Premier, Zulu contractors in crisis talks
PREMIER African Minerals, the lead company behind the Zulu Lithium and Tantalum project, held an emergency meeting this Wednesday with contractors to address ongoing work stoppages triggered by outstanding payments owed to these contractors.
Zulu Lithium project, located about 80 kilometres east of Bulawayo, is widely considered potentially the largest undeveloped lithium-bearing pegmatite in the Zimbabwe.
Operations at the Zulu project were recently halted by contractors due to payment delays.
This has threatened to jeopardise the planned production target for the end of this month.
Sources report that Wednesday’s meeting between senior Zulu Lithium officials, Premier CEO George Roach, and contractors yielded an agreement entailing Premier starting payments Thursday (yesterday) to pave way for a resumption of works.
“Premier agreed to initiate payments this Thursday, with larger sums expected and smaller amounts to follow during the second week of March,” said a source who requested anonymity due to the matter’s confidentiality.
“In total, the amount that is expected to be paid is close to US$2 million. Once the larger sum are paid, the contractors are expected to re-mobilise the equipment and resume normal works.”
The sources added that to ensure uninterrupted operations, it was recommended to Premier that they allocate a monthly budget of nearly US$2 million.
“The meeting urged Premier to prioritise a stable budget, recommending a monthly allocation of US$2 million to avoid jeopardising project progress and potential further disruptions,” another source said.
“This guarantees uninterrupted operations.”
Unpaid dues for services rendered at the Zulu project, including drilling and supplies, escalated to approximately US$2,2 million as of last week, leading to recent work stoppages, according to one source who preferred to remain anonymous.
Last Thursday, Premier, an Alternative Investment Market-listed company, sought to raise approximately £2,5 million (US$3,1 million) through a share issuance to its shareholders. The offering entails issuance of 900 million new ordinary shares at a price of 0,275 pence per share. Premier intends to use the proceeds of the subscription to assist with the ongoing mining activities and working capital.
Roach said the placement would assure Zulu of plant startup, subject “only to suppliers meeting their obligations and undertakings”.
“This has and remains Premier single most important objective at this stage,” he said.
“That is targeted for next week and remains on target.
“Early indications are that subsequent working capital finance will be available from commercial lenders at Zulu when production is underway as Zulu must begin to fund its operations without the assistance of Premier once commercial production has commenced.”
According to Premier, the funds raised would be used specifically for operating expenses at the Zulu Lithium project that includes the final payments related to the thickener purchase and installation, final payments related to the ball mill and associated hydrosisers, transport and installation, plant operating spares and reagents mining costs, and day to day operating expenses including diesel.
Premier will continue to engage with Zimbabwean-based lenders for working capital facilities for the project but the potential funders need to see production starting.
“While Premier strongly believes that Zulu will be able to source a working capital facility, this is now largely dependent on Zulu being in production,” said the board.
As such, Premier believes that securing funding “is the best immediate solution to securing further project funding in order to see Zulu commence production in late February 2024”.
“Once production has commenced, Premier believe that it should see one or more of the alternatives to equity-based funding materialise.
“On this basis, Premier’s current expectation is that it is now fully funded to first production at Zulu.”
Premier is a multi-commodity mining and natural resource development company focused on Southern Africa with its RHA Tungsten and Zulu Lithium projects in Zimbabwe.
The company has a diverse portfolio of projects, which include tungsten, rare earth elements, lithium and tantalum in Zimbabwe and lithium and gold in Mozambique, encompassing brownfield projects with near-term production potential to grassroots exploration.