Premier African Minerals Limited (PREM.L) Earnings Call Transcript & Summary

Ladies gentlemen, lady and gentlemen, just a welcome to say thank you for being here. This is a General Meeting of Premier African Minerals. Notice has been duly served, advertised and signed. And just referring to my script to make sure that I'm doing everything that I should be doing. I am going to chair this meeting at the request of our Chair, who is not here in person. We do have a forum, I note. And I note from my various documents that, that is the case. And I'm going to declare that the meeting is formally constituted, and I believe that we can proceed. Before we get into the business of the meeting, are there any specific questions that anybody would like to raise in relation to the 2 resolutions that are proposed? They are the only item on the agenda of the meeting. If there are any specific questions, I'm happy to deal with them. I just want to -- I have a webinar here, and I just want to have a quick check and just make sure that I don't have any questions coming through on that at the moment. I do not appear to have. Does anybody have any comments related to the resolutions? Okay. I'd like to proceed, and I'd like to propose the resolutions to the meeting. Full text has been set out in the notice of the meeting and has been available off our website as well. The resolutions being proposed are proposed as special resolutions and do require a majority to be passed. Resolution 1 is a special resolution to approve for a period commencing 24 months following the date of this -- for a period of 24 months following the date of this general meeting, the disapplication of the preemption provisions set out in Regulation 1.5 of the company's articles of association in relation to the issue of, or the grant of any right to subscribe for or convert any security into, up to a further 2 billion ordinary shares, and to authorize the directors of the company to issue or grant any right to subscribe for or convert any security into shares in accordance with the provisions of this resolution, but so that the company may make offers and enter into agreements during the period which would or might require shares to be allotted or right to subscribe for or convert other securities into shares to be granted after the period ends. Are there any further questions related to this specific resolution? On that basis, I would like to propose the adoption of this resolution. Could I have an indication of those in favor? [Voting]

Thank you very much. And against? [Voting]

Thank you very much indeed. May I also note that, as Chairman, I hold 17 proxies totaling 10,076,715,346 votes in favor of this resolution and 187,097,600 against. I have no instruction in regard to discretion, and I have no rights withheld. As a matter of interest, from a percentage perspective -- just get to the right one here, the percentage in favor is -- well, let's put it this way, the percentage against is really is nominal. So it's overwhelmingly carried, and I'm very pleased about that. However, let me just come back. I do have letters of representation. Computershare nominees, let's have a look-see here, but authorized [ Mark McDonald ] to attend, speak and vote on behalf of Computershare Company Limited at the Premier African Minerals Limited meeting on 29th of Feb. Mark, are you comfortable with this? Anything that you want to add to it?

[indiscernible]

Thank you very much indeed. In addition to that, I have a similar authorization here to authorizing [ Trevor Cilias ] to attend -- sorry? [ Chilary ], sorry. You know what has been put out here, let's just say -- look-see, that's fine. I do apologize for that. Hang on a second. Pronounce it again for me?

[indiscernible]

[ Chilary ]. It's been misspelled, too. I apologize. Would you like to add anything? You're happy with it?

[indiscernible]

Thank you very much indeed. Look, on that basis, Resolution 1 is adopted, and I'd like to then move on to Resolution 2. Resolution 2 is a special resolution to approve the period commencing -- or for the period of 4 months commencing following the date of this general meeting, the disapplication of the preemption provisions set out in Regulation 1.5 of the company's articles of association in relation to the issue of, or the grant of any right to subscribe for or convert any security into, up to a further 2 billion ordinary shares, and to authorize the directors of the company to issue or grant any right to subscribe for or convert any security into shares in accordance with the provisions of this resolution, but so that the company may make offers and enter into agreements during the period which would or might require shares to be allotted or rights to scribe for or convert other securities into shares to be granted after the period ends. Are there any particular questions related to this resolution? I hold -- in regard to this resolution, as Chairman, I hold 16 proxies totaling 10,233,313,168 votes in favor of this resolution, 40,299,785 against, no votes withheld, no discretionary votes. In addition to that, I believe that these 2 resolutions from Computershare refer as well. Gentlemen, anything that you'd like to add to this, Mr. Chilary? Or you should have, I've got to write that down.

