Cadence agrees to invest in Premier African's Zulu lithium project

Premier African Minerals has agreed with fellow AIM-traded investment firm Cadence Minerals to secure a direct investment into the Zulu lithium and tantalum project in Zimbabwe.

The investment of up to $5.1m, made by a Cadence at a subsidiary level so it will gain a 30% shareholding in the Zulu project and will help fund Premier's definitive feasibility study for the site.

Cadence has the right to acquire as much as a 30% interest in the Zulu project on completion of the investment and also nominate a director to the board of Premier and to Zulu.

In November, a scoping study of Zulu gave an initial resource estimate of 20m tonnes at 1.06% lithium oxide containing 526,000 tonnes of lithium carbonate equivalent, indicating a lithium concentrate net present value of $127m and a lithium carbonate NPV of $718m. The initial capital cost has been estimated at $64m, with a direct operating cost of $486 per tonne of concentrate, and significant potential for additional mineralisation with a 120-160Mt exploration target over the whole Zulu project.

George Roach, Premier's chief executive, said, "This conditional heads of terms with Cadence underlines the value and potential of the Zulu project, with a post-investment value of $17m, which reaffirms Premier's belief that the Zulu project is potentially one of the leading hard rock lithium exploration projects on the London market and is an indication of the significant value that Premier management has already added to the Zulu project.

He said the final agreement is subject to completion by Cadence of its due diligence and execution of the definitive investment contract.

"Finally, I am particularly pleased that the Investment will be made at subsidiary level and results in no shareholder dilution in Premier for the Zulu project at this time," Roach added.

Cadence CEO Kiran Morzaria said: "By coupling Premier's local relationships and country expertise and Cadence's experience in lithium project development both parties will be able to unlock value, rapidly advance this project with the aim of developing Zulu into a significant producer to supply the expanding lithium market.

"Securing the right to earn into this asset dovetails well into Cadence's strategy. That is to invest in assets with shorter development timelines, meaning earlier cashflow, and invest directly into the project, taking significant stakes and be part of the management team."

As of 0850 BST, Premier shares had soared 54.07% to 0.21p, while Cadence shares had ticked ahead just 0.91% to 0.20p.