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Premier African Minerals confident of lithium production this quarter


Premier African Minerals [LON:PREM], the AIM-listed, BVI-domiciled mining exploration and production company has been through many iterations under the stewardship of chairman, George Roach in its sixteen-year history.

Originally founded by Roach and Bruce Cumming in 2007 as G&B African Resources in 2007, the company listed on AIM in 2012. Since inception, the company has not been afraid to traverse the length and breadth of Africa on the quest for early-stage mining prospects that it could develop and sell-on or take into production.

The company has also been unconcerned about where it operated – even in the ‘more difficult’ African mining jurisdictions – and has been indifferent as to the asset it targets; having dabbled in gold, tungsten, phosphate, rare earths, tantalum, nickel, limestone and fluorite over the years.

However, Premier may have hit pay-dirt through its Zimbabwean Zulu Project, which could be a game-changer for the firm, if it can bring it into production – something that Roach said he was hopeful to, at least as a pilot project, in the early part of this year.

New dawn?

In June of last year The Armchair Trader covered Premier’s initial thoughts on Zulu and we were at the time sceptical of another false dawn in the mining sector, given the need to raise further funding for even a mini-mine.

Premier is still not producing revenues. In its last published results for 1H22 Premier reported an operating loss of USD4.9m (GBP4m) which it attributed to undertaking a definitive feasibility study on Zulu. However, the company could keep operating as it had around USD11m cash in hand. The company has a market capitalisation of around GBP112m.

Subsequent to the close of 1H22, Premier announced that it had reached an agreement with Chinese manufacturer, Suzhou TA&A Ultra Clean Technology Co Ltd which under an offtake arrangement, agreed to provide around USD35m of funding to help Premier construct its pilot mine at Zulu with the objective to produce SC6 spodumene concentrate, a mineral source of lithium, by the end of 1Q23.

In December, Premier reported the outcomes of drilling at Zulu, which included 6.2m of lithium oxide grading 1.15% and tantalum pentoxide grading 32 parts per million  from 209m and 6.3m of lithium oxide grading 1.5% and tantalum pentoxide grading 73ppm from 268m.

Golden egg

The Zulu mine might ironically be the goose that lays the golden egg for Premier, given that the rights were acquired as an afterthought in the acquisition of gold mining prospect. Roach said back in 2021: “Whilst considered of little value when Premier acquired a gold prospect in Mozambique […] this portfolio of hard-rock lithium assets located in Zimbabwe  […] was potentially a hidden gem […and] present circumstances have changed [our initial] perception entirely.”

The recent government ban of exports of lithium ore in Zimbabwe does close the door – to some extent – to new competitors. This development will not affect Premier’s project, as it is primarily targeting illegal artisanal miners and Premier will export its product as concentrate.

Premier opened trading today (10th January) at 0.5p and after languishing in 0.42p territory in mid December, since then the share price has gradually appreciated.

Over one year Premier has offered a 173.5% return opening 2022 at a measly 1.85p. The company has a number of other projects including the RHA Tungsten mine, the Otjozondu Manganese Mining Project in Namibia, and the Danakil Potash Project in Ethiopia. However, if the Zulu project delivers, it would be the jewel in Premier’s crown, given the rising demand for lithium needed for batteries in electric vehicles and renewable energy installations.

Premier investors have been waiting for a long time for a breakthrough. If Zulu comes good, the share price of Premier shares could rocket; however, veteran mining investors have been down this well-trodden path with Premier and its peers many times, and despite encouraging announcements, Premier is still not a revenue-generating business, so it remains a speculative – albeit with a good story – investment.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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