[indiscernible]

Thank you very much indeed, sir. Okay. All right. Could I ask a show of hands for? [Voting]

Thank you very much indeed. Any against? [Voting]

Thank you very much indeed. On that basis, I declare resolution passed as an ordinary resolution of the company. Ladies and gentlemen, that brings us to the end of the formal business of this meeting. I'm happy to informally have any discussion that you'd like us to have. There are, in terms of others linked to this webinar, and I'm unfortunately not seeing any specific questions coming through. But in terms of others linked, we do have 161 other participants who are linked to this. So as I say, I'm very happy to have as frank a formal -- or a frank and informal discussion as anybody would like to have. There may be things that I cannot specifically deal with. I will do the best that I can. So can I open this to the floor? I'm sure you all have a lot of questions that you want to ask.

[indiscernible]

Every component of the plant can run. So I'm going to break this thing down as best I can. Every component of the plant can run. The optimization of the plant to get to a continuous result that it was designed to achieve is an ongoing process. I said to somebody the other day that I can't -- I'm so often asked how long when this, that or the other thing in relation to a future event, and I've said on so many occasions that I can't predict this in terms of the future. What I've said historically in relation to components of the plant, anticipated running and so on, has been based on what OEMs have said to me, so the information they have given me. Over a period of time, recently, I've spent -- and I've had a lot of other people with me spend a lot of time at the plant trying to make sure that we have as good an understanding of the process we have to go through. So going back to the question, as you've asked it, I'm going to go back and say, the components of the plant, each flotation cell, and there are 1, 2, 5, 7 plus the scrubber, there are 8 individual cells contained within this, each one of them is a complex piece of equipment. It consists of an agitator. It consists of air that is being injected into it. It consists of reagents that are being injected and added to it. It consists of recirculating pumps. It consists of a flotation removal and an underflow removal and a recirculation, and there's a lot of complexity in terms of product movement associated with it, apart from the fact that each one of these cells, in itself, has a lot of components and variables to it. Now the pumps all work. The agitators all work. The material will flow over and float and go here and do what it's supposed to do. But there are so many individual variables associated with it that finding the correct optimization on a continuous basis is a process of time. Now the time has been -- and I think I've consistently tended to underestimate that time, largely, and I would say, not correct in doing this. But I've accepted what has been said to me, and assurances have been given to me, I'm no longer accepting those. So all I can say is, again, every component works. It's a case of optimizing this thing and making each of these work correctly, with the correct materials and the correct densities, the correct reagents, the correct flow rates. All of this is where the work lies at the moment. So I don't know what the time is. It could be very short. It could be a little bit longer. The difficulty that I tend to have -- that we, as a company, have at the moment, the principal difficulty that we sit with is that we must run the plant to be able to deal with these issues and get all these components performing exactly as they are supposed to. To understand all our flow rates correctly, to vary and change reagent dosing, pH levels, et cetera, et cetera, all of these things are taking time, and to get it correct, requires continuous running. Continuous running is expense. We've set out before what our cost of production of a tonne of spodumene is. Our forecast remains pretty well where we have the figures that we have published. In fact, if anything, we've been doing a lot of work and refining. And we are comfortable that once we produce at the correct rate, that the cost of production is sufficient to give us a decent margin as this plant is at the moment. But these are things that are -- have been published. They've been in RNSs already. And that will give you a very good idea of what it costs to run this plant. So if you're going to produce 4,000 tonnes a month, and it's going to cost $750 a tonne to produce, that works out at $3,000 a month. That's what it costs to run this plant. And that's what it costs to get this plant to a point where we have it commissioned and where we have it running properly. And this is a simple extrapolation from where we are. Sorry, James?

I think you meant $3 million a month to run.

Did I say $3,000?

Yes. If it's $3,000, I think [indiscernible]

Sorry, 3 is -- add a couple of notes. Getting confused. I beg your pardon. Yes, you're entirely right, $750 times 4,000 is $3 million. I beg your pardon.

Yes. I know you meant [indiscernible]

Yes. Getting a bit like Joe Biden here. Sorry. Anyway, I mean, that's the situation that we have. So it's a very difficult environment in which to get this plant properly optimized and try and fund us through this period that is ongoing. This -- I expect to provide significant updates in the very near future on this. And it's going to be an ongoing discussion to actually deal with this scenario and to be able to get us to that point where we actually have proper production. That's about as best an answer as I can give you at the moment.

