Premier African Minerals shares were in freefall on Monday as the Zimbabwe-focused lithium miner issued an update on their Offtake and Prepayment Agreement with Canmax.
Premier African Minerals have missed certain production deadlines and are now in the hands of Canmax, who have the ability to terminate the agreement and request funds be returned. This would be disastrous for Premier African Minerals, who are supposedly working with Canmax on possible alternatives.
According to the update released by Premier African Minerals on Monday, Canmax is taking full advantage of its position by proposing unfavourable terms to avoid termination.
Premier African Minerals outlined two suggestions proposed by Canmax; converting the prepayment amount into convertible debt or issuing equity in their Zulu lithium project, and the sale of all offtake to Canmax at fixed prices.
The amendments would severely erode shareholder value, and Premier African Minerals said the proposed terms are unacceptable.
Premier African Minerals shares were down 33% at the time of writing and had been much lower earlier in the session.
“The issues at Zulu have been acknowledged by the plant contractor to be beyond the control of Premier, and could not have been foreseen by Premier. Whilst I am deeply upset and committed to finding an equitable way forward with Canmax, that solution should strive to be fair and reasonable and in the best interests of all Premier shareholders as whole,” said George Roach, Premier African Minerals CEO.
“Whilst my focus is squarely on resolution of the plant issues during this period of FM and production at Zulu, I will diligently strive to resolve the issues with Canmax and will actively pursue alternative strategies.”
