London Stock Exchange-listed mining and exploration junior Premier African Minerals Limited has reached a further amendment to its Offtake and Prepayment Agreement with Canmax Technologies Co., Ltd concerning the Zulu Lithium and Tantalum Project, Mining Zimbabwe can report.
By Rudairo Mapuranga
The amendment, which revises the Long Stop Date, solidifies Canmax’s commitment to working alongside Premier in the project’s development.
Key Amendments and Conditions
Under the amended agreement, the Long Stop Date has been extended from April 1, 2025, to either December 31, 2025, or until Premier secures a reputable buyer approved by Canmax to settle the Prepayment Amount plus interest. The adjustment is contingent upon several conditions:
Canmax’s Participation Rights – Canmax retains the right to receive partial repayment through new ordinary shares in Premier, ensuring it holds 13.38% of the company’s shares on a fully diluted basis post-funding.
Financial Oversight – Canmax will monitor and control Premier and Zulu Lithium’s operational financial activities, including trade creditor budgets, until the full settlement of the Prepayment Amount plus interest.
Insolvency Safeguards – Neither Premier nor Zulu Lithium should be subject to insolvency proceedings unless contested and resolved within 30 days.
Asset Security – Premier cannot pledge or encumber its assets, including mineral rights, without prior written approval from Canmax.
Expression of Interest Requirement – A non-binding letter of interest from a reputable buyer acceptable to Canmax must be secured within 30 days of signing the addendum. Should the initial interest be withdrawn, Premier will have an additional 30 days to secure an alternative buyer.
Board Commitment – Premier’s directors must personally commit to these conditions until full settlement of the Prepayment Amount plus interest.
Failure to meet these conditions allows Canmax to exercise its full rights under the amended agreement.
Premier’s Default and Increased Interest Rate
This amendment follows Premier’s default on the initial offtake agreement, where the company failed to deliver the minimum 1,000 tonnes of lithium spodumene per month in November and December 2023. As a result, Canmax invoked its rights under the agreement, carrying forward a US$3 million balance ($1.5 million per month) and increasing the interest rate to 12% per annum, effective December 1, 2023.
Premier CEO George Roach acknowledged Canmax’s continued support despite the defaults, stating that Premier remains committed to meeting its delivery obligations. The company aims to resume production by late February, contingent on contractor commitments.
Background of the Prepayment Agreement
The relationship between Premier and Canmax dates back to an August 3, 2022, agreement in which Canmax pre-purchased US$34.64 million worth of lithium spodumene concentrate. This prepayment was intended to fund the construction and commissioning of the Zulu plant.
Under the agreement:
Canmax was to receive 25% of Premier’s gross sale proceeds from lithium shipments until May 30, 2024.
From June 1, 2024, until full repayment, Canmax would receive 50% of Premier’s gross sale proceeds.
Premier was required to begin repaying the Advance Purchase Amount no later than November 1, 2023, at a rate of 1,000 tonnes per month.
If Premier failed to deliver the minimum tonnage, it had to compensate Canmax through cash payments. Failure to make two consecutive deliveries would increase the interest rate further to 10%, and a prolonged failure could lead to Canmax converting the outstanding balance into Premier shares or even claiming a direct interest in Zulu Lithium based on a US$200 million valuation.