[indiscernible]

The old components were, I guess, it was the problem before. You see...

[indiscernible]

Provided I've got money to buy diesel and to keep powering the generators and keep driving the mining and so on, I mean, that's the point that I'm making. So this isn't a plant inability to operate. It's not a breakdown in a machine or something like that. That isn't where we are. We've gotten beyond that. And I think that after the moor went in -- it was a very good example. Now it's really only after the moor went in and after we finally got a proper product flow coming through there that we've been able to say now we can get into the float plant and start dealing with all of this. Theoretically, we're a year behind where we should have been with this. And I'm deeply conscious of that and what it has cost. I think that the upside of it -- because not everything is all downside, there's a lot of upside on this, and I can go through some of these. For example, along the way, we have a huge stockpile of undersized material. And this is material partly from the crushers, where we have not been putting through the small fraction because of the presence of the ore sorters, and that is stockpile. Now that's all material that's mined. It is a potential asset that is sitting on the ground. It's got spodumene in it. And there -- I don't know. There are a couple of hundred thousand tonnes of that, I would say, at the moment. So there's a lot of that. That's the one. Then the other is that the plant was supposed to recover tantalum as it was originally set up. That was completely wrong on the part of the OEM. But additional work that we've recently done has included test work using DMS, dense media separation, on the small particle size. And the purpose of that was to see, could we get a good spodumene concentrate out of it? And could we upgrade the tantalum section of this? And the results are very encouraging. So much so that the intention on that circuit is to seek some kind of a cooperative venture with the supplier of the DMS equipment, such that we would do a shared revenue exercise with them, for example, to get that on site and not cost us. Linked to that is the ability then to recover tantalum. And tantalum is very valuable at the moment. The price of tantalum, if you have a look at it, is through the roof. And this is -- I can't remember. It's in the $50, $60 a kilo kind of range. That's a lot of money for this. And we have a reasonable tantalum deposit at Zulu. In fact, it was the tantalum that originally took me to acquire this project way back in 2010 -- 2009, 2010 was because of the tantalum, and was acquired as an industrial minerals project. So the tantalum opportunity remains. In addition to that, a pegmatite has got a lot of other things other than just spodumene in it. And one of the biggest components is quartz. Now the original work done by ANZAPLAN many years ago predicted that Zulu could provide very high-purity quartz. Now we've done test work in our own laboratories there, and we are commissioning some of the outside test work on that as well. And that, hopefully, will confirm that what we've done in the laboratory is a 99.5% zero-iron quartz. We need to get it a little bit purer, and then it becomes a very valuable commodity. And one can do searches on this, and you can have a look at the pricing of this. But the moment you go very high purity, the 99.9s no iron, it becomes a desirable and sought-after product.

[indiscernible]

Yes. That's the current pricing.

At the current pricing.

At current pricing, absolutely. No, absolutely. It's a very valuable commodity. That would require some additional what we refer to as reverse flotation to actually purify that. But it's very easy because we have material that's in the slurry that's had the spodumene taken out, the micros have been taken out. It's residual material that was going on to a tailings seat, and we take that and put it through a couple of additional cells. So there is that. There are other industrial minerals of much lower value that may come out of this as well, which would may require some further refinement. So that's the one thing. The next thing is that within our EPO -- now the EPO, as I think we all know, has not been renewed at this time, but that is still under consideration. What we did is we registered claims, a number of claims within the EPO. And we have found within the claims that there is apparently a significant additional pegmatite resource within these claims. In fact, one of these -- two of the -- one of these claims is being fairly extensively worked by an independent who is doing hand sorting, hand carving and is delivering that ore to the plant. So it's within our claim, within our EPO areas, and that's both boosting grade but also lowering cost. So we are looking at that, and we understand that this is a significant further amount to be contained there. So the overall size of the pegmatite and the overall size of the resource, the potential size of this has changed dramatically. So it's not all a case of just the Zulu plant, there's much more at Zulu than just this. And then it's worth noting as well, just off the topic ever so slightly, that in recent meetings that we've had in Zimbabwe, it finally does look as though we may resolve the RHA, long ongoing situation. It looks as though we're going to get that done. And Brendan, who's at the back of the room, has been leading most of these meetings, and hopefully, we're going to see some results out of it. Over to the floor.

