and prepayment agreement with Canmax Technologies Co., Ltd to 31 December 2026, while agreeing to subordinate about US$55.75 million owed by its Zimbabwe lithium subsidiary to approximately US$48.73 million owed to Canmax, Mining Zimbabwe can report.
By Rudairo Mapuranga
The agreements give Premier additional time to restart and optimise the Xinhai flotation plant at its Zulu Lithium project, but come as the company continues to address significant funding requirements, historic creditor obligations and the challenge of establishing sustained commercial production at the Zimbabwean operation.
Premier said the Long Stop Date under its Restated Offtake and Prepayment Agreement with Canmax, originally entered into in August 2023, has been extended to 31 December 2026.
“The extension of the Long Stop Date to 31 December 2026 provides additional time and certainty as we continue to progress Zulu,” Premier managing director Graham Hill said.
The terms of the amended agreement remain substantially unchanged apart from the extension, with the security package previously granted in favour of Canmax remaining in full force and effect.
Canmax will retain its rights, powers and discretions under the agreement should Premier fail to meet the applicable conditions.
In a related development, Premier, Zulu Lithium Private Limited and Canmax entered into a tripartite priority and subordination agreement dated 10 September 2026.
Under the arrangement, all present and future amounts owed to Canmax constitute senior indebtedness, while amounts owed by Zulu Lithium to Premier or other companies within the Premier Group will rank as subordinated indebtedness.
Canmax’s senior indebtedness currently stands at approximately US$48.73 million, comprising about US$34.64 million in advanced receipts and approximately US$14.08 million in accrued interest.
The subordinated indebtedness owed to Premier Group companies stands at approximately US$55.75 million.
While the Canmax debt remains outstanding, Premier Group companies cannot repay, enforce or otherwise satisfy the subordinated debt without Canmax’s prior written consent.
The agreement does not extinguish or waive the debt owed to Premier Group companies, which may continue to accrue. Premier Group companies may also provide further funding to Zulu, provided the relevant creditor accedes to the subordination arrangement and the new funding remains subordinate to Canmax’s senior indebtedness.
Premier said no Premier Group company is, however, obliged to provide further financial support.
The subordination will remain in place until the Canmax senior indebtedness has been irrevocably discharged, settled, refinanced, restructured or otherwise discharged.
Canmax’s position also makes the transaction a related party transaction under Rule 13 of the AIM Rules for Companies because the Chinese company holds more than 10 per cent of Premier’s issued ordinary share capital.
Premier said its directors, having consulted with nominated adviser Beaumont Cornish, considered the terms of the agreement fair and reasonable to shareholders.
The company said the assessment took into account Canmax’s position as its principal secured creditor and strategic partner at Zulu, the additional time provided by the extension and the fact that the Premier Group debt remains fully owing.
Premier is simultaneously seeking to strengthen its funding position as it works towards restarting production at Zulu.
The company said its current programme through to 31 December 2027 identifies aggregate forecast expenditure of approximately US$19.1 million.
Premier stressed, however, that the figure should not be interpreted as the amount it expects to raise entirely through equity at Premier level.
The company’s actual external funding requirement will depend on cash generated from concentrate sales, operational performance, working capital requirements and the availability of project-level, offtake, debt, strategic or other third-party funding.
Premier is also seeking authority to issue up to 58,630,740,625 ordinary shares.
At the illustrative price of 0.016 pence used in the notice of general meeting, the authority represents potential gross funding capacity of approximately US$12.7 million.
The company said the figure does not represent an intention or expectation that the full authority will be utilised.
At Zulu, Premier’s current programme assumes the restart and optimisation of the Xinhai flotation plant by the end of October 2026.
The company has previously produced spodumene concentrate during commissioning activities, but its immediate objective is now to establish stable and continuous production before progressing towards approximately 2,000 tonnes of spodumene concentrate per month.
Premier said Zulu currently has approximately 12,500 tonnes of run-of-mine ore available for processing, with a further 1,000 tonnes in the EPO area expected to be brought to the ROM pad once funding is secured.
Management wants to build the available ore inventory to approximately 20,000 tonnes to support plant optimisation and subsequent continuous operations.
The company has not yet provided formal revenue guidance or definitive steady-state SC6 production cost and margin guidance, saying meaningful guidance is expected once the Xinhai plant has achieved sustained continuous operation.
Premier is also continuing to assess concentrate produced during earlier commissioning activities and currently held at site.
The assessment has principally relied on in-house laboratory results, which remain preliminary and have not been independently verified. The Board said it was therefore not appropriate at this stage to attribute a value to the material.
While Premier is working to restore production at Zulu, it is also facing pressure from historic creditor obligations.
The company said it had made provision within its funding requirements for settlement of amounts owed to J R Goddard Contracting (Private) Limited (JRG), in respect of which enforcement proceedings had previously been stayed.
However, Premier was required to make a payment by 11 September 2026 to maintain the stay and said that payment had not been made.
JRG may therefore resume enforcement proceedings, including seeking to proceed with an attachment order previously obtained.
Premier said it was engaging with JRG with a view to reaching an orderly settlement arrangement, although there could be no assurance that the creditor would refrain from exercising its enforcement rights.
The company is also reviewing the terms of director and management options announced in May, with the Board intending to make the vesting and exercise conditions more restrictive following publication of its interim accounts, expected on or before 30 September.
The proposed changes are intended to align the options more closely with defined production milestones at Zulu.
Meanwhile, Premier continues to assess commercial opportunities at its RHA Tungsten project.
The company intends to maintain its interest in RHA while engaging potential strategic investors that could co-invest in the project and participate as operating partners.
Premier cautioned shareholders against assuming that RHA would provide near-term funding support for Zulu.
The company said its immediate priorities remain restarting and optimising the Xinhai flotation plant, establishing sustained production, commencing commercial concentrate sales and generating operating cash flow.
It is also seeking to resolve outstanding creditor obligations and secure alternative sources of financing that would reduce its reliance on Premier-level equity.
The Canmax extension therefore gives Premier until the end of December to advance the Zulu project and work towards a longer-term resolution of its existing arrangements with its principal secured creditor.
At the same time, the subordination agreement places the US$55.75 million owed to Premier Group companies behind Canmax’s approximately US$48.73 million senior indebtedness, while the potential resumption of JRG enforcement proceedings adds another immediate financial pressure.
The central test for Premier now is whether the additional time can be converted into sustained production, concentrate sales and operating cash flow at Zulu while the company pursues alternative financing and addresses its outstanding creditor obligations.
