Premier African Minerals and Kodal Minerals have been tipped as two of AIM’s foremost battery metals companies well-placed to supply lithium to the burgeoning electric vehicle manufacturing industry.
Indeed, their lithium assets are potentially world-class. Premier African Minerals’ Zulu lithium project contains 20.1Mt @ 1.06% Li2O & 51.05ppm Ta2O5 at a 0.5% Li2O cut-off.
Kodal Minerals’ Bougouni Project has a resource of 21.3Mt at 1.11% Li2O, with 11.6Mt at 1.13% Li2O in the Indicated category and 9.7Mt at 1.08% Li2O in the Inferred category.
These significant resources caught the attention of Chinese partners, who have agreed to provide funding to develop their mines and bring them into production.
Both companies have secured the interest of major Chinese lithium players, and both Premier African Minerals and Kodal Minerals have so far let their partners down.
Kodal Minerals have failed to arrange the required conditions set out by their partner Hainan Mining to satisfy the criteria for issuing $100 million in funding for the Bougouni project.
Premier African Minerals is embroiled in a dispute with Canmax about their lithium offtake agreement terms. Canmax made a $34m prepayment for lithium and has issued a termination notice after Premier Minerals missed production milestones.
Both Premier African Minerals and Kodal Minerals need to up their game not only for their current shareholders but for the sake of the wider UK junior natural resource sector.
These two London-listed junior minerals companies have achieved a feat many won’t – identify a commercially viable resource and secure funding for production.
Should the two companies be unable to deliver on their potential, some investors will lose faith in the sector.
Corporate improvements
Kodal Minerals’ communications strategy has been woeful, leading to a 50% drop in the share price from their recent highs. Releases have been vague and left investors in the dark.
Premier African Minerals made a poor choice of mine construction contractor resulting in their offtake partner terminating their agreement. They are now locked into a dispute around the repayment of the prepayment amount. They may bring in a new funding partner, but Canmax won’t go quietly.
In both cases, their investors have suffered.
Thankfully, the disappointing series of events above ground doesn’t impact what the companies have below ground.
There is, however, a risk the value investors extract from their respective resources is diminished by poor management decisions.