[indiscernible]

Mutare is under investigation by one of the major Chinese mining companies, not Canmax. They are reviewing a term sheet that we have given them. I don't want to go into detail on the term sheet. I can't because I don't know whether they like the terms or they don't like the terms. I don't know whether they're going to come back with that or whether they're going to come back with an alternative proposal or whatever. But we've conducted the site work, and there is a term sheet that has been given to them to review.

[indiscernible]

Yes. Yes, I'm sorry, I can't. If there is any more definitive, I'd put it out in an RNS, and I'd tell you, but there isn't.

[indiscernible]

Yes. Look, I must say, they are strategic, those claims. They are very close to the Sabi Star lithium operation, which is, in fact, in operation, and part of their pits almost borders on our claims. So if I were them, I'd be having a negotiation quite soon to see what they could do about this because they're going to hit a fence just now.

George, what were your preference?

What?

[indiscernible] What would your preference be if someone made an offer to sell it, and then you expect efforts to support other operations, would you prefer to joint venture it?

No. I think my focus over the last year, 18 months, has been on Zulu, exclusively. And I don't want to get distracted at the moment. There's so much to come out of Zulu. There's so many opportunities to come. And I'm reminded sometimes of the early undertakings from Canmax when they first visited, when the Chairman visited the project. And his statements that he made then that once we got this initial component going, proved up the expanded resource that they would want to come and build a lithium carbonate plant at Zulu. I know that's where this thing needs to go. And I know, in my own heart, my own head says to me that, that is what will happen. If it doesn't happen, then Zulu is going to happen pretty close to Zulu. It's going to happen somewhere in the southern Zimbabwe.

To my mind, that means that Canmax is in their interest to be very supportive and help this flourish.

Yes.

Just going back to RHA, tungsten prices are [indiscernible].

[indiscernible]

So if Brendan and yourself were able to reach an agreement on that, do you think that's viable, profitable going forward, RHA's potential?

Yes. I'm not sure that those who are still on the web would have heard the question. The question related to RHA and to tungsten prices. The last time I looked, the ammonium paratungstate price was around about $350, $360, sorry, something like that. Now when we had a point where we stopped producing or stopped trying to produce that RHA, that price had gone right down to about $150. So there's a significant improvement in price. I think that we also need to remember that RHA did produce a very good concentrate that we had to takeoff in place. That takeoff probably still has validity. It was a takeoff in place, and we produced 2 grades there. We produce what we call a coarse grade,which was minus 6 more fraction, if I remember correctly, and then a conventional find, as most people do concentrate on wolframite. And that course grade was a very desirable product. People really wanted that. The quality of that, the low impurities in it and so on, made it a product of demand. So to go back to RHA, I think -- and I'd love to go back there. Just was checking to see if I can see any questions coming through our call at the moment.

[indiscernible] I think the chat might be disabled or maybe the chat button is disabled or something on the [indiscernible]?

I'll have to talk -- yes, I'll have to talk to [ Milner ] about that. She set this thing up. I'm not smart enough to understand how that works.

All right. It looks like they want to ask you stuff but...

My goodness. Were they sending any questions through to you?

[indiscernible]

First, a question about financing. [indiscernible]

I haven't made a placing today.

[indiscernible]

Yes, if placed.

[indiscernible]

No.

[indiscernible]

I've been very clear at the moment that until such time as this plant is fully optimized in producing product, it can't produce revenue, not to support that level.

[indiscernible]

Guys, can I...

[indiscernible]

Guys, can I just -- let me just come back on where you're going with that. I understand that. And I need to conclude various discussions that we are trying to have in the background with some other parties who have shown an interest in wanting to be involved in this and wanting to acquire part of takeoff and who are looking -- there's no nothing like that at all, but who are looking at [ integrating ], possibility of buying into part of the future supply. Now that requires consent from Canmax It requires a long discussion with them. But I think, in the background, it's important also to note that Canmax remain -- and I think it's clear, to me, I mean, I don't know who votes specifically. But I think it's clear to me, if I look at the voting, that I would suggest that they have probably been in support of the resolutions that we've passed today. Now I think that's an extremely important statement. Their entity is concerned with the production of -- sorry, message in the background here. They're concerned with the acquisition of spodumene. Now that's what they want. I don't think they want to run a mine, but I think they want to make sure that they can get spodumene. Now we are so far down the line with this at the moment. We have progressed this development to such an extent that, in terms of risk normally associated with the mining entity, most of that risk has been dealt with. We're at the final stage, I can't tell you how long it's going to be, of bringing this plant to an optimized state. We know that the components can work. Getting it to work in an optimized fashion is, we believe, one of the last steps. That's how far down the line we are. We've exposed the ore body we've mined. We know what's there. We have a lab at site. We have so much work that has been done and so much that has been invested at this stage that, I believe, personally, that this project is going to be brought to production one way or another. And otherwise, I wouldn't be sitting here, to be perfectly frank with you. This, I am quite determined, is going to go. Detailed presentations and proposals will be made to Canmax following this meeting in terms of how we go forward and to others. But that, frankly, is where this specific project is at this stage.

