Canmax agree to carry forward monthly payments owed by Premier
AIM-listed mining and exploration company, Premier African Minerals, has received a notice of election under the Agreement from Canmax Technologies Co., Ltd. due to its failure to deliver at least 1,000 tonnes of lithium spodumene per month for November 2023 and December 2023.
Patricia Rwafa/ Rudairo Mapuranga
Consequently, the current outstanding balance owed to Canmax of US$3 million (US$1.5 million per month) will be carried forward as part of the monthly payment.
According to Premier CEO George Roach, in accordance with the Agreement, the interest rate for the outstanding balance of the prepayment amount will be increased to 12% per annum with effect from 1 December 2023.
“Premier is pleased that Canmax has elected to carry forward the monthly payments in respect of the non-delivery of product in November and December 2023. The effect of this is that the monthly payment contemplated is rolled forward and clear indication that Canmax requires delivery of Spodumene concentrate as soon as possible.
“Premier is deeply appreciative for the understanding and assistance Canmax has provided. And we remain committed to production in late February provided only that all commitments made by contractors are met,” Roach said.
Pre-Payment agreement
As previously announced on 3 August 2022, Canmax purchased in advance US$34,644,385 worth of product to be sold by Premier (“Advance Purchase Amount”), with the proceeds used to construct and commission the plant at Zulu. The parties agreed to supply the Product for the Advance Purchase Amount plus accrued interest by Canmax following the bridge of a first contract agreement by Premier.
The Advance Purchase Amount, plus accrued interest (which has been agreed to increase from 3.5% per annum to 8% per annum from 31 May 2023), will be settled from gross sale proceeds from the Product shipped to Canmax as follows:
From 1 November 2023 until 30 May 2024, Canmax was to receive 25% of all gross proceeds due to Premier from the sale of the Product.
From 1 June 2023 until the Advance Purchase Amount plus accrued interest has been settled, Canmax was to receive 50% of all gross proceeds due to Premier from the sale of the Product.
Settlement of the Advance Purchase Amount was to commence no later than 1 November 2023 at a minimum rate of 1,000 tonnes per month on a rolling average basis plus or minus 10% (“Minimum Delivered Product”). If the Minimum Delivered Product does not occur, then Premier will be required to make a cash payment to Canmax (“Cash Settlement”) for that month as follows:
According to the agreement, If Premier fails to make a second Minimum Delivery Product, the revised interest rate will be adjusted further to 10% per annum from the first date of the next month. If in any month Premier is unable to supply the Minimum Delivered Product or make the Cash Settlement set out above, then Canmax will have the following options:
– the outstanding balance of the Cash Settlement will be carried forward to the following month, and the interest rate applicable to the outstanding balance of the Advance Purchase Amount will increase to 12% per annum from the first day of the next month; or
– the monthly payment will be settled in new ordinary shares in Premier at a conversion price that will be twenty daily volume-weighted average trading prices of ordinary shares during the last twenty trading days of the month where the Minimum Delivered Product was not delivered (VWAP Period).
The conversion rate will be equal to 90% of the average of the twenty daily volume-weighted average trading prices of ordinary shares during the VWAP Period. The conversion price shall, subject to standard customary adjustments inter alia for changes in Premier’s capital structure, be no lower 0.32p per ordinary share.
Settlement of all amounts of Product due under the Amended Agreement will be subject to a new Long Stop Date of 1 April 2025, and should Premier have not delivered the required Product or provided Cash Settlement to settle the Advance Purchase Amount in full, and provided that Canmax has not elected to take settlement in new ordinary shares (the “Outstanding Amount”), then Canmax will be entitled to receive as settlement of the Outstanding Amount, a direct interest in Zulu Lithium based on a project valuation of US$200 million.