Premier African Outlines production Plan for Zim Project
Shares (British Virgin Islands) in Premier African Minerals Ltd. fell Monday in early trading after the company said that it is considering an early production strategy for its Zulu lithium and tantalum project in Zimbabwe.
The mining exploration company said that pursuant to test results, there exists a clear potential for a large-scale pilot plant to produce spodumene concentrate only, stockpiling tantalum and petalite for future processing. Such a plan could be in production in the first quarter of 2023, Premier African said.
Spodumene and petalite are two types of lithium ore.
“Premier is potentially following an accelerated programme of early production to exploit the current opportunity. There are identified risks and abatements inherent in this to a greater extent than may be the case following a fully developed DFS [definitive feasibility study],” Chief Executive George Roach said.
At 0742 GMT (British Virgin Islands), shares were down 10% at 0.36 pence.
The Premier African Minerals Ltd (LON: PREM) share price plunged 12.5% despite the company announcing an accelerated plan that could see it start production activities at its Zulu lithium and tantalum project by Q1 2023.
It is unclear why investors reacted negatively to the news. Still, one of the reasons could be because it is a more risky plan than if the company stuck to its original plan of completing a definitive feasibility study (DFS) to determine the best way forward.
The lithium mining company said it could secure funding to build a large-scale pilot production plant using an interest-free prepurchase payment for spodumene concentrate from an interested buyer. The firm is looking to capitalise on the enormous demand for spodumene concentrate globally.
Premier African Minerals shareholders may have overreacted to the announcement, despite its positive nature, given that the building of the pilot production plant would help the company complete sections of its DFS, which is a significant bonus. The firm also revealed that high demand for spodumene significantly de-risks the proposal.