[indiscernible] The share price is 0.05 something, whatever it is, right?

Yes.

Four million shares of that is, what, $2.4 million, right? [indiscernible]

I don't -- the only -- let me...

[indiscernible]

Some of these shares will need to be used to settle the -- and [indiscernible] the resolutions to settle this commission situation. That needs to be done. But that is not a case of placing out all those shares bang now and going -- collecting some money for it. That's not what's going to happen. That will be dealt with in an orderly manner over a period of time. I think Brendan is standing at the back. He is busy sorting out the various negotiations and agreements associated with that. That's not going to be just dumped on the market. So I've also said that detailed presentations, recommendations will be made to Canmax and other parties, and we will simply have to see how we take that forward. You're entirely correct, if you're concluding that 2 billion shares over and above the settlement is going to complete everything that we are trying to do, that conclusion is entirely correct based on the current share price. That's not going to do it, but that's not where I want it to be. I'm uncertain as to precisely which way it's going to go, and I'm being as candid as I can with you. But we will exploit every opportunity in every other avenue we can. Guys? [ Tommy ], do you want to add anything? You're going to keep out of this one? Gents, anything else?

[indiscernible]

Gents, anything else?

[indiscernible]

Yes.

[indiscernible]

Not necessarily Canmax. Not necessarily. I said there is a large Chinese entity that is in negotiation with. I think -- let me try and -- well, let me try and put this another way. Canmax are aware of Mutare. They are aware of another company looking. And as a matter of principle, we would not conclude an agreement with that other company. And bear in mind that Canmax are shareholders and have a representative on our Board as well. So Canmax will be fully aware and fully informed should a formal offer come on this property. And Canmax will have all the opportunities in the world to step in if they want to step in. Does that help?

It does [indiscernible]

Mutare retire requires a lot of exploration storm. There's limited drilling at Mutare. We've done some. We've got it fairly well mapped out. We've done a lot of surface work. Mutare is a relatively early-exploration project. It is not an advanced project like PREM. PREM was much more advanced than Mutare was at the time that Canmax got involved, much more so. And I understand where they are. As I've just said to you, they are shareholders of ours. One of their directors is a representative. And I'm pretty sure that if they feel that they don't want it to go somewhere else, when and if, and provided that there is a formal offer that comes from those looking at it, if they don't want it to go somewhere else, they can step in and take it at that point.

Yes. So that's what you've just said. They've got far more shares, basically. So if there's someone who offers you 20 million [indiscernible]

Yes. Look, I mean, that's the reality. That is the reality of it.

Their requirements -- so they got far more shares. So when it comes [ pulling ] an offer [indiscernible]

Yes. But that's a matter of us having -- it's a matter of us having a moral responsibility as well. I wouldn't sell it somewhere else without going to Canmax first and saying that's what's on the table, are you comfortable? What do you want to do?

[indiscernible]

Yes. That was definitely welcome.

To understand the process that's happening now in the plant, putting the [indiscernible] now, scrubber. So the new plant runs for maybe a day and then you stop and you find out that you've got -- or how do you manage to make adjustments and then do the testing? How is that all going?

