10th Dec 2015 09:32
LONDON (Alliance News) - Premier African Minerals PLC shares dropped on Thursday morning after it announced a discounted placing and provided an update on Circum Minerals Ltd, a company in which it holds a 2% stake.
Premier African Minerals said it has issued 30.0 million new shares to a single unnamed subscriber at a price of 0.375 pence per share, raising a total of GBP112,500 to be used as working capital.
That is a 23% discount to its closing price on Wednesday in London of 0.489p.
Premier African Minerals shares were down 16% to 0.399p on Thursday morning.
In a separate statement, the company said Circum Minerals has engaged a strategic adviser to gain advice on its "world class" potash deposit in Ethiopia. The adviser has a mandate to invite potential strategic development parters and financial institutions to participate in the project, "amongst other things", it said.
Although it only holds a 2% stake, Premier African said the projected future value of its holding in Circum exceeds its own market cap, giving it confidence that the company can manage its "debt burden" that has resulted from its development of the RHA tungsten project in Zimbabwe.
Premier African said Circum has claimed its potash deposit, which will extract product to be used in the fertiliser industry, is potentially one of the largest deposits of its type in the world and will be one of the lowest cost projects of its type once in production.
Production from the Ethiopia project is expected to be around 2.8 million tonnes of potash per year, of which 2.0 million tonnes would be muriate of potash with the other 750,000 tonnes being sulfate of potash.
Muriate of potash (MOP) is the most common type of potash to be used in the agricultural industry, with higher levels of nutrients such as potassium and chloride compared to sulfate of potash (SOP), which is used on more specialist crops that are more sensitive to the chloride, fertiliser burn or deficient in sulphur.
"Circum's proximity to the Asian and South East Asian Markets make it strategically important. The strategic process is likely to commence upon receipt of the project's mining license," said Premier African.
Premier African also noted that a US-based company, Liberty Metals &Mining Holdings, part of Liberty Mutual Insurance, has reportedly acquired a 25% stake in Yara Dallol potash project, also in Ethiopia, for USD51.3 million. Premier African said the Yara Dallol deposit is "much smaller" than Circum's deposit, which lies north of Yara Dallol.
That investment by Liberty Metals values the Yara Dallol project at USD200.0 million, and that project will only produce around a fifth of what Circum's project would initially produce, it said.
By Joshua Warner; [email protected]; @JoshAlliance
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