skip to Main Content

Free Newsletter: Actionable insight every morning for the self-directed investor. Find out more

Late last week Premier African Minerals (LON:PREM), the multi-commodity mining and development company, announced the formal grant of an Exclusive Prospecting Order (EPO) for their Zimbabwe Zulu Lithium and Tantalum project.

The EPO is good news for Premier African Minerals as it takes them a step closer to production and they can begin the feasibility study which should take about 14 months. It also provides the company with much-needed impetus while it waits for the RHA Tungsten mine, their other project to restart (Premier owns a 49% stake).

On Friday 12 March, Shares bounced up to 0.37p from 0.24p at the news, but by the end of the day they were back to 0.28p, which is still a lot higher than their 52-week low of 0.03p. At time of writing, they are hovering around 0.37p.

With demand soaring for lithium – a key battery ingredient – the EPO has come at the right time. President Mnangagwa, in his end of 2020 address re-iterated that he expects to see the mining sector reach US$12 billion by 2023 and according to Statista, the market research and data platform, the production of lithium minerals in Zimbabwe grew from 1,100 metric tonnes in 2005, to around 50,000 tonnes in 2019. This year Zimbabwe is expected to produce around 65,000 tonnes.

Latest research shows new lithium discoveries

Yet with new discoveries at the site which is located 80km from Bulawayo, Premier African Minerals believes that the Zulu project is potentially the largest undeveloped lithium bearing pegmatite in Zimbabwe. George Roach, Chief Executive of Premier, has stated a potential exploration target of up to 80 million tonnes. The massive increase in target, the firm says, is because since the maiden mineral resource estimate of 20 million tonnes, at least six new zones of lithium mineralisation have been discovered.

The Zulu Lithium and Tantalum project comprises 14 mineral claims covering a surface area of 3.5 km2. Lithium bearing pegmatites (mainly spodumene and lepidolite) have been identified at vertical depths of over 200 metres throughout the area, as well as on the eastern part on the Zulu concession. Test work conducted by Anzaplan in Germany on behalf of Premier confirmed that low iron spodumene concentrates of up to 6.5% contained lithium equivalent were attainable.

Related

Meanwhile a scoping study prepared by Bara Consulting for Zulu, assuming a mine life of 15 years, valued the project at US$127 million and found that both concentrate and lithium carbonate plant options could produce pre-tax returns of over 80%.

Premier African Minerals has some way to go before reaching a profit

But for now, Premier African Minerals is still operating at a loss. For the six months to 30 June 2020, it had an operating loss of $0.649 million. This was mainly due to the costs associated with maintaining the listing status, administrative fees, retainers to advisors and essential Premier operational expenditure. It received continued financial support from an unnamed major shareholder throughout the year.


Premier is committed to reducing its debts, however. In the period post June 2020, it reduced its overall liabilities by $1.4 million through a combination of debt conversion and other settlement agreements. But with no actual production on both sites, the company has some way to go before reaching a profit.

Nevertheless, Premier’s recent EPO proves that Zimbabwe is open for business, which bodes well for the both the Zulu Lithium and RHA Tungsten projects. Whether investors can wait that long is another matter.

Become a better investor with SharePad Designed to give you the confidence to pick your own investments, Sharepad gives you access to a wealth of information on UK, US & European stocks. Find out more

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Philippa Aylmer

Philippa Aylmer

Philippa Aylmer is a freelance writer within the investment management sector.

She began her career in the late 90s writing about emerging markets for the Euromoney titles while based in Pakistan. Since then, she has covered hedge funds, ETFs, wealth management and fintech.

As well as news, on the client side, Philippa advises on media relations and editorial strategy, writing about the topical and technical issues of investment management

Stocks in Focus

Here are some of the smaller companies we are following most closely. They all represent significant growth stories in our view. Our in-depth reports go into more detail on why we like them.

Comments


Back To Top