Well, let me try and say this that it takes probably 6 hours, possibly a little longer. If we adjust a density on the thickener, for that effect to flow all the way through the mica section and then all the way through the spodumene section, and all the way up to the final cleaner in the spodumene section could take a period of 6 hours, possibly longer for it to stabilize, and then only can one start assessing. Now we get pretty quick results from our lab, but we tend to inundate the lab at times with the amount of analysis. They can only do -- I think they can do around about -- I can't remember the numbers, Graham, you were there. I'm trying to remember 20, 30 assays an hour, I think, something like that. But if you think about it, you'll take material in the slurry, it's got to be dried. Once it's completely dried, that material must then go through an acid digestion. All of this takes a period of time to get it dry, to get it sized, to get it moved correctly, then to put it through the asset digestion, then to take it and do an atomic absorption analysis on this. It takes time, and there's a lot of this. So they can adjust for now, and then expect -- if you want to get a full suite of results back, you'll be lucky if you get it in 12 hours. So it's a tedious and time-consuming process, and it's been underestimated.

So since the new [indiscernible] the results, have you seen -- did you see improvements, gradual improvements in the property?

You see results that are better, and you may think that you're going to have an improvement, and it isn't. And you have some that goes forward and some that goes backwards. And all the way down the line, one is refining to a greater extent. So yes, the plant manufacturer has said to us on a number of occasions that they are encouraged at where we're going, and they believe that there is a time line and so on associated with it. I'm not prepared to commit any longer to a definitive time line.

[indiscernible]

Yes. From time to time, you do get some -- look, we've produced spodumene from this at more than 6% already. We've produced ACS6 under specific circumstances. The circumstances were when there was a prolonged period without more new material coming in and a long [ residence ] time within a cell. Various different circumstances have occurred, where we've been able to produce very good spodumene and where we've been able to produce at quantity. We can still push out concentrate in tonnes, large tonnage, but getting the purity and the grade into that on a consistently elevated basis is really the issue. So yes, there's a fair amount of other material there that will be 4.5 or 5 or 3 or whatever it might be. There are varying grades that are coming out. There's a fair amount of it along the way. But the only time that you really see true tonnages, and you'll see truly upgrade, is when this is all resolved and when we can then allow this plant to just run continuously.

[indiscernible]

At that point, yes. My target hasn't changed. The target, the eventual target on this front hasn't changed. Along the way, there have been a lot of accomplishments, and particularly in regards to understanding the resource, understanding how much of this is spodumene and how much of it isn't. And that's a very important feature of this as well, that a lot of people tend to report an Li2O grade, and I'll talk about this as a percentage, but that doesn't mean it's all spodumene. If you've got a lot of petalite or lepidolite or -- there are various other minerals that contain spodumene, if that's what you're sitting within this. It doesn't mean to say that, that 1.5% or 1% or 2% or 0.5% or whatever it is, is something that you've been recovered. It could be anything. We know, with a massive amount of work that's been done, what percentage we expect in that ore body to be spodumene.

[indiscernible]

No, there's good ore exposed in the pit.

[indiscernible]

Yes. Look, the other thing that's quite interesting about the pit, and I think I've alluded to this in RNSs before, is that when we do our actual input drilling, last hole drilling, and channel sampling input, and we estimate the grades that we're getting in, but it's around about 30% to 40% higher than the original resource model. So that's very encouraging.

[indiscernible]

Yes, that's -- guys, anything else?

[indiscernible]

I beg your pardon?

[indiscernible]

Now what product is there that can be sold will be sold in-country. We'll sell it on an x mine gate basis. And the party that wants -- there are a couple of parties that want it, but the principal party that wants it from home should get the best price, wants to take it into parcels at 1,000 tonnes at a time. Now there's probably the better part of 1,000 tonnes there at the moment. I haven't checked. But the initial 350-odd, we have the assays for that. We know exactly what's in that, but they wanted to make the parcel up to a bigger parcel. So that will go.

[indiscernible]

It's not running continuously, as I said.

[indiscernible]

Yes, that's not running continuously. In terms of salable, around about an average of 4% and possibly a bit bigger. It must be very close to 1,000 tonnes per month. There is other. There isn't -- but there is other that is really not going to sell. Ladies and gentlemen, can I call it to an end? And can I thank everybody, and those who are online, if I can thank as well, thank you very much indeed. I'm sorry that this chat issue seems to, somehow or another, have not been coming through to me. And I'm sorry, I don't seem to have the skills to have been able to resolve it. But I'm very happy to deal with any correspondence, WhatsApps or however else. And [indiscernible] will be on standby as well. So to those of us here, thank you very much. And to all those online as well, thank you very much indeed. Thank you.