New offtake deal needed to boost Zulu output

British-based miner Premier African Minerals Limited (Premier) says unlocking the full production capacity of its Zulu lithium project in Zimbabwe hinges on a revised offtake agreement with Canmax Technologies Co Ltd (Canmax) and the securing of complementary funding.

The offtake agreement, originally signed in 2023, requires Premier to deliver a set volume of spodumene concentrate to Canmax in advance, with Canmax providing prepayment financing to support operations. However, delays in performance have prompted Premier to renegotiate the terms to optimise production, restructure debt, and ensure adequate cash flow.

In a letter to shareholders, Managing Director Graham Hill emphasised that discussions with Canmax and other stakeholders are ongoing. "Our constructive engagement with the major trading house referenced in previous announcements is ongoing with the shared desire to see this through to final agreement both with Premier and particularly with Canmax," Hill said.

Further site visits to Zulu are expected in the coming weeks, and Hill reassured shareholders that the company is advancing a multi-option strategy for the project, as previously outlined in the 2024 annual financial statements.

"The resource, infrastructure, and market access are all in place for long-term success," he said. "Optimisation is progressing, commercial discussions are advancing, and the board and I believe Premier is taking the necessary steps to restore value for shareholders."

The company reported an operating loss of US$7,68 million for the six months ending June 30, 2025, largely due to overheads and administrative costs linked to the construction, installation, and optimisation of the Zulu mine. Cash at hand stood at US$0,029 million at the reporting date, with continued financial support from shareholders helping to sustain operations.

Premier noted that total assets exceeded total liabilities by US$5,881 million, but current liabilities exceeded current assets by US$54,423 million. The bulk of this shortfall - US$46,067 million - represents advance receipts from Canmax, which will be settled from future sales of spodumene concentrate or through the issue of shares if not repaid by December 31, 2025.

"The board continues to believe in the value of Zulu, with an estimated fair value under the prepayment and offtake agreement of US$100 million," the company said, while cautioning that failure to secure additional finance could cast significant doubt on its ability to continue as a going concern.

The Zulu Lithium and Tantalum Project, located roughly 80 kilometres from Bulawayo, is considered one of Zimbabwe's largest undeveloped lithium-bearing pegmatite deposits. Covering 14 mineral claims over 3,5 square kilometres, the project holds strong prospects for both lithium and tantalum mineralisation.