Name of the Project
Zulu lithium/tantalum project.

Location
Fort Rixon, Zimbabwe.

Project Owner/s
Premier African Minerals.

Project Description
A scoping study in 2017 evaluated the economics of developing an openpit mine and processing facility to directly produce spodumene and petalite concentrate.

The scoping study identified a target production of 84 000 t/y of spodumene concentrate and 32 500 t/y of petalite concentrate for an initial 15-year life-of-mine.

The 2021 updated scoping study is based on preliminary technical and economic assessments.

The updated scoping study has modelled three scenarios for different spodumene concentrate sales prices to illustrate the impact of the recent significant increase in prices of spodumene and petalite. No further changes have been made to the underlying economic, technical, engineering or processing assumptions used in the scoping study, the resources or the mine plan.

The improvement in spodumene pricing and, therefore, the revenue factors, have resulted in a significant positive improvement in the economic results, despite the escalated capital and operating costs.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has a net present value (NPV), at a 10% discount rate, of $127-million in the 2017 scoping study and an internal rate of return (IRR) of 85.9%, with a payback of two years, based on prices of $800/t spodumene and $400/t petalite concentrate.

In the 2021 scoping study, the project has an NPV, at a 10% discount rate, of $207-million, $292-million and $377-million, based on spodumene concentrate prices of $1 000/t, $1 150/t and $1 300/t respectively, and petalite prices of $400/t.

In the 2021 scoping study, the project has a pretax IRR of 112.4%, 144.3% and 176%, based on spodumene concentrate prices of $1 000/t, $1 150/t and $1 300/t respectively, and petalite prices of $400/t.

Capital Expenditure
The project has a total capital cost of $69.3-million in the 2021 scoping study, compared with $64-million in the 2017 scoping study. The project will require peak funding of $42-million in the 2021 scoping study, compared with $38-million in the 2017 scoping study.

Planned Start/End Date
Not stated.

Latest Developments
Premier African Minerals has entered into a marketing and prepayment agreement in the form of a binding heads of terms with clean technology developer Suzhou TA&A Ultra Clean Technology.

The agreement will enable the company to establish a large-scale pilot plant at its Zulu lithium and tantalum project to produce spodumene concentrate six (SC6) from the first quarter of 2023.

Targeted production from the pilot plant is 50 000 t/y of SC6 – a high-purity lithium ore with about 6% lithium content being produced as a raw material for the subsequent production of lithium-ion batteries for electric vehicles.

The take-off for target production has been committed to Suzhou, with the prepurchase of production paying for the complete $35-million construction cost, interest-free.

A minimum price undertaking for the first 50 000 t has underwritten Premier’s repayment capability.

Premier CEO George Roach said on June 24 that the net effect of the agreement was that construction activities at the Zulu project could begin immediately, with first shipments expected before March 31, 2023, and a steady ramp-up in production to about 48 000 t/y of SC6.

“It is important to note that this is a pilot plant facility and will produce SC6 only in the first phase. Three by-product streams will be stockpiled and will go to inventory, pending the completion of additional testwork and an additional plant,” he explained.

The three by-products are a tantalum concentrate in a magnetic fraction, a petalite-rich mixed ore and a mica/lepidolite concentrate that is likely to contain caesium and rubidium, all of which might be immediately saleable.

Premier and Suzhou have agreed to complete the definitive transaction documents within one month of the agreement.

Under the agreement, Suzhou will have the right to acquire SC6 for the first three years of production or until such time as the prepayment amount has been repaid in full, whichever occurs later. This can be increased by a further three years if both parties agree to it.

The sale of SC6 will be priced at a discount, conditional on the approval of the State-owned Minerals Marketing Corporation of Zimbabwe, on the first 50 000 t of SC6 shipped or until the prepayment amount has been fully liquidated, whichever occurs first.

Following completion of this first delivery, the parties will agree to negotiate a discount based on market conditions for the remaining term. The buying price will be subject to a floor price until either the prepayment amount has been fully repaid or until December 3.

Following the successful payment of the prepayment amount, Suzhou will have the right of first refusal to match any offer from another interested party to acquire SC6 from the Zulu project, should the parties not agree to a renewal of the term.

Premier’s independent directors believe that the agreement provides a significant opportunity at a time when spodumene prices are expected to remain high amid current supply-demand imbalances.

The agreement also provides funding without the issue of any ordinary shares and, therefore, avoids any dilution to shareholders.

Key Contracts, Suppliers and Consultants
Bara Consulting (2017 scoping study and scoping study financial matrix review).

Contact Details for Project Information
Premier African Minerals, tel +27 100 201281 or email info@premierafricanminerals.com.