Premier African Minerals shares were sharply lower on Tuesday after the lithium miner issued a disastrous update on operations at the Zulu project.
The Premier African Minerals share price had plunged 20% to 0.24p at the time of writing. Shares are down 47% over the past month.
Last week, the UK Investor Magazine published an article entitled ‘Premier African Minerals shares: proceed with caution’ detailing discrepancies in the company’s official regulatory news releases and social media posts made by the CEO of the Stark – the company contracted to construct Zulu’s lithium processing facilities.
In an RNS issued 3rd November, Premier African Minerals alluded to ‘ongoing commissioning and optimisation issues’ at Zulu resulting in ‘material flow challenges’.
These assertions were countered by a contradictory social media post on X by Stark CEO Geoffrey Madderson, who said, “Guys, relax. There is no issue on the plant.”
Geoffrey Madderson’s account now appears to have been deleted. It’s easy to see why.
There was an issue with the plant. Today, Premier African Minerals said that they would miss not only November’s 1,000 tonne production deadline but December’s as well.
This will mean $3m in penalty payments to offtake partner Canmax. Compounding the problem for Premier’s shareholders, the company does not seem to have the cash lying around after it was forced to dilute investors by paying Stark in newly issued shares for a plant that is not yet functional.
Under the terms of the renegotiated offtake deal agreed earlier this year, Canmax has the right to take penalty payments in the form of newly issued Premier African Minerals shares, promising further dilution for investors.
Investors will understandably be frustrated with RNS releases outlining issues at Zulu and contradictory media appearances by Premier African Minerals and Stark suggesting the situation was under control.
Premier African Minerals is now considering ceasing the operation of current plant facilities in order to build a fresh mill, imposing substantial delays to increasing production to the required levels. In addition, achieving the required production by the end of January is far from certain.
Premier African Minerals is also yet to confirm the grade of any lithium produced at Zulu.