Premier African Minerals shares fall with further work needed at the Zulu lithium plant

Premier African Minerals shares dipped on Wednesday after the company revealed recent progress at its Zulu lithium plant in Zimbabwe.

The company has been dogged by delays and is subject to a punishing offtake agreement with Chinese partners Canmax which sets out a 1,000 tonne per month minimum production – a target Premier African Minerals is yet to meet.

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Today’s update focused on optimising the floatation circuit that processes lithium into a saleable product. While today’s announcement had some bright spots, it also had several sources of disappointment.

The plant is expected to begin production at 50 tonnes per day, which will satisfy the minimum production targets. However, further work is needed to ramp production up, and there is no guarantee this will be easy.

There are legacy issues with the mill and ore sorter which still need to be overcome. Many investors would have hoped these setbacks would have ben rectified by now.

Premier African Minerals shares were down 8% at the time of writing.

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The PREM CEO provided a comprehensive overview of the current situation:

“Thanks to the support the Company receives from ENPROTEC, the supplier of the float plant components and innovation and dedication from our team at Zulu, we are now able to run the floatation circuit continuously and produce saleable spodumene concentrate,” said George Roach, CEO, Premier African Minerals.

“There is much to be encouraged by, notably, the use of an activator in the spodumene floatation plant that has seen recoveries in internal laboratory work approaching 90% and the indications that the ore body in situ grade is higher than was estimated in our Resource model.

“The overall plant is currently running at a feed rate to spodumene floatation that is approximately 50% of original floatation design capacity and will need a further conditioning tank and minor pump upgrades to operate at the full design capacity. This is over and above the recently completed flow changes. The required pumps are already at site and the additional civils for the conditioning tank should complete in May 2024.

“Target production for the coming week is expected to start at 50 tonnes spodumene concentrate per day with increasing production. Target full projected capacity remains at 4,000 tonne per month. Grade is consistently improving with continuous running and latest internal chemical analysis of spodumene concentrate produced by the floatation circuit indicates grades have now improved to between 4.5% and 6.3% Li2O.”

Grades may also be a concern for investors. At the top end of the stated range, Premier African Minerals will satisfy the grade requirements stipulated in its offtake. However, at the bottom end, it will not. Investors will be closely watching for any signs of further improvements in the grade.

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