Premier African Minerals and China’s Canmax Technologies have Amended and reinstated the Zulu Lithium and Tantalum project Offtake and Prepayment Agreement which the parties had previously agreed in August last year but was terminated in June this year after Premier failed to honour the contract due to problems resulting from its pilot processing plant.
The offtake agreement is for the supply of 48,000 metric tons of spodumene concentrate to Canmax from Premier’s Zulu lithium mine. This is in exchange for a $35 million cash injection Canmax made towards the construction of the Zulu processing plant.
Canmax had moved to terminate the deal in June after Premier failed to start delivering the lithium concentrate as promised in May and declared force majeure, citing problems at its recently assembled plant.
In separate statements, the two companies said they had agreed to restore the offtake deal.
“The Amended Agreement restores the working arrangements between Premier Canmax and therefore the Force Majeure and default notices have been withdrawn by the respective parties.
“The essential elements of the Amended Agreement remain the same as the original agreement entered into in August 2022, save that the parties have agreed:
“A revised Product supply schedule (and alternative arrangements) in respect of the prepayment of US$34.6 million plus accrued interest; and
“A revised hybrid pricing agreement with the payment for SC6 supplied by Premier based on the SC6 price and a profit share whereby Premier and Canmax will share in the profit from production by Canmax of Lithium Hydroxide from SC6 supplied by Premier.
“As Canmax is currently interested in more than 10 per cent. of the issued ordinary share capital of the Company, the Amended Agreement is a related party transaction for the purposes of Rule 13 of the AIM Rules. As previously announced, as Dr Luo Wei was nominated by Canmax as a director of the Company, he is not independent for the purposes of the AIM Rules and the Agreement has therefore been considered by the Independent Directors (being the Board other than Dr Luo Wei). The Independent Directors of the Company consider, having consulted with the Company’s nominated adviser, Beaumont Cornish, that the terms of the Amended Agreement are fair and reasonable insofar as Shareholders are concerned.
“The Independent Directors have in particular taken into account that the Amended Agreement provides an agreed timetable and process for the supply of Product pre-purchased under the Amended Agreement with alternative arrangements in the event of a delay in delivery, resolves the dispute between Canmax and Premier, and provides a basis for the parties to work together to resolve the plant issues at Zulu and achieve all parties’ production objectives.” The Company said in a statement.
Canmax confirmed the agreement in a separate statement.
“The amended agreement resumes the cooperation between the company and Premier,” Canmax said.
Canmax is also the single biggest shareholder in Premier, with a 13.38% stake and is one of several Chinese firms that have invested more than $1 billion in Zimbabwean lithium assets over the past two years, as they seek to lock in future supplies of the key battery mineral.
Other Chinese firms with lithium mining operations in Zimbabwe include Zhejiang Huayou Cobalt, Sinomine Resource Group, Chengxin Lithium Group and Yahua Group.