Premier African Minerals shares were trading down in early trade on Friday after conducting a £4m placing at 0.35p.
Premier African Minerals shares were down marginally at the time of writing in choppy trade, with bargain hunters stepping in to pick up shares on a discount in the early minutes of Friday’s session, taking the stock positive.
It was almost inevitable the company would raise funds for works at the Zulu project, and the uncertainty lay with how much would be raised and when.
Today’s £4m fundraise will remove some uncertainty, but the amount raised may not be enough to take the company to a stage where cash generation supports operations.
The company said the cash from today’s placing will see them through to lithium production. However, Premier has been forced to offer key contractors newly issued shares for the payment of invoices. This suggests further cash will need to be raised in the future.
In addition, the Premier African Minerals CEO recently lent the company £2m, which he will want to recover.
Premier African Minerals recently renegotiated their offtake agreement with partner Canmax, which sets out a series of production targets, that, if not met, could result in shareholder value-eroding penalties for Premier.
All focus will now be on the development of the plant and whether the first production target can be met later this year.